Medicare: Policy Issues and Options

2017-10-23T07:05:27Z (GMT) by Richardson, Jeff
By international standards Australia's health scheme, Medicare, is relatively efficient. Despite this, it is structurally unstable. The private health insurance and hospital industries operate at full cost and in competition with a public sector that is free' at the point delivery. Despite claims to the contrary this has not, to date, resulted in a decline in the size of the private hospital sector. However, over time, this must occur and a decision must be made about the desired balance between the public and private sectors. Theory and evidence indicate that the full privatisation and deregulation of health care is not a sensible option. Alternative options include the use of an ad hoc subsidy to prevent the decline of the private sector, a movement towards a largely government dominated industry, and the adoption of managed competition' to activate the internal market' in health care. In principle, the last of these options has the greatest potential for the achievement of allocative efficiency.