Australian Health Care — The Challenge of Reform in a Fragmented System
By Jane Hall, Ph.D.
The New England Journal of Medicine, August 6, 2015
The Australian health care system appears remarkably successful in delivering good health outcomes with reasonable cost control. Australians enjoy one of the longest life expectancies and a long healthy life expectancy, while costs as a proportion of the gross domestic product remain around the median among countries in the Organization for Economic Cooperation and Development (OECD). Universal, tax-financed comprehensive health insurance, Australian Medicare, has been largely stable for three decades. Yet this performance has been achieved through, or despite, the interplay of public and private financing, public and private service provision, and a division of responsibilities between the federal and state governments. The main political parties clash over the role of government and whether national health insurance in its current form should continue.
Australian Medicare was established in 1984, after a period of tumultuous change. Australia has moved through numerous approaches to health care financing: private insurance with public subsidies (pre-1974), publicly financed national universal health insurance (Medibank, 1974–1976), predominantly private insurance with public subsidies (1976–1984), publicly financed national universal health insurance (Medicare, 1984–1996), publicly financed national universal health insurance with publicly subsidized private health insurance (1996–2013), and publicly financed national universal health insurance with means testing for private insurance subsidies (2013 to present). The rationale for government subsidies for private insurers alongside a public universal insurance scheme has never seemed clear; perhaps it is best seen as the compromise between the “strife of interests masquerading as a conflict of principles” that, according to health planner Sidney Sax, characterizes the Australian system. full text here
By Don McCanne, MD
Probably the greatest problem with government financed and government administered health care systems is that, whenever conservatives gain control of the government, they attempt to privatize the systems, believing that markets work better than the government. Currently we are seeing such efforts in England, Canada and Australia.
As today’s message demonstrates, Australia serves as a prime example of how the health care systems suffer under continuing shifts in political ideology, with the most damage being done under conservative rule. As their government leadership changes periodically, “Australia has moved through numerous approaches to health care financing.”
Jane Hall, the author of the NEJM article above, writes, “The rationale for government subsidies for private insurers alongside a public universal insurance scheme has never seemed clear; perhaps it is best seen as the compromise between the ‘strife of interests masquerading as a conflict of principles’ that, according to health planner Sidney Sax, characterizes the Australian system.”
Thus Australia has ended up with a highly fragmented system, though shifting political winds make it likely that they have not seen the last change. (More information is available in the white paper produced by the current conservative Australian government - link above.)
One interesting observation in the NEJM article (which is available for free at the link above) is the contrast between the public and private sectors in delivering health care. An example is that “42% of private deliveries (unadjusted for risk factors) are caesareans, versus 29% of public deliveries.” Their private sector seems to have much in common with our medical-industrial complex.
Many single payer supporters in the United States continue to advocate for a “public option” - a government-run insurance that competes with the private plans - as an incremental step towards a universal single payer system. Australia’s Medibank began as such a program in 1975. The Wikipedia chronicle (above) of the history of Medibank reveals that it has transformed into the largest, private, shareholder owned insurance company in their nation. Although our efforts at establishing a public option never got off the ground, before the effort was abandoned, the concept had already evolved away from an expansion of Medicare into simply another player in the private insurance market, government in name only.
Our health care politics have much in common with Australia, and we both have fragmented health systems as a result. Our public Medicare program has already been partially privatized by using overpayments of taxpayer dollars to lure Medicare beneficiaries into the private Medicare Advantage plans. The conservatives are not through in that they want to shift the entire program into the private sector by use of “premium support” vouchers. Of course, the expansion of private insurance plans also perpetuates fragmentation, though currently efforts are being made to convert the insurers into private oligopolies - perhaps the worst model of health care reform that we could have.
So who ultimately controls the ideological complexion of the government? The voters, of course. That is why it is crucial that we continue to educate the public on single payer - an improved Medicare for all - contrasting it with the more dysfunctional models, with our present system being a prime example of dysfunction. The people can have a much better health care system, but they are going to have to understand what that is so that they will demand it of our politicians.
You can help MVHCA as we work for publicly funded universal health care like the rest of the developed world by donating, hosting a house party, signing up for the newsletter, and attending our monthly meetings. You can also Like us on Facebook, and Follow us on Twitter. Thank you.
Supporters of a single-payer, Medicare-for-all health care system in the U.S. were puzzled September 27 when Swiss voters rejected a reform proposal by 62 percent.
The new law would have replaced the current system, where about 60 insurance companies offer mandatory health coverage, with a single insurer, the government. It would have offered all medically necessary care, paid for by taxes adjusted to each person’s ability to pay.
