Australians encouraged to buy private insurance

August 4, 2000

Free Market Foundation

In the biggest private health insurance push in the country’s history, the government aims to lock Australians into lifetime private health insurance coverage, reports the British Medical Journal. It is the culmination of a “stick and carrot” approach to encourage the affluent to leave the public health system, called Medicare, and return to the private health insurance funds that have declined since the 1950s.

Lifetime coverage replaces the current system of community rating – in which all policyholders are charged the same regardless of age or risk – with a system in which private insurance customers will be charged 2 percent more for each year they are over age 30, up to a maximum of 70 percent for those age 65 and over.

The “carrot” is a 30 percent rebate on health policies, which range in annual price from about £150 ($225) for the most basic hospital cover to £780 for the most inclusive, if people signed up before the July 1 deadline.

The refund has proved controversial, costing the government an estimated £1bn for nearly a third of premiums.

In the 1950s, 70 percent of the population had private health coverage, but that fell to 30,1 percent in December 1998. Since the new policies began to be implemented 18 months ago, the privately insured total has risen to 33,5 percent or 6.4 million Australians.

Source: Christopher Zinn, “Australia moves to boost private health cover,” British Medical Journal, July 1, 2000.

For text http://bmj.com/cgi/content/full/321/7252/10/a

For more on International Health Care http://www.ncpa.org/pi/health/hedex16.html

RSA Note:
Obviously the Australians know something our Department of Health does not. The Australian policy is in line with FMF recommendations allow the more affluent to take care of their own health-care expenses and confine government health expenditure to aiding the poor. Current South African policy appears to be in line with the failed Australian experiment of involving government in health-care for the well-to-do. However, the RSA approach is diabolical: the intention appears to be to make private health-care insurance excessively expensive by imposing actuarially unsound requirements on health-care companies so forcing increasing numbers of people to use state health-care services. Why government should wish to take over health-care from the private sector when its own services are disintegrating is a question that only a collectivist ideologue would be able to answer.

Eustace Davie, Director, FMF