Update 23 February 2009: the Age today reports that:

Treasury, in one of its first briefings to the Rudd Government after its 2007 election win, urged Mr Swan to seriously consider scrapping the rebate. The briefing said the billions of dollars lost annually to the rebate would be better spent on public hospitals.

It’s nice to know dear leader Rudd is now as adept at ignoring professional advice and wasting taxpayers’ money suppporting inefficient private greed as his predecessor.

Update 18 February 2009: while the spineless losers in the Rudd government keep changing their minds about how much they love the private health insurance industry, medical experts are detailing exactly how inefficient it is. For example:

the money churned through the private health system adds 10 per cent — or about $1 billion a year — to administrative costs compared to the cost of a single-monopoly insurer because of the much higher cost of processing claims, advertising and maintaining a street presence to attract customers.

The fundamental argument is that:

The strong private model of health insurance in the US is the main reason health insurance consumes 17 per cent of that country’s GDP. Yet it has worse outcomes in terms of longevity, morbidity and infant mortality than the majority of countries that have a strong public health presence and spend about 9 per cent of GDP on health.

Australia cannot afford an additional 6 per cent of GDP, or $60 billion a year, to boost the incomes of health providers and insurers by continuing down the American path.

I agree. Private health insurance is a con, a crime and an insidious form of exploitation. It must be stopped.

Original post: I was in a taxi last night and on the radio I heard an ad encouraging me not to waste my money paying extra tax to the government in the form of the Medicare Levy Surcharge. Instead, I was urged, I should visit a website to learn how to stop wasting this money.

The website, which I will not name, is published by various private health insurance businesses, and allows consumers to compare policies from different providers. This in itself is a reasonable service; similar ones exist to compate savings accounts, credit cards, and mobile phone plans.

What really made me mad, however, was the marketing spin. According to the ad, money paid to the government through the Medicare Levy Surcharge is wasted – it is simply a tax on individuals whose taxable incomes is over $50,000. Instead, these people can buy private health insurance which, combined with the government’s 30% rebate of the cost of private cover, can make having private cover more or less ‘free’ or even generate a saving for some individuals.

We all pay 1.5% of our incomes as Medicare Levy. Those of us who earn more than $50,000 pay an additional 1% Medicare Levy Surcharge unless we follow government recommendations and buy private cover.

With private health insurance, the government bribes its citizens to buy a product they don’t need and rarely get value from. It has set up a structure whereby public money that should be spend on primary health care is instead channelled to private enterprise, where only some of it is spent on primary health care.

The rest is spent on company cars for health fund executives, obscenely misleading and expensive advertising campaigns, and lots of lawyers and bureaucrats whose job is to make it as difficult as possible for people to claim rebates owing to them in relation to their policies.

The whole system is like an illegal pyramid marketing scheme, yet somehow it is legal and supported by the government, which indirectly funds the private health insurance industry through its rebate system, which artificially creates a market that should not exist and would not exist without the subsidy.

What is even more bizarre is that the private health insurance industry is now marketing itself as the saviour of the individual who is supposedly being taxed by an indifferent government. The spin places the industry in opposition to the government, but in reality they are two leaches sucking the blood from each other.

If all the money wasted on private cover was spent on Medicare, we would all enjoy a much better public health system. I support the Green’s policy. I hate the idea that I pay the surcharge to a government that seems determined to undermine and destroy the public health system, and which uses the income from the surcharge to subsidise the private health insurance industry.

However, I refuse to voluntarily contribute to the system by paying for private cover, although the economics work against me. By paying the levy rather than buying private cover, I am losing about $200 per year. Many other tax payers feel the same way. We will not be conned into wasting our money buying something of no value.

the cancer of private health insurance

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