Email from me to Anne-marie regarding PHI and Commission of Audit ideas…
Thanks Anne-marie… last week was so busy, but at least it was a good busy, filled as it was with so many excellent events and conversations, quite often featuring you! Glad to hear that the club delivered on expectations… maybe Steve will be up for some insurrection? Or maybe not.
[the following early morning rant is off-the-record on account of my current employment and it still being a bit rough, but am happy to explore it further with you as required J]
On the modelling question, that’s more on the economic modelling side – something we’re tooling up for with Federico Girosi and Jane Hall, but haven’t quite started on. Ian McAuley and John Menadue have been presenting solid thinking about PHI for a while and would be worthwhile speaking with, particularly if you were looking to confirm your suspicions? Off the top of my head, I can’t think of anyone who could actually back-in the COA’s assumptions, as I’ve never heard anyone credible (with the potential exception of Paul Gross – though unsure how credible he is) put forward that point of view, mainly because it is ideologically driven, rather than evidence based. Indeed, the closer I get to the PHI data, the PHI businesses and the people who run them, the more certain I am that PHI can only ever be inflationary – especially when positioned as a duplication of a public insurance scheme (as per that graph from the SMH that Jim Gillespie spoke to at the event last week), as it allows clinicians to select whichever system suits their interests best, making them the customer rather than the patient.
My back-of-envelope rationale:
PHIs market themselves as honest brokers in the health system, but in reality, benefit directly from health inflation, acting as hemi-bureaucracies which take a 13% clip of disbursements that pass through them. In Australia, this dynamic is emphasised by their mutual structure, as the lack of profit motive leads to a lack of interest in containing anyone’s costs, especially when the Minister mandates premium increases based on demonstration of increased costs!!?? The smaller PHIs have no market power, so aim to please hospitals and doctors, thus making providers the customers, rather than their patients. This all has the effect of distancing patients from value the market generates, despite the fact they are the ones who fund it. I can’t think of a more diabolical arrangement than the one we’ve got. I’m disappointed that conservatives are willing to trade this downside for the illusory benefits of choice (which don’t actually exist because the basis on which we might choose are health service have nothing to do with the quality of that service). In reality, the choice argument is just a smoke screen for queue jumping, something conservatives aren’t to keen on when it came to asylum seeker policy.
As a footnote, it’s interesting to see the behaviour of the non-mutual PHIs – Medibank and NIB. They tend to be far more innovative and disruptive towards conventional health service models, mainly in an attempt to position themselves as the customers served by doctors and hospitals, while still being funded by their members. Unfortunately, their business model still ultimately relies on cost containment AND premium growth, and so also ends up also being inflationary – the main reason the US is the situation it’s in.
Wrapping the diatribe up, ideally a health market should be singularly focused on improving the health of the population that funds it. I’d estimate the current ranking of value captured by various actors looks something like this:
- insurers
- hospitals
- bureaucrats
- politicians
- doctors
- patients
- nurses
- allied health professionals
Under the previous administration, it probably looked more like this:
- bureaucrats
- politicians
- insurers
- doctors
- hospitals
- nurses
- patients
- allied health professionals
Ultimately, all forms of private health insurance make the providers the customers while the population carries the can. Interventions which position the population as customers should be the preference. Medicare was a big, necessary but not sufficient step in that direction.
I reckon some of this can inform some interesting health market design that could support a far more advanced and efficient health system. We’ve previously discussed that we’ve got 6 years to bring this to maturity, though if things keep tracking like they have been, it could be sooner.
Let me know your thoughts?
Cheers, Paul
From: Anne-Marie Boxall [mailto:ABoxall@ahha.asn.au]
Sent: Monday, 5 May 2014 6:08 PM
To: Paul Nicolarakis (paul.nicolarakis@outlook.com)
Subject: Modelling
No, not the fashion kind (although I am sure you would be great).
A curiosity question – are you and your people able to model something along the lines of the means-tested Medicare scheme proposed by the Commission of Audit? Not sure what data you have, or what is needed to model such a proposal, but it strikes me that the idea rests heavily on the assumption that a market for health insurance would drive down health costs (hospital and primary care and therefore premiums prices). Not quite sure what evidence underpins this assumption (other than economic theory) as Fraser era experiment suggests that it would not work. Just wondering….
Hope you made it to your many subsequent events last week. Dinner at the gentleman’s club was interesting. I think they might also have an age criteria for membership there. 70 plus only.
Regards,
Am
Dr Anne-marie Boxall
Director, The Deeble Institute for Health Policy Research
Managing Editor, Australian Health Review
Australian Healthcare & Hospitals Association
the voice of public healthcare
T: 02 6162 0780 | F: 02 6162 0779
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Comments (7)
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Peter Houston :
26 Jul 2011 5:51:02pm
Good segment on ‘wilful blindness’ – it reminded me of Barbara Tuchman’s ‘cognitive dissonance’. How about a follow-up on the psychological profile/dimensions of wilful blindness and related phenomena? What makes it tick?
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Mulga Mumblebrain :
27 Jul 2011 4:21:06pm
‘Willful blindness’ seems to me to be a mealy-mouthed euphemism for rank untruthfulness, a sort of ‘innocent on the grounds of insanity’ defence.
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marsha :
26 Jul 2011 8:42:39pm
And you must remember that Allan Bond had Alzheimers. I wish he’d share his cure with rest of us.
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Mulga Mumblebrain :
27 Jul 2011 4:19:29pm
A relative who worked on the News Corpse switchboard in Surry Hills years ago well remembered Rupert’s habit of periodically ringing from New York to have that day’s edition of ‘The Fundament’ (known then as The Australian) read to him, from front to back. A real ‘hands-off’ proprietor! What we witnessed in the UK Parliament was, in my opinion, a tour de farce of deception, and an Oscar performance from Rupe as a demented old codger who didn’t know what was going on. Already parts of James’ testimony have been utterly refuted by former senior News Corpse functionaries. Rupe was more cagey, and possibly has set James up, along with Rebeckah and Hinton, as ‘patsies’.
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Simon Barlow :
27 Jul 2011 4:43:30pm
I thought the piece on ‘wilful blindness’ was a segue leading from the European right-wing terror story. Like Philip expressed, we all find the rising tide of xenaphobia, and anti-Muslim sentiment in Europe (and to some extend in Australia) worrying, but aren’t we kidding ourselves? The clash of cultures, so vastly different are bound to result in this reaction, and we are ‘wilfully blind’ and courting disaster if we ignore it.
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David from Leichhardt :
28 Jul 2011 7:25:03am
Regarding the story on “wilful blindness” I was interested in the notion that many of us refuse to listen to views that we do not agree with. You and your guest chastised us for “having our heads in the sand” about the panoply of of views surrounding an issue. I think that what is missing here is the role of “discernment”.
I enjoy listening to LNL and consider myself much better informed for it. I will not listen to John Laws or Alan Jones. Should I be criticized for not giving them a fair go at informing me of their points of view? I think not.
For that matter I must tell you that when Mr Abbott is being interviewed on the news I turn down the volume because I cannot bear listening to him. Does this make me “wilfully blind” to his point of view and policies? Can you be “wilfully blind” when there is, in truth, nothing there to see?
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Lyall St Kilda :
28 Jul 2011 7:48:19pm
Mr Adams listen back to your show where you interview the biographer Manning Clark. Perhaps the scales will fall from your eyes.