Bill Shorten faces call for radical overhaul of private health

Distinguished former public servant John Menadue said the “parasitic industry” was undermining Medicare and criticised Labor’s role in creating a two-tiered system.

“It’s a disgraceful program and I’d hope the Labor party would progressively reduce the subsidy and use the money for public health programs,” Mr Menadue said.

Dr Duckett said Labor’s promised health insurance review must clarify the $29 billion industry’s relationship to Medicare, which politicians had come to view as a “residual system” for poor people, promoting a view that the wealthy should not be placing a “burden” on the public system.

“That is inconsistent with Medicare’s universality,” he said before his appearance at the National Press Club in Canberra on Friday.

“They say private health gives you something Medicare doesn’t, like the choice of doctor … If it’s necessary, it should have been part of the public system.”

Dr Duckett said the inquiry should be given a broad brief and allow the commission to do more than “tinkering” with the industry, which was “well overdue for reform”.

Private Healthcare Australia chief executive Rachel David rejected the criticism, saying means-tested rebates were “a highly efficient way of funding non-emergency surgery and in-hospital mental health care” and that financial incentives “must be sustained”.

She cited a study the peak body commissioned, which found that a dollar spent by the government on the rebate was “up to 15 per cent more efficient” than one directed into the public system.

The 2017 analysis by social policy research firm Evaluate factored in the willingness of privately insured patients to pay out-of-pocket costs.

Dr Duckett acknowledged that removing the subsidy would likely make health insurance premiums more expensive and said the Productivity Commission should be tasked with modelling the impact.

“If it’s the young people who drop out, private insurance will become more expensive,” he said.

“But there would still be a core of people who want to have it.”

A spokesman for Labor’s Catherine King said “restoring affordability and value” would be a key focus the Productivity Commission inquiry.

“We understand how important the rebate is to the affordability of private health insurance,” the spokesman said.

Dana is health and industrial relations reporter for The Sydney Morning Herald and The Age.

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