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Medicare Select

Thought Plus
07 Jan 2012

Australian Unity is calling on the Federal Government to revisit a forgotten element of its 2009 health review and examine the feasibility and design of a healthcare governance model dubbed Medicare Select.

The review, conducted by the National Health and Hospitals Reform Commission (NHHRC), made a series of recommendations regarding the health system, but the then Prime Minister, Kevin Rudd, and then Health Minister, Nicola Roxon, made no mention of Medicare Select in their response in early 2010.

This was a mistake. As Australian Unity Group Managing Director Rohan Mead said on announcing the company’s 2011–12 results, the nation’s health system needs a circuit breaker if it is to bear the looming cost burden brought on by Australia’s ageing demographic, and Medicare Select could be a significant part of the longer-term solution. “The demographic changes are structural in nature, and the costs of servicing them – healthcare, dental, aged care, disability – will continue to mount,” said Rohan. “Yet, we are planning to pay for them with cyclical revenues currently inflated by the mining boom. There are clear dangers if these cyclical revenues continue to shift away from their peaks.”

What is Medicare Select?

Under the model, all Australians would belong to a health plan run either by the government or private providers. Membership would be compulsory, so universal access to basic health services, such as hospital, dental and general practitioner services, would be assured for all.

The Commonwealth would be the sole public funder of health services, distributing funds to the plans on a ‘risk adjusted’ basis according to each individual’s needs and state of health. Plans with a larger proportion of elderly people with chronic illnesses would receive more funding from the government than those with younger, healthier customers.

Plans would also be able to offer ‘top up’ insurance packages covering additional services such as more comprehensive allied health services, for which members would pay an additional premium.

How will this help?

The proposed system is designed to end the current split between public and private systems. This should drive more competition, both for providers of health services and those who run the health plans (most likely private providers, such as Australian Unity). And this, in turn, should deliver better quality care, with less pressure on the public purse.

As the NHHRC said in 2009, a Medicare Select-type system in Australia would “focus on people’s health needs over time and across service settings, rather than on the purchase of individual elements of the (health) service”.

Rohan said this opened up opportunities for a new approach to the way health cover is provided in Australia.

“It creates incentives for health funds such as ours to focus on prevention, early intervention for chronic disease and better integration and co-ordination of healthcare services,” he said. “And it would encourage individuals to take more responsibility for their own care.”

As part of our commitment to the wellbeing of all Australians, we support Medicare Select, a system designed to bridge the gap between public and private health services.