Squabbling In The Private Health Sector Is Government Policy – 22 May 1997

The Australian Doctors’ Fund has reacted to claims by the Federal Health Minister, Dr Michael Wooldridge that squabbling in the private health sector is driving people out of private health insurance.

The Australian Doctors’ Fund states that conflict between parties in the private health sector is Government policy.

Spokesman for the Australian Doctors’ Fund, Mr Stephen Milgate, said “the facts are that the Federal Government has deliberately continued a system developed by Dr Carmen Lawrence designed to cause conflict between doctors, hospitals and funds”.

Under the Federal Health Insurance (Lawrence Legislation) introduced in May 1995 all three parties (doctors, hospitals and insurers) are meant to be in conflict with each other.

The outcome of this cumbersome conflict model is thousands of annual renewable multi- contractual arrangements hammered out between parties with patients ultimately picking up the tab for all the extra legal and administrative expenses.

The model is based on the economic rationalist concept of “Managed Competition” proposed by US Economic Professor Alain Enthoven.

“It’s the ‘survival of the fittest’ health financing model so loved by our health bureaucrats and their political masters”, Mr Milgate said.

The system does not allow for centralised negotiations and transparent fee schedule arrangements. In fact, these aspects are prohibited.

This Managed Competition Model is one of the first things to be junked by Britain’s new Prime Minister, Mr Tony Blair, “The (British) Government also proposes to end the ‘internal’ market in the NHS which pits hospital against hospital and doctor against doctor to attract more patients and funds.” – International Express, 21 May 1997.

“It (the British Government) plans to cut red tape (in health), and spend the first £100 million saved treating an extra 100,000 patients”- International Express, 21 May 1997.

“Dr Wooldridge has been constantly advised to repeal this conflict model (the Lawrence Health Legislation) which has no hope of success. Instead Dr Wooldridge has seen fit to continue to follow the advice of the Australian Health Insurance Association (AHIA)” Mr Milgate said.

The AHIA advice is to give health funds the power to restrict a patient’s choice of hospital and doctor using a Preferred Provider Model. Not all health funds support this approach.

The ultimate stated aim of this approach is for patients to receive a benefit only if they use hospitals and doctors chosen by health funds.

The Australian Bureau of Statistics report ‘Private Hospitals Australia’, 1994-95 (quoted in Healthcover December 1996) notes that 42.7% of admissions in free-standing facilities and 15.6% in private acute and psychiatric hospitals were self insured (paid their own way).

“Some health funds are starting to introduce policies with high excess and lower premiums. They are moving away from the bells and whistles approach and starting to deliver more affordable products with lower premiums. This direction is to be encouraged”, Mr Milgate said.

“Dr Wooldridge is stuck in a command and control mode. He continues the interventionist approach to health policy first advocated by former Labor Federal Health Minister, Dr Neal Blewett”.

“He has embraced Dr Lawrence’s conflict legislation model when he should have repealed it”.

“Dr Wooldridge accuses some sections of the private health sector of being galahs”.

“It’s time for the Minister to come down off his perch and rid the private health sector of the Lawrence conflict model he has so eagerly embraced”.

“Only then will some real progress by made in ensuring the ongoing viability of health care financing that meets the needs of all Australians, present and future”, Mr Milgate said.