Co-payment debacle reflections

The Abbott government’s Medicare co-payment proposal prompted the organised medical profession to wage a political campaign that helped drive a first-term Prime Minister to the brink of the sack by his party. It now appears any reform that interferes with the sacred cow of Medicare is the third rail of Australian politics, given the vested interests vehemently opposed to change.

The more positive interpretation is that for any reform proposal to be credible, it must be informed by a viable political strategy.

When the federal opposition railed against the ‘GP Tax’ it said more than intended. Medicare is one of the most obvious ways people get their taxes back. This is the entitlement mentality in action – those forced to put so much of their income into the pot seek every opportunity possible to take out as much as possible.

The rejection of the co-payment should be interpreted as an expression of dissatisfaction with the size of government and indeed as a rejection of another ‘tax’. It wasn’t the exercise of the nation’s collective social conscience that killed the copayment, but the flexing of the hip pocket nerve. The implications for politically feasible health reform are important, and suggest the clear winners out of the process have to be taxpayers.

The arguments for health reform need to serve the public interest in the direction of sustainable funding for necessary public health services and the maintenance of the public finances. These are cerebral arguments that appeal to the senses located above our necks. But in politics, it is the emotions existing between the neck and knees that usually determine outcomes, emotions that often centre somewhere around people’s wallets.

This is part of the political logic behind the plan for a Medicare opt-out Health Savings Account (HSA) system devised by me and CIS Senior Fellow, David Gadiel.

Among other important things, cashing out Medicare entitlements and depositing the annual proceeds in a HSA would be good for the health of people’s wallets. HSAs are a more efficient way to finance health care, and individuals would benefit as the savings accumulated from more cost-effective health care would ultimately be added to superannuation balances and fund higher retirement incomes.

I make no apologies for trying to beat the entitlement mentality — which helps prop up big government welfare programs like Medicare — at its own game. The only way to achieve major structural health reform is to build a coalition of the willing in favour of change with sufficient political punch to overcome the vested interests in the sector that stymie innovation.