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What the US can learn from Aussie health care

Analysis: The view from Down Under.

The reality is that while overall access in the U.S. is inferior, a great many Americans with private insurance receive timely, quality care. This helps explain why President Barack Obama’s job approval rating is falling: Health care is the perennial “third rail” subject, with fear of the unknown trumping the potential benefits of a shake-up — particularly during a recession.

So does Australia’s experience with Medicare contain any lessons for the U.S. debate?

Much American fire and brimstone has been aimed at the proposed “public option” — essentially a universal Medicare-style scheme to compete with private insurance. Critics say this would destroy the private health insurance market and disrupt millions of Americans who are happy with their plans. The warnings are justified to a point — some employers may well decide to stop subsidizing coverage. Obama’s promise that “if you like your plan, you keep it,” is viewed as likely impossible to police.

Nonetheless, the Australian experience suggests that the extra trimmings of private insurance will always remain attractive to those who can pay. Here, the government actually props up the private system by rebating 30 percent of the cost for those who take it up. Recently, this subsidy was eliminated for higher-income earners to howls of complaint from private insurers.

Yet, says Bob Wells of the University of Sydney’s Menzies Center for Health Policy, “You’ll always have people claiming it’s the end of the world.”

He continued: “They were saying one million people would drop out of (private) health insurance and it was just rubbish.” Another criticism is that nationalized systems ration health care. Yet this is true whenever a capacity constraint exists — and is nothing new in the U.S. where Medicare resources are already badly overstretched.

According to Wells, rationing in Australia occurs informally. “If a hospital has a 90-year-old who needs a hip-replacement and they’ve also got a 40-year-old who needs one that would get them back into the workforce and being productive … the decision is made on the ground, by the providers.”

The Australian government is actually considering a controversial reform to define the “universal service entitlement” available under Medicare. Any procedure above and beyond what was deemed reasonable — such as the 90-year-old wanting a hip replacement — would need to be paid for privately. The effect would be to make rationing explicit.

Yet the bottom line is that the U.S. system rations health care in an even more fundamental way — by denying it altogether to people who are unable to purchase coverage. They may simply lack the money or be disqualified because they are already sick and thus too risky to insure.

As Ian McAuley, of the Center for Policy Development, describes the Australian system: “Yes there are waiting lists, but it’s better to be on a waiting list than to be excluded altogether.”