Professor Stoelwinder presents to the AMA National Conference

Professor Just Stoelwinder presented to the Australian Medical Association (AMA) National Conference in Sydney on Saturday 25^th May in their policy session “A market economy for health”. Professor Stoelwinder addressed the issue of the challenges to the long-term sustainability of a tax funded universal health scheme such as Medicare. He noted that in such a tax funded system health care expenditure is determined by a political process driven by vested interest stakeholders, with the general public largely unengaged, leaving politicians little option but to capitulate. Building on the National Health and Hospitals Reform Commission’s recommendation that the Government explore a Medicare Select alternative, Professor Stoelwinder outlined a reformed model, based on the Netherlands reforms of 2006, that would:

1. Link spending on health care in a formulaic way to the growth of the economy by hypothecating the Levy for Medicare at a level of approximately 7% to represent half the required Commonwealth funding. Growth in health care spending would then be linked to growth in the economy.


2. Require consumers to pay a significant premium to competing health plans who would be responsible for providing a standardised package of benefits, as represented by current Medicare entitlements. Provide a means tested tax benefit to maintain equity while still requiring all adults to shop for a Medicare health plan.


3. Require competing health plans to offer Medicare package with open enrolment (i.e. must accept all applicants) and community rating (i.e. charge the same premium to all applicants irrespective of their health risks).


4. Further enhance risk equalization arrangements to prevent risk selection by competing plans, so as to encourage plans to actively manage high risk members.


5. Enable plans to enhance the Medicare basic package with additional private health insurance. This would aggregate all health funding for an individual in the one account, preventing cost shifting and the ‘blame game’ and facilitating active management of chronic disease and appropriate location of care between community and hospital providers.


6. Enable health plans to offer Medicare benefits through both public and private providers.


7. Enhance the regulatory framework and consumer information to support active competition amongst health plans and providers.

Professor Stoelwinder’s proposal was recently showcased in the CEDA publication “Healthcare: Reform or ration” April 2013 which can be accessed at http://www.ceda.com.au/media/302619/healthcarefinal1.pdf