An interesting 'article' from crikey on premiums:

What do you think we're running here? Medicare?
Jennifer Doggett writes:

Dear Minister Roxon

In response to your request to health funds to explain why our premiums keep going up, please find below for your consideration an explanation and some suggestions of how to address this important issue.

The main problem for private health funds is simply that people don't really want our product. Despite your generous 30% subsidy (and the extra 1% tax on middle and high income earners who don't sign up), less than half the population is on board.

Unfortunately for us, the people who join are often those more likely to need health care. We can't refuse insurance to anyone who is sick or old. We can't even charge high-risk people more -- they pay the same premiums as everyone else, no matter what sort of havoc that creates for our balance sheets. Allowing us to refuse insurance to people who are likely to actually need health care would ensure our premiums remained significantly lower.



The attitude of the young and healthy is also a problem. They make the foolish assumption that just because they don't get sick they don't need health insurance, not realising that their role is not to use their insurance but just to pay their premiums and subsidise everyone else. It was hard enough to get them interested when we could offer them free CDs and gym shoes, it's almost impossible now.

Another problem are fund members who feel that once they have paid their premiums for years they are entitled to get the maximum benefit from it when they get sick. They demand private rooms, their choice of doctor and the best quality hip replacements, rather than making do with a cheaper version. Although we make it as difficult as possible for consumers to work out exactly what their entitlements are, far too many of them manage to read the fine print closely enough to put a sizable dent in our profit margins.

And don't get me started on health professionals. They continually put their fees up, well aware that their patients have health insurance and won't have to pay the full cost of the increase. Optometrists suggest that their customers get a new pair of glasses each year, whether or not they need it, knowing that the government and the health fund will foot the bill. I hope you will act swiftly to put a stop to this blatant exploitation of tax payer funds. After all, don't health providers realise that private health insurance is the only industry that is supposed to benefit from this government largesse?

Finally, there are the advertising costs. With close to 40 health funds competing for less than 50% of the population, we have to keep pumping money into promotions to keep up with the competition. And with a product that has as little to offer as ours, you will appreciate that we need to spend up big to persuade consumers that they should sign up.

In the light of the above issues, I hope you understand that your support for continued premium increases is essential to maintain the unique qualities of private health insurance. After all, if we were a low-cost, efficient, equitable and popular health insurance program we would be called Medicare, wouldn't we?

yours sincerely,
A Health Fund Manager

Jennifer Doggett is a consultant who has worked in a number of different areas of the health system, including the federal health department and the community sector, and as a political advisor on health policy. She is the author of A New Approach to Primary Care for Australia.

the sooner we stop the health fund welfare rort the better. subsidies to private companies is a farce. if it can't provide a service and make a profit then it needs to do what the government has done and open up wholly owned private health clinics to cater for it's own clients. perhaps then it can stop leeching of the public health system.

freediver wrote on Mar 19^th, 2008 at 9:23pm:



agreed. however hyundi doesn't make a play for rolls royce market share. nor vic versa. trying to make private something akin to public hasn't worked.
most high end products in the market place have it's own service and warranty centres. why not health insurance companys have their own clinics?

the same goes for education. why should the taxpayer foot the bill for a parents choice? it's only pandering to aspirations to upper-middle class status.

the metaphor wasn't quite up to scatch. what i was really trying to point out is the core business strategy of rolls and hyundai differ primarily due to the market share they're trying to capture. public health tries to offer(due to economy of scale) something that caters to a sector of the populace that private health insurers really aren't that interested in covering anyway. they've really only been enticed into the market with Huge government subsidies. Those subsidies the government would do better to invest directly into public health infrastructure and staffing levels without healthfund shareholders skimming off profits from.

this follows a tried and true methodolgy most conservative governments implement. take for example aboriginal settlements. while the neocon gov. of jh was in office they ran atsic into the ground with smaller and smaller grants and funding. the gov. cried foul, declared it wasn't working and promptly abandoned it. next they further reduced funding to primary health care, education, housing, welfare, infrastructure and policing. when things (expectantly) fell apart they declared something akin to a state of emergency all the while making themselves out to be heros of the day. when in fact the were the makers of the disaster.

