Australians should take control of their own health dollars rather than pay higher tax to fund health care argues CIS researcher Dr Jeremy Sammut.
“Voters rejected the ‘GP Tax’ because they already contribute enough to the cost of Medicare. Hiking the GST will be just as unpopular and won’t control health spending and bend the health cost curve down in an ageing Australia,” Dr Sammut says.
“Instead, people should be free to choose a better alternative to Medicare. Individuals should be allowed to opt out of Medicare and establish a tax-effective Health Savings Account (HSA) that attracted the same 15% concessional tax rate as superannuation contributions.
“Those who opted out could cash out their Medicare entitlements in return for an annual health voucher for deposit in an HSA, the value of which would be equivalent to total average annual per person government health spending – currently around $4700.”
“HSA funds would be used to purchase health services and pay for private insurance premiums. International evidence shows that HSAs are a more cost-effective way to finance health care.”
“Our plan would give people the incentive to be cost-conscious consumers of health care in order to save up and pay for health costs that inevitably increase as people age. HSAs would also merge with Superannuation accounts on retirement.”
“HSAs are important because they are way to address the unsustainable cost of health in an ageing Australia by establishing significant non-government sources of health funding. However, the benefits will flow not simply to government budgets, but to individuals who will benefit financially – in the form of higher HSA balances and ultimately higher retirement incomes.”
“Hence, in political terms, an opt out policy could be sold as both a tax cut and a increase in lifetime income, and as employing the same principle of choice in health that already applies in education.”
“When voters understand the financial opportunities latent in HSAs, this will create a viable political consistency in favour of genuine innovation rather than feeding the Medicare beast with more taxpayer’s money.”
Dr Jeremy Sammut is a Research Fellow at the Centre for Independent Studies
Media inquiries: kpincott@cis.org.au