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Sean's Reminders

Thoughts from Skeet


Dogma - Spinning Doctors

Taking the health industry by way of example, let us consider more closely the dogma proposed by way of mitigation for privately funded enterprises.

Direct billing, or "bulk billing" as it is becoming to be known, is that practice where medical practioners accept as payment in full the State's scheduled rebate for their services, i.e. no additional charges are made despite the scheduled rebate being often only a percentage of the medical practitioners' Schedule fees, and bill the State's public health administration directly. Under this system the patient bears no "out of pocket" expenses and those who defend this practice often consider it one of the cornerstones of egalitarian society.

Where available, direct billing has lately dropped to all time lows of late, a phenomena that co-incides with levels of presentation to general practioners in general. Circumstantial evidence admittedly and being that as it may, that people are becoming less concerned with the health of their families borders on fantastic and i for one am prepared to link declining visits to health practitioners with rising fears for the associated costs ...


Too poor to afford food and clothes for their children if they waste money on their own health, citizens least able to afford to do so are coerced to await a severity of their condition such that they may present themselves to the publicly funded emergency services. The cost of such practices represent to us all greatly raised levels of stress for all concerned, and all that entails, eg productivity, and the public health system's resources are strained to such insufficient levels as to increase the number of people turned away.

Levels of GP presentation bear a direct relationship to levels of bulk-billing. As these levels drop, that is in fear of the financial implications of having their condition treated, those who can least afford it are forced more frequently to await more severe stages of illness in order to attend emergency services. Greater costs overall, greater strain to the public health system and ultimately more people turned away due to insufficient resources to cover everything.


With none of the dis-integrating costs associated with the private health insurance industries (such as premiums collection, advertising and individual billings), public health administration bears relatively reduced overall costs when it comes to procesing the claims of individual patients. The monitoring of health care providers and patients alike in terms of propriety and appropriate levels and patterns of health service are vastly improved under State/public ventured funding.

Uncertainty as to the overlap of responsibilities shared by varying levels and agency of government and providers of health insurance and health services creates an environment where providing the best health care, i.e. the ends, become subservient to such means as exercises in transfer of responsibility of payment to other payers.

Universal access to public hospitals, that is, without such disintegrating effects as means testing and charging, definitively reduce hospital administration costs.

As a proportion of expenditure, the administrative costs of private health funds average to about four times those their state/public ventured counterparts.

The conclusion of international experts in their field is that use of public funds to service public service provisions is substantially more efficient than use of those same funds to subsidise private services.


The Dogmas

That private hospitals relieve public hospitals

The leaking of funds to medical gap payments, 'ancilliary' benefits, administrative and all other disintegrating costs associated with private health industries saps all but a fraction of the monies earmarked for private hospitals and only a fraction of this fraction is employed by private hospitals on the kind of services that offset demand for those of public hospitals, so private health insurance certainly has little effect on public health in this capacity.

Private hospital practices tend to be more costly than their equivalents (including those of efficiency, where such comparisons can be made) in public hospitals. Rather than relieving, private hospitals drain funds that could be spent better in public hospitals.

Also worthy of consideration in this context are that many states have (rarely used) instruments in place to facilitate contracting private hospitals to care for public patients; and significant numbers of people patronise private hospitals without private health insurance.

Admittedly these are not arguments against private health insurance and nor are they intended to be. Rather, they serve to highlight the disingenuity of arguments to the effect that private hospitals prop up public hospitals and private hospitals depend upon private health insurance.

More to the point, any rise in private health care subsidies must need be consistantly applied to training for the best part of a generation before even starting to have an effect on those scarcest and costliest of health care resources, nurses and medical practitioners. When it does, the proportion that is channelled into private health care represents a related proportion of health care professionals qualifying and choosing to enter the private health care industry, representing an effective transfer of health care resources from the public to private health care sectors. This is the kind of relief most public health care systems could afford to forgo.

That private health industries reduce the tax burden

I commend as first consideration the very concept of "tax burden". Enough said. Per hap.

Losses intrinsic to the dis-integrated nature of private health insurance are such that what remains of these monies to be spent on actual health care is small enough as to be comparable to the health insurance subsidies spent propping the system up.

An huge popularity for minor tax increases for the betterment of public ventures, and in particular public health care, has been demonstrated in various surveys accross wide demographics.

The achievements of private health care and related industries' dis-integrated efforts could be effected mostly by completely scrapping private health insurance subsidies and rechanneling them into State/public funded health instruments. The difference could be addressed by a small and politically acceptable rise in a state's health care levy, need it be addressed at all.

That competition is good for the health insurance industry

Where regulations effectively discourage health professionals from advertising their prices, restrict their numbers and limit intakes to specialist colleges, such fragmentation affords these suppliers the ability to play insurers off against one onother and the more the merrier with respect to extending beyond reasonable servicing and charging.

A single strong insurer has the "market power" to restrain health professionals from succumbing to such excesses. To channel public expenditure into centralised health care funding is to achieve exactly what is argued as the benefits of competition.

The market itself obligingly demonstrates these principles. For countries with good health care outcomes, (predominantly high income countries), health care expenditure as a proportion of their GDP is significantly related to another proportion, that of public funding to the same expenditure. The less it is publicly funded, the more a country pays for its health care overall.

Where the disintegrating practices of private health insurance "industry" is so extreme as to prohibit cost control so entirely as to give price of health inflation a life of its own, the "sellers market" effected reduces the state to a weak purchaser capable of buying little for the same proportion of GDP when compared to states investing more strongly through public funding for their health care costs.

