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When the NHS was introduced, the prevailing view was that healthcare expenditure would stabilise once unmet need had been satisfied. But, from 1900 to 1950, the life expectancy of men in Britain had risen from 49 to 67 years, because of improved living standards and, latterly, cures for infections.¹ Prescient indeed would have been the academic in 1950 who could have foreseen that lengthened life would result in a host of new healthcare needs, that technologies would be developed to meet those needs, and that Bevan's stability of expenditure on health would prove to be illusory.

Speculating on the future of healthcare delivery is no less hazardous now than it was in 1948. Nevertheless, the major forces shaping the future generally are manifest in present trends. If we were developing scenarios about commodity prices we might well accept that, in a globalised world economy, the policies of national governments have, at most, a marginal effect. In the case of healthcare, however, this is no easy task.

The experience of the past 25 years suggests we might expect at least four changes of government over the next 25 years. That would indicate an on/off sequence for Medicare, much as we have seen in the past 25 years, and this has not been totally related to which side of politics is in power. During Labor's time in office, the governments of Bob Hawke and Paul Keating reintroduced universal hospital care, but also brought in a much higher level of patient copayments in healthcare, particularly for pharmaceuticals. The present Liberal-National Coalition Government has reasserted a commitment to Medicare, and has tended to shy away from market forces in the private sector, encouraging community-rated insurance rather than self-reliance.² Yet, at the same time, the present government suggests strongly that those who can afford to have private insurance should do so. A similar sentiment was evident in the proposals of the Labor Health Minister, Graham Richardson, in 1993.

The vision of Medibank, and of Medicare, as defined by Neal Blewett when Minister for Health in the Hawke Government, was as a universal shared system. During the 1990s, however, there was political pressure within both parties to redefine Medicare, in particular as regards access to public hospitals, as a charity system for the old and indigent. Because the basic principles of Medicare are not regularly articulated, Medicare becomes pliable to the fashions of government policy and subject to expedient interventions to solve real or perceived problems.

Forty years ago, Charles Lindblom coined the term "muddling through" to describe a policy-making process which has no clear end or objective, but which lurches, reacting to one crisis after another.³ The Productivity Commission's modest proposal -- that the Commonwealth Government hold a broad public inquiry into Australia's healthcare system -- which might have led to a less muddled health policy, met with rejection.⁴

As an alternative to muddling, we can take account of probable changes in demand (especially ageing) and supply (especially technology) of healthcare and build a policy for the future.

A further factor that may diminish demand for care among older people may be changes in lifestyle -- smoking, diet, and exercise are all major determinants of healthcare needs. Dr Wendy Everett, Director of the Robert Wood Johnson Foundation's health programs, suggests (as have many others) that behaviour contributes to 50% of our health status.⁷ These effects take decades to manifest. Thus, it is the "baby boomers", who grew up in the Golden Age of postwar prosperity and equality, whose lifestyle choices will become apparent when they are around the age of 70 to 80 in the year 2025.

Another determinant is consumer attitudes to healthcare. Daniel Callahan, in his book False hopes, predicts the implosion of healthcare under the weight of grasping demand for perfect health unless all of us (in the case of the United States, especially older people) modulate our demands.⁸ He fears that the commercial imperatives that drive new pharmaceutical, biotechnological and bioengineering industries will further push demand for tinkering and spare parts to completely unsustainable levels. As an alternative, he posits education of the public that they cannot have it all, and this must begin now if a shred of equity in how healthcare is provided is to be retained.

Thus, while the arithmetic of ageing is not complex, much depends on background economic capacity and the sociology of demand of the country concerned. Unless demand is disciplined, it is easy to see market forces overwhelming healthcare budgets. In that case, a scramble for care will occur, with only the rich doing well, further widening the already depressing gradients in health and healthcare between the rich and the poor.^9,10 Presuming instead a more civilised society with a central health insurance agency such as Medicare, the omens are by no means bleak, as our Scandinavian colleagues demonstrate.

However, the role of new technology is a mixed one, and, while there may be a Galbraithian "technological imperative", to suppose that it cannot be modified with time according to human design seems a defeatist position. Many technologies have revolutionised patient comfort, especially the replacement of old diagnostic procedures with new, far less invasive ones. The same can be said for many therapies that have enabled the massive movement away from prolonged inpatient care to ambulatory service. A step in the direction of the sane use of new technology is the development, in 1998, of processes of critical appraisal for services that might be supplied by Medicare. We have not yet seen what clinical care based on insights into the human genome may achieve, but not to consider this as a significant aspect of demand for future healthcare would be foolish.

The other aspect of technology likely to have a profound effect is the Internet. It is shifting the locus of information in healthcare.¹² Will it result in more shopping around, more time spent in argument, or will it result in more self-help displacing the need for formal care? Will it result in more mishaps through partial knowledge? How will it relate to Medicare?

Community-rated private health insurance (a "privatised" tax) is a clumsy way to do what the taxation system does well. There is nothing that community-rated private health insurance does that Medicare and the taxation system cannot do better. The administrative expenses of private health insurance are $0.6 billion per annum, or 12.4% of premiums, compared with 3.7% for the Health Insurance Commission.^13,14 The taxation system achieves community rating without the need for complex arrangements (such as apply with private health insurance), with "lifetime cover" and reinsurance, and because taxation is progressive it is fairer than private insurance.