medibank was no different - it worked. it's just that fraser didn't like it, neither did jh as minister for business and consumer affairs. it was gutted and left to die a miserable death. as fas as conservupaliers are concerned if it's public it must be sold. because private enterprise is "better" and will provide "better service". this is of course a complete lie and there is not one example today of a public utility where this has been proven to be true.

public education, health care, transport, banking, infrastructure, police, telecommunications, electricity and military should always remain public. of course these enterprises can be run to make money - but essential services are just that, essential for everyone. it has yet to be proven that it is essential or efficient to make money from public utilities or sevices.

Prove it.

not possible without holding the reins of power.



As far as I can tell we would be worse off. There would be less choice and fewer government funds available per 'public customer'


less choice is good. that is how efficiency is earned, less choice - More of the simple neccessary stuff.

instead of throwing gov. funds at people to give them more choice, you concentrate on delivering lots of what families (or people who'd like to have families) need. like free education, free visits to GP's and hospitals for non-electives, cheap housing.
i've never been a fan of having the gov. throw money at health insurance companies (or any private or  religious enterprise) so the clients with all the wiz bang addons can have subsidised non-elective surgery and medical treatments.

the same goes for public education. economy of scale is what our modern society is built upon. neo-corps and churches like it so much they beg governments to let them take on government services.......

Goivernment enforced uniformity is the hallmark of communism, not capitalism.

Which is exactly what Dooley wants for all Australians

That is an absurd simplification. Goivernment enforced uniformity is the hallmark of communism, not capitalism.

stretching my point easily allows pidgeonholing as communist mantra. i'd never propose that people who want their children educated by religious institutions to be dragged away from such. as a matter of fact i openly embrace pluralism. i just don't think that the government should be beholden to religious institutions through government funding. i do believe in means testing however. i do see that not every private school is a "brisbane boys grammar". On the other hand i don't agree with the elitist attitude "we are g*ds chosen people" guff that ALL private religious institutions embrace and indoctrinate in their flocks - be it catholic,  c of e, muslim or jew. I do not see the government has a role in fomenting that form of intolerance through the private education system. If people want their children to attend these institutions then good on them. But i don't want my tax dollars supporting them.

The only reason private health insurance looks so good is because the past gov's have allowed it to (state and federal) crumble under the weight of an increasingly ageing population.

that is how efficiency is earned, less choice

It depends how you define efficiency. In such a broad argument, economists usually define it in terms of getting people what they want, which you can't do by reducing choices. There is no reasonable standard by which reduction of choice improves efficiency. Also in this case, increasing choice also reduces cost to the government. I think you are missing the main point - by subsidising private health and education, the government could actually save money and deliver a better service to public customers as well.

i think the bandaid solution to fix the crumbling health and education system is typical of what jh was all about - kneejerk, ad-hoc solutions to stem the flow of public debate on the issues. there is no evidence to suggest this system has shortened waiting lists, raised nursing levels, increased the number of beds available for long term care, increased the numbers of country doctors. Sure, people with enough money to spend on PHI May be better off. nor has it improved the rate of literacy, numeracy, or social cohesion through subsidisation of private schooling.

On another tack. If we can't afford a fully funded PHS now, when the economy is in the best position it's been in for decades, when will we be able to afford one? Conservative politicians will say never. They prefer a system that we have now. Where the poor get the left overs and the wealthy have preferential treatment through subsidisation.

http://en.wikipedia.org/wiki/Efficiency_(economics)

Ford was the progenitor of efficiency in business. I believe one of the sales pitches included the line for the t-model ford was "you can have it any colour you like as long as it is black".

Leeching?  Can you explain please?

see http://en.wikipedia.org/wiki/Leech_(computing)
also see http://en.wikipedia.org/wiki/Free_rider_problem

what exactly don't you understand?