Rationing versus increased taxes

To the Editor: A recent commentary from the Editor of the Journal1 raises the health-funding dilemma facing current and future Australian governments. All stakeholders in the health industry need to dispassionately scrutinise the role of current models in perpetuating inefficient or socially discriminatory patterns of care.

Health care economics is indivisible from the tendency of the broader economy to sustain growth or create disparities, and comparative analysis of systemic economic policies informs the divergent evolution of health systems.

The United States, epitomising the free market paradigm, combines a high gross national product with a high poverty rate and significantly unequal income distribution.2 Per capita health care expenditure and its annual rate of increase are comparatively high.3 This is juxtaposed with one of the highest infant mortality rates in the developed world,3 as well as significant racially related variations in health indices.

The Scandinavian societies, particularly Sweden, epitomise the benefits of a social welfare model that maintains low unemployment, relatively low income disparity, and advanced technology, while maintaining a healthy private sector.2 The Swedish health care system, which maintains best practice health indices, is characterised by administrative devolution, combined taxation and insurance-based funding, high equity of access, guaranteed maximum primary-care waiting times, and annually capped out-of-pocket expenses.4 Although it had one of the highest per capita health expenditures in the 1980s, its annual rate of increase is one of the lowest in the OECD.3

Since 1975, Australian economic and social policy has increasingly shifted towards a free-market orientated system, comparable with that of the US and United Kingdom rather than the more mixed economies of most European countries or the social welfare economies of Scandinavia. In this context, Medicare is an anomalous relic, which, because of inadequate funding, has struggled to contain patients’ out-of-pocket expenses and maintain equity.

The most successful health care systems have a relatively small private sector, limited fee-for-service provisions, and smaller income disparities between health care workers. In contrast, Australia’s hybrid model has a significant private/entrepreneurial component based on a fee-for-service structure that is driven by market forces rather than needs analysis. As Medicare increasingly withers due to neglect, out-of-pocket expenses will continue to rise and health equity will diminish, but sections of private medicine, fuelled by demand from the more affluent, will continue to thrive.

As we confront the unpalatable likelihood that the market-driven private sector is a major cause of increasing per capita expenditure, we shall have to justify the viability and equity of the dominant fee-for-service model.