To Americans who’ve worked for such a system here, nationally and state by state, it was a blow. What’s not to like about single payer?
Swiss and American media, academia, and business sectors rushed to interpret the results. Virtually all crowed that the Swiss people had rejected government-run national health insurance because they preferred private insurers.
But these convenient interpretations rely on false assumptions to justify a model of health insurance that is unraveling—less conspicuously in Switzerland, but dramatically in the U.S.
Let’s look at what’s wrong with these pro-business interpretations, and see what lessons the Swiss referendum has for single-payer advocates here.
Washington Post “policy wonk” Jason Millman wrote that the Swiss rejection shows that single-payer has little chance of gaining popular support in the U.S.
He notes that in 1996, the Swiss voted for an individual mandate that compels everyone to buy a basic package of health services. That law eliminated discrimination for pre-existing conditions, meaning companies have to sell equal plans at equal prices to all customers. The government subsidizes low-income people. In Millman’s view, the resulting Swiss system is very much like Obamacare.
Another policy reporter, Avi Roy from Forbes, asserted that Obamacare (and Romneycare before it) was modeled on the Swiss system: people shopping among competing private plans with little government interference.
Roy says the referendum demonstrates the “political popularity” of universal coverage via private insurance. He concludes that because the Swiss have rejected single payer, there’s good reason to believe Americans will reject it, too.
What’s Wrong with the ‘Official View’?
These interpretations are based more on ideology than on facts. Why?
First, Swiss health care is not a version of Obamacare. The differences are critical to understanding the implications of the Swiss referendum for health care reform here.
Second, Swiss health care, though far superior to ours in terms of access, quality, and equity, has critical problems that threaten the system. Those problems illustrate why, four years after Obama signed the Affordable Care Act into law, health care access, quality, and equity are increasingly threatened here too. The Swiss is a model to reject, not to embrace.
Third, the referendum does not prove that the Swiss don’t want government involvement in health care, nor that they like private insurance companies. Quite the opposite.
Indeed, an analysis of a series of referendums over several years shows that, like the U.S. population, the Swiss are increasingly unhappy with treating health care as a business, rather than a social good.
1) Obamacare is not a version of the Swiss system.
The current National Health Care Law, known as LaMal, requires that everybody living and working in Switzerland carry health insurance—we call this an “individual mandate.” So the Swiss are required to purchase insurance for a uniform, comprehensive package of medical services.
But the national government operates at every level to make everything run smoothly. To more than 50 percent of the population, the government offers full or partial subsidies to purchase insurance. So more than 99 percent of the population is covered.
The government also compels insurers to sell policies to everybody at the same price, irrespective of health status, medical history, gender, age, or location (within each canton, the administrative equivalent of a U.S. state). A 25-year-old and an 80-year-old pay exactly the same premium for the same plan. The only exception: those under 25 pay substantially less.
If your income changes, or job changes, or marital status changes, your doctor need not change.
The government also enforces a “basic” package that is very comprehensive—in the U.S., some call it “Cadillac,” as if only spoilt Americans would dare demand it! Thus basic insurance, Swiss-style, includes outpatient care—essentially whatever a doctor prescribes—hospital care, mental health, all pharmaceuticals on the government’s list, some rehabilitation services, some dental care, some herbal medicine, and acupuncture.
Importantly, the government forbids insurers to make a profit from the sale of the mandatory package, and it compels them to contract with every single health care provider in Switzerland.
The government also imposes a system of risk equalization. It compensates companies that enroll individuals with more expensive medical needs, taking the money from companies that enroll healthier users.
The government also compels mechanisms to deal with prices. Within each canton, prices must be negotiated between associations of providers and insurers, and everybody must abide by them. So providers within a canton are paid equal amounts for equal services, regardless of which plan the patient has.
Finally, the state also enforces limited deductibles (about $300 U.S.) in all plans, and a maximum out-of-pocket cost of about $700.
Users can choose to purchase cheaper policies as a trade-off for higher deductibles (up to 2,500 Swiss francs, or about $2,500 U.S., for adults, and 600 francs, or about $600 U.S., for children). They can also choose policies with restricted provider networks, though few do.
As you can see, this looks nothing like “no government interference.”
Obamacare: A Reality Check
Nor does it look like a version of Obamacare. A few comparative points:
- Obamacare does not cover 100 percent of the population. In fact, more than 30 million people living in the U.S., the majority of them citizens or legal residents, will remain uninsured by 2024, according to the Congressional Budget Office.
- Obamacare does not guarantee a homogeneous, generous basic package of services.
