Australian Healthcare Should be a Model for the United States

Featured, Healthcare

During the national discussion of healthcare reform we should be looking at the Australian “Medicare” system. It shares a name with the system for the elderly in the United States, but it is much closer to a true free market and is rated as one of the best systems in the world overall, and number one for systems in which the healthcare industry is not nationalized.

See this analysis by William Claiborne, an American Journalist living in Australia:

MELBOURNE–During the long, rancorous public debate over American health care reform I heard and read quite a bit of incendiary rhetoric in the media about “socialized medicine” in countries like Australia, where I have lived for the last decade as an American immigrant (and now dual national). But I don’t recall reading very much about how public-option universal health care systems like Australia’s actually work, from the perspective of someone who is able, from personal experience, to compare the health care systems in both countries.

What I remember from the debate in the U.S. Senate late last year and early this year was quite a bit of reporting of allegations of “death panels,” the imminent “Europeanization” of the United States, the exaggerated fears of a “government takeover” of medicine and of perceived threats to freedom of choice in selecting doctors. Okay, I appreciate the fact that conflict and controversy are the engines of journalism when covering emotive stories like health care reform. But I believe that the debate would have been better served if more reporters had come down to Australia and asked us, “How, exactly, does your health care system work?”

The discussion in America hasn’t been settled; some are urging repeal of what was enacted; some want a much stronger plan. So a look at health care in Australia is still appropriate. Here are a few questions I’d ask:

Q. Is Australia’s universal health care system socialized medicine?

No, not by any reasonable definition. The 35-year-old universal health care system is a hybrid of public and private plans. Every permanent resident or citizen in Australia — that’s everyone, regardless of age — is covered by the government’s Medicare program and is entitled to highly-subsidized, or even free, treatment by doctors in their offices, and fully-covered treatment and care in public hospitals. I go to a primary care physician who charges the maximum-allowable $60 (all currency figures in this report are in U.S. dollars at the current exchange rate) per visit, half of which is automatically refunded into my bank account by Medicare after I pay the fee with my debit card. Many doctors, like the one my wife sees,”bulk bill” their patients’ fees to Medicare and no money changes hands at the office. We each chose our own doctor for our own personal reasons. The only “government takeover” is in the refunding of half of my doctor’s fee, thereby making health care more affordable.

When I recently underwent cataract surgery in both eyes, I chose one of Melbourne’s top retina and cataract surgeons (on my GP’s recommendation). Because I supplement Medicare with an eminently affordable private insurance policy, I had virtually no waiting period, and a week later when I had the surgery my only expense was a $250 co-pay (tax deductible) for everything — surgeon, anesthetist, hospital costs, prescription drugs, follow-up visits, the works. Moreover, over the years my primary care doctor has from time to time sent me to specialists for various examinations and in-hospital procedures, such as a colonoscopy and an angiogram, and the costs have always been minimal or nonexistent. He didn’t have to consult any government body before referring me. He just sent me to the specialists. That doesn’t sound like “socialized medicine” or “government intrusion” to me.

The system isn’t perfect; what health care system is? Yes, occasionally there are published reports of people waiting long periods for admittance to public hospitals, or put on gurneys for hours in an emergency ward of an overcrowded public hospital. That happens anywhere, even in the United States. But overall I think any objective person would have to say that Australia’s health care system is pretty damned good. I speak from experience on that question.

Q. How does private health insurance blend with public Medicare?

As I’ve said, everyone is covered by Medicare. But if someone whose income exceeds $62,000 cannot or will not join a supplemental private health plan, he/she pays a 1 per cent surcharge over the 1-1/2 per cent Medicare levy that everyone (except low-income earners) pays in income taxes. This is a carrot-and-stick approach, and consequently nearly half of Australians opt in for private health insurance, which not only reimburses coverage gaps in physician and hospital fees, but entitles the purchaser to avoid long waiting periods at public hospitals and obtain private rooms in private hospitals. For obvious reasons touching on class distinctions there‚Äôs a bit of ongoing controversy over this two-tier system, but its supporters say it alleviates the pressure on free public hospitals and helps keep health coverage affordable for all.

To encourage people to take up private coverage, the government subsidizes 30 per cent of their insurance premiums, increasing to up to 40 per cent in rebates for people over 65. My wife and I each pay an annual premium of $750, after the rebate, for private insurance. We think that’s quite affordable.

Q. Is there a safety net for blow-out medical costs?

Yes. Medicare covers all of any fee gaps once a family reaches an annual threshold of total gap costs. For my wife and me the threshold is $1,000. For low-income earners it is $500. If we pay more than $1,000 in a year in out-of-pocket medical expenses, we have no co-pays for the rest of the year.

Q. Does Medicare provide prescription coverage?

Yes. The Pharmaceutical Benefits Scheme not only subsidizes prescribed drugs but controls the retail prices through negotiations between a Pharmaceutical Pricing Authority and the pharmaceutical companies. Regardless of the cost of a drug, my co-pay per monthly prescription is $30. If my family’s total co-pay gap reaches a threshold of $1,140 (which it hasn’t yet) my co-pay virtually disappears. For low-income (under $62,000 a year) earners there is no gap threshold and the co-pay never exceeds $4.80.

Q. How does the government pay for all of this?

The Medicare program currently costs about $17.8 billion a year, and is rising about 4 per cent annually in real terms. That doesn’t sound like much in American terms, but for a country with a population of only 22 million it is fairly hefty. It is about 35 per cent of the total federal health budget ($50.5 billion), which includes the cost of running all public hospitals as well as Medicare. The health budget, in turn, is about 16 per cent of the total federal spending for the current fiscal year ($313.2 billion).

The government pays for universal, publicly-funded health care because historically Australian governments — conservative and liberal alike — have cared for the health and well being of its people. The only spending item in the federal budget larger than health costs is social security and welfare, at $102.3 billion. Defense spending is at $18.7 billion. That says something about Australian values, I think.

When my Australian friends hear or read that our Medicare system is dismissed by a fair number of American politicians and their constituents as “socialism” they laugh.

And, after nearly a decade of enjoying the benefits of a benevolent — and efficient — health care policy, I laugh right along with them. All the way to the bank.

Leave a Reply