Private healthcare system in need of financial life support

The articles in The Weekend Australian by Penny Timms (“What patients need to know in private hospital dispute”) and Eric Johnston (“Healthscope overplays its hand in act of self-destruction”), on the financial mess in the private healthcare system, make some telling points, with the comment that the whole system depends on the survival of the private hospitals especially apt.

However, the emphasis on the central two-way conflict between health insurers and fairly powerless private hospitals is too limited. This game has five main players, all with individual but conflicting financial interests.

Two of the parties, the private proceduralist specialists and the all-important Labor government, keep their heads down while pointing to these central nominated protagonists. All the while the fifth player, us, the patients, has little idea of what the heck is going on or how any of the system works; but when they need it they’re just shocked by how much extra it costs them, having already forked out a great deal of money on insurance (and taxes).

The whole system has been like a house of cards waiting to collapse for some time, but the precipitant to the current crisis is the government. The federal Health Minister, as the system’s financial umpire, decides how much the health fund premium can rise each year but has been limiting this to about 3 per cent, but with inflation in the health industry between 7 and 10 per cent a year, what could possibly go wrong?

There is just not enough money any longer going into the system for the health insurers to maintain their perceived needs, and since they alone hold the premiums they get to decide the flow-on of money. In the event, they have been squeezing the private hospitals, after years of expansion, into a situation of non-viability.

The private medical profession, on the other hand, stands rather aloof at the top of the food chain, though nervous about the fragility of the system that feeds it so well: with fees coming from the government via Medicare, a substantial top-up from the health insurers and usually a large dollop from the patients through out-of-pocket expenses. But this unidir­ectional flow may well have become unsustainable. Perhaps the doctors need to take some of the pain by returning a percentage to help pay for their operating time and consumables, and without passing that on to the patient.

And what about the private patients? Undoubtedly they receive a good and preferential service, but at a substantial and increasingly unsustainable cost; they are at the bottom of this system’s power chain. A core to the system, as Johnston emphasises, are the hospitals, but they are critically short of money. So who pays? It has to be those who have the cash, and so it has to be some combination of the government; government allowing insurers to increase premiums dramatically to meet inflation; the doctors contributing some percentage out of their substantial private earnings; or the patients.

Whatever happens, patients are likely to be financially worse off, but they really need protecting. Again, without them in adequate paying numbers, there is no private system; then the public system in turn would come under existential strain. Perhaps it is just the time for wholesale reform?

Professor emeritus Eugene Walters, Richmond, Vic

Corporate myopia

When Donald Horne wrote in 1964 his oft-quoted “Australia is a lucky country, run mainly by second-rate people who share its luck”, he probably never imagined it would take 60 years to reach fruition. He was referring to our political class but nowadays the blame can be spread further. Tom Dusevic writes, “The nation is in a rut becoming older, flabbier and less nimble. Corporate Australia can see the coming peril” (“Wake up, Australia! Our good luck is running out”, 25/11). The irony is a substantial part of the decline is due not only to woeful political leadership in the past few decades but also the fairly substandard performance of our corporate leadership, which has lacked any vision and spends most of its time worrying about next year’s bottom lines and the impact on bonuses. Few corporate leaders have shown a willingness to invest in the future unless it turns a profit tomorrow. It is fine to recognise the problem, but does corporate Australia have the intellect or desire to find a way out?

Ross Hudson, Mount Martha, Vic

Fake gunshots

On Monday, The Australian published a claim by former soldier Heston Russell that ABC news director Justin Stevens was present in court at the ex-commando’s successful defamation trial when issues were raised about the inclusion of “fake gunshot audio” in an ABC program about an Australian military operation in Afghanistan.

Mr Stevens says he was not present in the courtroom when the matter of fake audio was discussed.

The court ultimately ruled that Mr Russell was defamed by the ABC, and he was awarded $390,000 in damages, plus legal costs.