- It does not guarantee equal prices for equal services—hence all these calls for greater transparency of prices so “consumers” can shop more productively! Prices vary according to age—older people pay up to three times as much—geographical location (over 18 different ones only in California!), even gender composition of the workforce insured.
- Providers under Obamacare are paid differently depending on the patient’s plan—which is unheard of, and would be scandalous, in Switzerland.
- Obamacare does not guarantee access to every provider in your state—only to providers in your plan, and only as long as your plan does not change.
- As to maximum out-of-pocket, we’re not even close to the Swiss.
- As to the celebrated choice of plans, it hardly applies to the 160 million Americans with employer-sponsored coverage (now 60 percent of the non-elderly population; it was close to 70 percent back in 2000), who are stuck with whatever “choices” their employers offer (assuming they offer any).
- Last and not least, insurers in the U.S. can and do make a profit for selling you insurance for medically necessary care. Which is the only reason they are in the business of selling insurance!
So the belief that Swiss health care and U.S. health care after the ACA are “more or less the same” is quite misguided.
At the center of the ACA is a well-oiled money-making machinery for the medical-industrial complex: insurance companies, Big Pharma, and for-profit (and many non-profit) medical establishments.
2) Over the last decade corporate interests have hijacked the Swiss system, despite the strong government oversight.
This has led to increasing overall and out-of-pocket costs, making the Swiss system the third most expensive in the world.
To control costs, the Swiss government has promoted managed-care options and encouraged users to comparison-shop. So in addition to the classic comprehensive plans, insurers are offering narrower provider networks and higher deductibles and co-pays, and users are prompted to choose plans annually.
However, the Swiss appear not to like all these “new choices” after all, because in a 2012 referendum more than 70 percent voted against a dramatic expansion of managed care, proposed as a key mechanism to “control costs and improve the system.” And only a very small minority chooses to change plans every year.
Last, a growing number find health care unaffordable and are failing to pay their premiums.
Simply put, all the problems the Swiss are grappling with are rooted in the for-profit nature of the companies that participate in the system. As these companies become more financially successful, and hence more powerful, they get harder to tame—and their influence on the politicians who decide health policies grows stronger and stronger.
Clearly, even in the best-case scenario—the highly regulated environment of Swiss private insurers—entrusting them with the provision of health care is assigning a fox to guard the henhouse. The attempt to achieve justice in health care via competing private insurers is a pipe dream.
3) The defeat of the single-payer referendum does not mean the Swiss people reject a government-run system and support private insurance.
The Swiss have rejected almost all referendums since 1891—only 20 out of 191 have succeeded, even when issues were popular.
Critically, one successful referendum was LaMal, the 1996 health insurance law that banned profit from the sale of medically necessary care. It also allowed the government to pass on money from companies spending less on patient care, to those spending more—certainly not an indicator that the Swiss shun “government interference” on behalf of ordinary people, nor that they trust private insurance to do well by them without supervision.
Also worth noting: in 2007 single payer was rejected by 71 percent, but the figure fell to 62 percent in 2014. Maybe the Swiss are beginning to cut through the anti-single-payer propaganda?
For a detailed comparison of the U.S. and Swiss systems, see my article “Is the Swiss Health Care System a Model for the United States?”
For a thorough, albeit ideological (i.e. supportive of “market forces”) review of the current state of the Swiss system, see the 2011 OECD report.
For a full “reality check” of the Affordable Care Act, see “Why do Americans still need single-payer health care after major health reform?”
To understand the single-payer movement’s recent setback in Vermont, and what comes next, read “Vermont Governor Backs Away from Health Care for All.”
Why, then, was single payer defeated? What can we learn?
In this article from Labor Notes, Claudia Chaufan discusses the recent rejection of a single payer referendum in Switzerland and how it relates to the ACA and the campaign for universal coverage in the United States..
First, we need to grant that the state of Swiss health care may be of concern for the Swiss (they seem to have lower tolerance than we do!), but it is still not as bad as in the U.S. People who experience the greatest barriers to care in Switzerland are the most politically disenfranchised—the young, poor, women, immigrants, much like here—so the problem has yet to affect the so-called middle class enough to pass a referendum.
Second, we can see the extraordinary power of corporate propaganda. The scare tactics deployed by corporate interests in Switzerland were quite extraordinary, both in 2007 and this year. Likewise, their interpretation of the results was designed to discourage supporters of public health care—to make us think we’re more alone than we really are.
The Swiss referendum teaches us that:
- We need to sharpen our understanding of what the ACA is really about, who our enemies are, and what our alternatives could be.
- We must increase our outreach to the disenfranchised, to those who don’t think their voices make a difference.
- And we must work on improving our political education of those we wish to reach—rather than watering it down to sound bites that fit within the boundaries of the “politically feasible.”