What would be the financial consequences of doing away with private insurance? Health insurance funds pay out $3.1 billion a year in hospital benefits.¹³ Of that, 30% is subsidised by the Commonwealth Government. Therefore, $2.2 billion of additional public funding could substitute for this funding. That could be met with a 0.75% increase in the Medicare levy. Its immediate effect would be to eliminate a large private bureaucracy. Its longer term effect would be to bring to the healthcare market the discipline of a single national insurer. Box 3 shows that countries with a larger proportion of healthcare funding passing through the public sector, through universal national health schemes like Medicare and Britain's NHS, tend to have much lower total healthcare costs.

Would eliminating private insurance represent "socialised medicine"? No. It is quite possible to fund a private hospital system without private insurance. Medicare funds can just as easily go to private hospitals as to public hospitals.

Would it be possible politically to raise taxes to pay for a universal Medicare? The evidence seems strongly to suggest it would. In both the 1993 and 1996 elections, healthcare was a major issue among voters. In 1993, the Coalition had promised private health insurance initiatives, while Labor did not, being more committed to Medicare. Polling researchers asked people which party was closest to their own views on various issues, including health policy. In response to that question, Labor had a 19% lead over the Coalition. In 1996 both parties promised support for private health insurance and the same polling found Labor's lead on healthcare had fallen to 5%.¹⁵ This year, in a multination poll, a small majority of Australians said they were in favour of higher taxes and higher public spending, with healthcare, at 75%, the second-highest priority (after education, at 78%).¹⁶

The last line of defence for private insurance is that, because it is "private", it is somehow superior to a "public" system -- a belief, known as "private sector primacy", which is grounded more in ideology than in economic rationality. The case does not rest on any economic analysis of whether a function is more efficiently carried out in the private or public sector; rather, it is a matter of faith that, if at all possible, it is always preferable for a function to be in the private sector. This argument has merit where private provision is accompanied by the discipline of price signals. But insurance, private or public, acts to suppress price signals, except for those of the premiums. At the point of use, there is no difference between the perception "Medicare will pay" and "private health insurance will pay". Insurers know this phenomenon by the quaint term "moral hazard". It applies whenever there is third-party funding.

We offer three issues for this debate.

• First, let us clarify the government's role in healthcare; is it charity or is it something we share? On that point we tend to the latter view. Even if we are generally inegalitarian, accepting the slings and arrows of life as a matter of private fortune, we may have a different attitude to healthcare. We may know our inheritances of material wealth and of physical and intellectual talent, but we do not know what lies around the corner when it comes to health. In the terminology of the Harvard philosopher John Rawls, when it comes to our healthcare needs we are in an "original position", and are more likely to choose to share our lot with others to the extent that we can.¹⁷

• The second issue relates to the boundary between third-party funding and the market. The debate should not be between private and public insurance, but between insurance and the market.

• The final issue, after the first two have been settled, is how to rationalise the complex set of programs in healthcare. To those in the healthcare professions or who study healthcare from an academic perspective, it is complex. To the consumer it is bewilderingly unintelligible. Some programs have copayments, some do not. Simple procedures like ambulatory care usually require visits to several establishments, with different payment systems. Why, for example, is pharmacy separated from general practice? Why does a public hospital stay attract no copayment, while much less expensive procedures attract large patient contributions? Why is medical care separated from nursing care in private hospitals and nursing homes? Why does one have to wait days for test results which are generated instantly with new technology?

Program divisions reflect ancient demarcations between crafts, and the complexities of Federal-State relations. Advances in medical technology have not been matched in structures and organisations providing healthcare. If Shaw had lived to 150, he would have found them surprisingly familiar. Will they be the same on his 175th birthday?

1. Organisation for Economic Co-operation and Development. Financing and delivering health care. Paris: OECD; 1987.
2. McAuley I. Private health Insurance. Redefining the issues. Australian Rationalist 1988; 1 Spring: 47.
3. Lindblom C. The science of muddling through. Public Admin Rev 1959; 19: 79-88.
4. Industry Commission. Private health insurance. Canberra: Industry Commission, 1997.
5. Australian Bureau of Statistics. Population projections. Canberra: ABS, April 2000. (Catalogue No. 3220.0.)
6. Organisation for Economic Co-operation and Development. OECD health data 99 [on CD-ROM]. Paris: OECD, 1999.
7. Stapleton S. New technology, smarter patients augur vast change. American Medical News 2000; March 13: 33.
8. Callahan D. False hopes. New York: Simon and Schuster, 1997.
9. Marmot M. Social determinants of health: from observation to policy. Med J Aust 2000; 172: 379-382.
10. Mathers C, Vos T, Stevenson C. The burden of disease and injury in Australia. Australian Institute of Health and Welfare. Canberra: AIHW, 1999.
11. Newhouse JP. Keynote address: The costs of medical care and consumer willingness to pay for new medical technologies: how much should we be spending on health care? National Health Summit, Nov 15, Sydney 1991.
12. Clarke RL. Hard times and great expectations. Healthcare Financial Management 2000; March: 16.
13. Private Health Insurance Administration Council (PHIAC). Operations of the registered health benefits organisations. Canberra: PHIAC, 1999: 87.
14. Health Insurance Commission (HIC). Annual report 1998-99. Canberra: HIC, 1999: 79.
15. Bean C, McAllister I. Short-term influences on voting behaviour in the 1996 election. In: Bean C, Simms M, Bennett S, Warhurst J, editors. The politics of retribution -- The 1996 Federal Election. Sydney: Allen and Unwin, 1997: 198.
16. Peering into 2010 -- a survey of the future of medicine. The Economist 1994; March 19: 63.
17. Rawls JA. Theory of justice. Cambridge: Harvard University Press, 1971.

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