That publicly funded health instruments are administratively wastefull

The private health insurance "industry" must bear (translate that however you will) costs not suffered by public funded methods: promotion, duplication of services (e.g. collection and point of sale) and any of the costs one tends to associate with private enterprise not applicable to publicly funded enterprises.

Those monies lost to the disintegrating practices required to prop up privately funded health insurance are monies not spent improving the better health care service provided by public funded health insurance practices. Before the situation is understood it is a great pity, but perpetuated in the knowledge of what is truly going on, it amounts to little more than deliberately throwing money away. (Or is it? Per hap we need more closely scrutinise the Political gains afforded by such channelling of funds.)

The dogmatic expression employed by defenders of private health insurance to describe this erosion of funds is "administrative waste", except they use it to describe the outcomes of publicly funded enterprise, and it is peoples' unthinking acceptance of this expression such dogmatists rely on, for were they to attempt to defend such argument, they would inevitably dig themselves an huge hole indeed.

That private health industries provide ensure insurance equity

The choice to not pay for private health insurance is for many a decision bourne by financial hardship more often than by any health related or political concerns. Where a state decides to penalise those forced into such "choices" they often do so to those who can ill afford such penalties and all things being relative, those who choose not to share their health care with the community are rewarded handsomely. In this scenario, a most attractive difference exists between health insurance premiums and their associated tax rewards, for the wealthy that is. It is a double edged sword indeed, no such rewards for the poor who in effect pay the rich to take out private health insurance. Where any such rewards are expressed as a proportion of health insurance premiums, the transfer of funds to the wealthy from the poor is changed only in magnitude. Granting rebates to those rich enough to be able to afford "ancilliary" services merely adds injury to insult.

Irony's cup runneth over; for those sufficiently wealthy and prudent to avoid gap and excess payments, private health insurance provides a usefull tool for restoring tax losses, where it's usefullness decidedly ends and is not nearly so effective in the theatre of it's allegedly intended function. For actual health care and associated funding, the state public health instruments still serve their purpose well, despite their potential being leeched by private health insurances.


That states need spend more on pharmeceuticals to contribute to pharmeceutical research and development

The top 10 pharmeceutical companies spend 150% of their R&D budgets on marketing their products to health service providers and patrons and the trend is for a greater proportion of their total budgets, with rises in expenditure for marketing:R&D being 4:1. In reality, the peoples of the world are being coerced into paying more for marketing, that is, to contribute to the extra-ordinary profits of the pharmaceutical industry and their associated executives' salaries world wide.

That states need spend more on pharmaceuticals to help create new innovative therapies

Intellectual property rights "protect" a developer's access to profits from the work they have established. Like many rights, these exist more in letter than spirit, that is, motive and ability to exploit loopholes abound. The profitible characteristics of pharmaceutical products can usually be replicated in similair products, differing only enough to be legally separate from the fruits of others' research and hence not represent an infringement of property rights when they provide a ticket to the gravy train. This still takes a bit of R&D but rarely involves much by the way of risk, which may go some way to explain an investment of more than thrice that in actual innovation being poured into finding new variations on existing products.

The real R&D, which is quite risky in as much as it costs a lot of time and money, is being done by the worlds publicly funded intitutes, such as universities, from who the pharmaceutical companies will purchase the ideas and invest resources into clinical trials once the real work has allready been done.

When it comes to health issues involving mainly less developed countries or where relatively few patients effected, i.e. less profitable, then forget it.

If there is any responsiblity for contributions to such research, then surely it is to the public funded research institutes such monies should be directed, for the good of public health. Then, if there's any left over, and for some reason you still want to help pharmaceutical companies make their fortune, (which you just might if you want to retain political power), then funding the pharmaceutical companies' tickets to the gravy train should be considered.

To pay what a pharmaceutical is therapeutically worth is a rather radical stance on the world stage. Australia seemed to have got it right, but considering recent developments with their relationship with those United States, and the increasing contributions pharmeceutical companies are making towards election campaigns, the longevity of this approach is on shaky ground.


That private health industries provide states with greater choice

There is a wealth of data available to draw upon to refute this claim and a comprehensive rebuttal would demand more in time than actual energy expended and yet this is still probably the easiest claim to counter. All you need do is open your eyes to the sovereignty surrendered by states and their citizens caught in the thrall of "free trade" (an expression reminiscient of "holy roman empire") to see that when states relinquish their control to the corporate sector, choice is one of the first casualties.

There's room for an entire thesis here and while many of us can sort through the wheat and the chaff easily enough there's still good work to be done highlighting such injustices and worthwhile alternatives. If you have any such aspirations please make a point of it - we will gladly host your work.


For now, the next time you hear any of these dogmatic arguments rehearsed as shorthand for theoretically established and acceptable facts, take their proponent to task, get them to explain what they mean and see how far they get. A longer term and arguably more rewarding goal would be to help them to understand the truth.

(1) Australia: Defend and Extend Medicare News

(2) Medicare Action

(3) Medicare fact sheet 4

(4) Paper for Health Insurance Summit, Sydney, 12-13 June 2003 Ian McAuley, University of Canberra

(5) Public Health Association of Australia - Talking Points

Further Work
Illustrate the long term investment into nurse and physician training required for any appreciable effect.
Illustrate the disintegrating effects of "free trade" upon world's states' sovereignty

Document History
2004-03-23: First drafted.

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Last updated: 23 Jan 2014, Hit Count: 2166