Claudia Chaufan, MD, PhD, is an associate professor at the University of California San Francisco and a member of Single Payer Now and of Physicians for a National Health Program.
- See more at: http://labornotes.org/blogs/2014/12/why-did-swiss-voters-reject-single-payer-health-care#sthash.xIHxPSzh.rZrJLPE8.dpuf
In the December 30, 2014 issue of the Corvallis Gazette-Times, MVHCA's Roger Blaine refers to the opinion in the Chicago Tribune Ebola didn't have to kill my uncle, Thomas Eric Duncan. He makes some great points about the need for universal health care.
An article in the Chicago Tribune (Oct. 16) states that Thomas Eric Duncan, the first person on American soil to die from the Ebola virus, was turned away from the hospital on his first ER visit because, as a visitor to this country, he had no health insurance. This failure to treat put Mr. Duncan’s family and the whole of their community at risk of the disease. Indeed, it quite possibly led to Mr. Duncan’s death.
This lack of treatment for those without medical insurance is another example of the costs that a for-profit health care system puts on the well-being of some patients and the health of the community.
The Affordable Care Act does not prevent this situation. Only a universal health care system where everyone is in and no one is out will address it. Here in Oregon such a system goes by Health Care for All, Universal Medicare, and Single Payer Health Care. Universal health care implements the moral concept that health care is a human right, endorsed by the United Nations and World Health Organization and is the medical standard of most of the developed world. Our repeated failure to pass a single-payer health care plan is one of the reasons why we place 37th globally in health care outcomes, a Third-World ranking, all the while paying more than twice as much for healthcare than any other country. Universal health care will reduce the overall cost of medical care and improve its availability. Isn’t it time to make this change?
From our friends at PNHP-
By Don McCanne, MD
The dream of expanding Medicare to cover all of us has failed to materialize in a large part because of the nation’s obsession with marketplace concepts of health care financing. On the supply side, health care providers are responding to financial incentives that maximize their revenue. On the demand side, patient-consumers are responding to financial incentives that minimize their out-of-pocket spending. In both instances, health care access is compromised - in managed care by erecting structural barriers to care (“managing” the care), and in competition by erecting financial barriers to care (buying competitively-priced plans with lower premiums that have higher deductibles and other cost sharing).
Where did this obsession come from? Gilens and Page have shown that the very wealthy and large business interests have control over major legislation. These interests benefit from marketplace approaches to health care through investments in for-profit insurance companies and in health care delivery organizations, including for-profit hospitals. In contrast, their tax burden in publicly-financed health programs is greater when taxes are progressive. Also many other important government programs are financed through progressive taxes, so the moneyed interests benefit by privatizing government functions to the maximum extent possible.
These interests, along with ideologues, have made a meme of the concept that private markets are always more efficient than massive government bureaucracies, when the evidence is almost always to the contrary. Unfortunately, much of the media have accepted this meme as a given. Since everyone “knows,” based on a lifetime of exposure to these memes, that the private sector can always do it better, they are quite willing to support private solutions to problems such as the financing of health care.
Whenever proposals such as expanding Medicare come up, the insurance industry pulls the puppet strings in Congress, and the public is reminded how well UnitedHealth and the other for-profit insurers are doing in creating private products that have lower out-of-pocket costs than Medicare (not mentioning that they are doing that with one-third of the overpayments they receive while keeping the other two thirds for profits and to pay for the excessive administrative services that they are selling us - a bad deal for taxpayers).
So those who support the intrusive managed care organizations and who support shifting more costs directly to patients under the false banner of marketplace competition (see Kenneth Arrow) have been effective in suppressing any serious consideration of improving Medicare and expanding it to cover everyone. As long as the public continues to buy their meme, there is little likelihood of change.
We need to continue to inform the public on the legitimate findings of health policy science (national health programs that include everyone while providing higher quality at a lower cost), but that is a daunting task considering how difficult it is to communicate complex policies to a population blunted by unfounded memes.
By Charles Bankhead, Staff Writer, MedPage Today
A third of cancer survivors reported financial or work-related hardships that persisted well beyond treatment of their disease, a survey of 1,600 survivors showed.
One in four (27%) survey participants reported high debt, bankruptcy, and other financial difficulties, and 37% of the patients said they had to modify work plans, which included extended periods of leave and delayed retirement.
Almost all of the patients reported lifestyle alterations resulting from cancer:
- Reduced spending on leisure activities: 77%
- Spending less on basics: 57%
- Borrowing money: 54%
- Spending savings: 50%
- Sold possessions: 18%
- Family worked more: 15%
Full article here