This post is about the Australian healthcare situation. I am posting this because this is also what is befalling the US healthcare system and hence the urgency to contain costs. Obama does realize that we do not have to wait for the public outcry against rising healthcare costs to reach critical mass. We can do it now and today. But unfortunately, there are vested interests for the insurance industry in both parties who are serving as a barrier to the passage of healthcare reforms.
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We need tough treatment for high healthcare costs
From: The Australian February 01, 2010 12:00AM
TREASURER Wayne Swan will have some good news today when he releases the third intergenerational report: many more of us can expect to live longer and healthier lives. But - and the but is very big - it will come at a cost that the elderly do not expect to pay for their healthcare. It will be a brave politician who tries to make them, given their increasing electoral strength. Today around 13 per cent of the population is over 65, by the middle of the century it will be 25 per cent. And the expectations of older Australians will increase with their numbers, as medicine makes it possible to live not just longer but more active lives. In The Australian last week, Adam Creswell reported the story of a woman in her 80s who has had artificial joints fitted in both knees, plus a hip and a shoulder over the past nine years, all at public expense. So have a great many other Australians. Such operations have increased by 120 per cent, to 70,000, in a little over a decade. Just about all Australians will consider this an excellent outcome. But paying the costs of an ageing population will be increasingly difficult, especially when considered in the context of the shortfall in superannuation savings by middle Australia, pointed to by the Investment and Financial Planning Association yesterday, which showed middle Australia is not saving enough for retirement.
For a start there will be fewer workers to pay the cost of healthcare and welfare. There are 5.5 workers for every individual over 65 now, a figure that will halve over the next 40 years. With health spending projected to outstrip state tax revenues in 20 years, something must be done. The obvious answer is the government's pronouncement that productivity improvements in the economy as a whole can generate more wealth to support the health system. And while ministers will not easily admit it, taxes will most likely increase, at least for high- and middle-income earners. Kevin Rudd gave us an indication of what the future will look like yesterday when he denounced the opposition for blocking legislation to end the private health insurance subsidy for individuals earning over $75,000. The Prime Minister has a point, but cutting the subsidy at such a relatively low income while requiring people to maintain private health insurance is an effective tax hike for middle-income earners. Nor will it contain overall health costs, putting pressure on public hospital services as people reduce insurance cover to the bare minimum.
The challenge for Canberra is to restrain the rate of spending growth on health by negotiating ever harder with drug companies for medicines available under the $10 billion-per-annum Pharmaceutical Benefits Scheme and to take an equally close look at the subsidies paid to pharmacies. And waste in the hospital system must be tackled. Mr Rudd used to promise he would force the states to fix their hospitals, where spending is growing three times as fast as tax revenue, and made a case for Canberra taking them over if they failed. If he is serious about containing spending increases he will act on the undertaking - it is one of the few fast and practical treatments available to him. All the treatments for ballooning health costs are hard. But the longer we wait the worse the side effects will be. |
