Money Finance News Australia’s world-class health care system still weighed down by inefficiencies
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Australia’s world-class health care system still weighed down by inefficiencies

Australia's health care system is among the world's best but inefficiencies are adding to its financial burden.
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Healthcare is costing government and consumers more and more each year, and a new report has found that much of that money isn’t going where it needs to.

Between 2006-07 and 2016-17, the amount Australia spent on health care nearly doubled from $95 billion to $181 billion in just 10 short years, and that figure is expected to more than double again by 2055.

Now new research conducted by a team of international actuaries has highlighted weaknesses in the way money is distributed, and a few simple reforms could improve Australians’ health outcomes without additional cost to the federal budget.

Medibank Private chief actuary Andrew Matthews (one of the four report authors) told The New Daily an obvious inefficiency was a lack of integration between the public and private healthcare sectors.

“At the moment, if I give you an example of a mental health patient, if they go to a public hospital we’ll fund it,” Mr Matthews said.

“If for some reason that person is unable to attend a public hospital and they go to a private hospital, we’re not willing to fund it.

“Let’s say it would take $10,000 to treat that person over a year in the public system.

“But if we were able to provide an extra bed or get an extra service in a private hospital and it would cost $10,000 – so it would be neutral – we’re not willing to fund it as a society. That person is left on a waiting list.

“Let’s stop thinking of it as subsidising a private system and think about it as how much are we willing to subsidise a person to get the treatment they need.”

Mr Matthews said the private health insurance rebate system should be changed from its income-based model, where people on lower incomes receive greater rebates regardless of how healthy they are, to one based on health risk.

“In other words, unwell people would receive a little bit more support,” he said.

Implementing change in both of these areas, Mr Matthews said, should create a more efficient and equitable health care system without requiring government to spend more and jeopardising the proposed surplus.

Other measures more effective

Speaking to The New Daily, Australia Institute senior research fellow David Richardson said such changes don’t address the more pressing concerns of rising health care prices.

“It’s not clear to me how this would work. It’s still the case that either the consumer would pay or government will pay,” he said.

“The alternative would be to look at a serious price cap being introduced on several health care services.”

But Mr Richardson also proposed an increase in government spending on preventative and planning measures would help reduce the growing financial burden posed by health care costs.

Helping Australians to act on health care sooner rather than later would reduce the risk of problems becoming chronic, reducing costs in later life, he said.

“It’s clear that would also have productivity effects and other beneficial effects on the state of the economy overall,” he added.

“If we can fix people up rather then leave them with chronic problems, they’re going to have a better experience in the workforce.”

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