EDITORIAL: Insurance impasse can’t go on

PRIVATE health insurance premiums, it seems, are about to surge another 7per cent, assuming the government rubber-stamps the latest increase being sought by Australia’s health funds.
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The prime minister, Tony Abbott, has already signalled that he can see no reason to intervene in a business decision by health funds, even if the proposed hike is triple the inflation rate.

According to the health insurers, the upward spiral in the cost of their product is due to the rising cost of claims in the health industry. One health fund executive, attempting to explain the problem, told reporters this week that a single member recently claimed more than $270,000 for ‘‘end-of-life’’ care.

That was an illustration of the increased costliness of care, as well as of the problem of an ageing population.

It’s an issue that policymakers seem to find intractable. When people are sick they’ll generally pay whatever they have to in order to get well, and that makes it easy for providers of treatment to charge high prices for their services.

Historically, when insurance hasn’t been available, medical bills have been a major cause of bankruptcy and imprisonment. And yet, when insurance is introduced into the picture, it can be argued that it gets even harder to restrain the earning expectations of practitioners and medical entrepreneurs.

Much is said about the rising cost of new technology and that’s valid, to a point. But even when technology makes particular treatments easier and cheaper, practitioners often show unwillingness to reduce their fees accordingly.

It might be suggested that the health insurance industry benefits from expensive care, since people – frightened of economic hardship due to illness – will find insurance attractive.

But the upward spiral of treatment costs and insurance premiums reaches a point at which more and more people are simply priced out of the market.

Australia’s Medicare system of universal taxpayer-funded health insurance provides a powerful backstop, enabling many to treat private insurance as an optional item, useful if income permits, but not essential.

But with Medicare under sustained assault from the private sector and its political allies, the nation is drifting towards the feared American model, where corporate medicine is immensely profitable but where millions of people simply can’t afford to be insured at all.

Cost control will be essential if Australia is to avoid that awful trap. That means more preventative care to help keep people well. It means closer scrutiny of treatments and products to ensure they represent value for money.

Private insurance and corporate medicine have their place, but their endlessly rising prices suggest that they should not be permitted the market dominance they appear to crave.