The Medicare safety-net. Or, why can’t Government understand the concept of consequences?

Answer: Because they are not government, they are politicians, and that makes all the difference.

Follow this one, if your breakfast and coffee have settled.

Kevin Rudd will today reverse Labor’s long-held opposition to the Medicare safety net to protect the 1.5 million people a year for whom it saves money.

Labor earlier attacked the safety net as a sham. It was introduced before the last election to protect struggling families against high medical bills, but it has disproportionately favoured the well-off.

The nation’s richest 10 electorates, eight of which are Liberal, ended up with a quarter of the $250 million safety net proceeds last year, because the wealthy are more likely to see pricey specialists who tend to cluster in affluent suburbs.

Labor sources acknowledged the scheme was inequitable, but said that reflected a lack of access to Medicare-funded care in outer urban, rural and remote areas.

Labor will promote its $220 million “super clinics” as a solution to this imbalance. The clinics, including GPs, specialists and other health professionals such as physiotherapists, will be targeted at areas of need.

The safety net provides an 80 per cent discount on out-of-pocket medical expenses above about $500 for pensioners and families on medium incomes. For single people and families on high incomes, the threshold cuts in at $1000.

This runs counter to my usual Eco 1 example of price ceilings: rent control here in New York (here = 5 hours or so, from now, since I’m still in the office). The Romance of Rent Control is that is allows poor people (or suitably necessary public employees) to live in an idiotic city with idiotic prices. But.

Rent control does not apply to the people, it applies to the apartments. Meaning it is a failure, because: (a) apartments discriminate – there’s no rule dictating that a rent-controlled apartment be let to the poorest applicant (and common sense dictates exactly the opposit), and there never should be; (b) poor people aren’t connected, or networked – the odds of them finding their way into rent-controlled apartments, which people never leave, is far lower.

The Romance of Rent Control is also its failure. Welfarist housing policy should apply to people, not buildings, to work.

Thence the medicare safety net. It is being applied to people, on a deductible/ad valorem basis, with some (read: inadequate, entirely) means-testing, when it is in fact the geography that needs attention. Costs cluster around high-cost areas (a standard aggregation problem), but this policy ignores that.

The open question is, will AUD220m super-clinics fix the problem? How? By building medical facilities that rival the high-cost areas, in terms of out-of-pocket expenses?

The only way the government can leave this policy in place, but be able to claim that government expenditure is evenly-distributed, is by seeing to it that everybody faces equally high out-of-pocket expenditures.

Don’t get me wrong: I still say vote Labor. I’d like somebody to sit someone down and explain how silly this approach is, though. Our health care system does not need to invite more costly infrastructure to justify existing expenditure. We’re like gamblers chasing losses. By all means, build health care infrastructure to deliver health care as health care is needed – but respond to the need to govern, not the need to establish political gain.

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1 comment so far

  1. Darwin Corby on

    You are so right!

    This plan does not address enough. Sure it helps some people, but a large minority are still stuck with major bills if they reach the doughnut hole


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