Health Care Reform and single payer: Australian perspective

Investment manager and former Australian Treasury official John Hempton offers very useful insights into the operation of the Australian hybrid public-private health care scheme.

(…) Much of what I write is a 12 year old perspective (and the data I have in my head is that age) because 12 years ago I worked at the Australian Treasury and followed the numbers more closely. Moreover I am normally a bank analyst – and am stepping (way) out of my area of expertise. There are bound to be some errors and the lack of (recent) quantification I would not normally tolerate. With that caveat – here goes.

Australia has a hybrid private-socialised medical system.

For reference I think the Australian system is superior to anything in Canada or the USA. I am less familiar with the European models. The Australian system is better thought through and will work better than anything Obama is proposing. However Australia had weaker incumbents than America, some advantages over America (which I will get to) and has had 20 years tweaking the system in lots of ways to make it work better. These systems require a lot of tweaking and if Obama implements something worthwhile the next twenty years will be spent reforming it.

(…) Australia has a system whereby primary medical care (general practice doctors), much specialist health care (for example a cardiologist) and almost all important pharmaceuticals are covered by the government but with a copayment by patient. Most the copayments are large enough to be annoying (the service is not free) but do not cover anything like the costs. The copayments differ sometimes due to your income status. For instance most people have a copayment for pharmaceuticals of about $20 – but for (low income) pensioners the copayment is $5.

There are also government run public hospitals – run by State Governments – but where the funding almost entirely ultimately comes from the Federal Government through transfer payments to the States. These hospitals have a public emergency room which rations via triage. [Turn up with a sprained ankle and you might wait twelve hours, turn up with chest pains and the waters part for you.]

After admission to the public hospital [either through a consulting specialist or through the emergency room] you will get a shared ward and no doctor of your own choice – but a very high standard of care by global standards. Non-urgent procedures are queue rationed – and the queue is long and annoying and was once the main issue at State Elections. But the treatments eventually happen. Queue rationed conditions can involve some pain and hence there is real annoyance at the queues. [Gall stone removal for instance is queue rationed. They are painful until removed.]

You can be admitted to a private hospital in the same way as the public hospital. The admission is either from a consulting specialist or through the emergency room at the public hospital. At a private hospital you have your choice of doctor, often a private room, sometimes slightly better food and distinctly less pressure to leave until you are recuperated. Most importantly, private hospitals are not highly queue rationed. When my wife needed knee surgery after a skiing accident the wait was two weeks at a public hospital or alternatively the next day the doctor was in surgery at the private hospital. That was an easy choice.

To go to a private hospital you will either need to pay for it or have private health insurance. Most people do it with private health insurance with a moderately large copayment. [It costs me $800 to go to a private hospital – as a one-off payment – and there might be additional copayments for particular doctor treatment in the hospital. Nonetheless I would get out of something dire like open-heart surgery for a couple of thousand dollars. And I would get a nice room to recuperate in… The cost to me of open heart surgery and a knee reconstruction in a private hospital to me are about the same – the various excesses on private insurance.]

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One thought on “Health Care Reform and single payer: Australian perspective

  1. It’s really refreshing to see this analysis. In discussions this year I have commented that most of the debate (at least in the US media outlets I look at) I’ve seen regarding health-care reform in the US pits the US system as it currently stands against fully socialized systems like the UK and Canada, with little or no mention of hybrid systems like Australia and Germany. It’s good to see an analysis of the pros and cons of the Aussie system and lessons it may have for the US. I wonder if policy makers in the US are looking at pieces like this? Might be worth sending it to our congressional delegations.

    Having lived in Australia for 13 years now, I have some perspective on both systems. The Aussie system works – not perfectly – but it works. Like John Hempton I know this from personal experience. After an injury requiring minor surgery I could have gone to the private hospital as I have private coverage, but the best surgeon was in the public hospital so I stayed there and was treated well. The system here has problems but no one I know would want to see it gone.

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