INTERNATIONAL: Ian Morrison vacationing at the taxpayer’s expense

My old boss Ian Morrison has been in Australia studying the health care system. I’m sure this was a work visit for him with neither a bar nor a golf course in sight. He did though come back with a pretty interesting view of their changing system, called  Aussie, Aussie, Aussie which is basically a British style NHS with a robust private insurance sector layered on top of it.

The only thing I’m not so sure of is why the government—any government for that matter—would want to give people a tax break to buy private health insurance. (They do it in the UK too, BTW). Unless of course the politicians concerned planned to amakudari into private health plans later. Anyone looking at the US experience knows that exempting health insurance spending (and mortgage spending) from taxation means that we spend too much money on health care (and houses).  The only place I’ve ever seen that tax break successfully taken away was in the UK, where the tax break for mortgage payments was phased out in the late 1980s. Of course it didn’t stop house prices from going up there too, but there’s no need to encourage it.

Still in general, like the French, the Aussies have got to a mix that most Americans outside of the Cato Institute could probably live with. Pity we can’t have it here.

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  1. Hi Mathew
    I am surprised that so few of your readers have commented on Ian’s description of our system down here.
    Firstly, the practice of amakudari, is rare. The head of the AHIA, whilst a former politician, had no responsibility for taxation policy in his former role. He was a state government minister with responsibilities for running government owned hospitals, not for deciding who contributes what to our health pool (commonwealth responsibility).
    In terms of the taxation benefits, I think you misunderstand our system. Yes the tax payer contributes 30% (35% & 40% based on age) of the cost of private health insurance in Australia. This is a rebate on the fee charged, not a reduction in taxable income. This ensures that people who don’t earn enough to pay tax (mostly older and pensioners) are able to have PHI if that is their preference. Also, if a persons earns more than A$50,000 (A$100,000 for families) and don’t have PHI, then they are liable for a 1% tax surcharge. This does result in the perverse notion that the more you earn the more the tax payer forgoes if you have PHI.
    As to why the Commonwealth (federal) Government supports PHI like this is, the public system is only capable of a certain amount of work and access to it is in effect rationed, but as you are aware, affluent societies like to spend their resources on health care and so PHI gives people the choice to do so and in effect avoid rationing for elective services. Also, medical specialists get access to private incomes.
    Apart from the obvious that we don’t bankrupt sick people and that in all but a tiny minority of cases, people get the best care possible, our problems are
    1. Medical variation, much the same as the USA, driven by fee for service specialist medicine (OECD figs show our FFS specialists are at least as well of as their US colleagues)
    2. Lack of ubiquitous health IT
    3. Poor cost benefit analysis of devices and procedures (mostly dreamt up by corporate USA)
    4. Adverse events – Quality and safety
    5 Provider mentality of cost plus funding
    6. Funder mentality of “..it is too hard to do anything but cost plus funding”
    Overall, our process is far better than the mess at play in the USA but there are many things we could do to improve.

  2. Yea, I could live with the Aussie plan, at least how it is now. Hard to say how it will transition as time goes on. Political corruption will sure kill it if that takes hold. At least they are making changes and adjusting policy, more than we are willing to do here.
    As for Amakudari American Style, do you think that’s a big part of the reason we can’t get any reform here worth looking at.
    “In July of 2002, the Japanese Prime Minister Junichiro Koizumi ordered that the practice of amakudari be completely stopped in Japan, because it is widely regarded as a source of corruption between business and politics.” Do you think!
    And Americans call this democracy.

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