PDF of book review:
AHv38n1_BR1_MakingOfMedicare_PodgerBookReview

More important than the ‘ideas’ were the interests and institutions. The medical profession won the battle in the 1940s for fee-for-service against not only the advocates of a salaried national health system along the lines of the British National Health Service, but also against advocates of private approaches, who saw advantage in the friendly societies’ use of ‘lodge payments’, which were like capitation grants. The subsequent challenge, debated for decades (and still relevant today), was to find an affordable and equitable system consistent with fee-for-service. Whatever the balance of public and private health insurance, fee-for-service exacerbated the problem of ‘moral hazard’ where doctors, professing interest in their patients, are able to add to costs beyond what their patients or customers may be willing to pay because the costs are met by third party insurers.

Other interests that needed to be managed over the decades included the private health insurance industry, the union movement and the States. There were also factions within each interest group, most significantly between specialists and general practitioners (GPs) within the medical profession, and among a range of GP organisations. It remains the case that governments will wisely avoid taking on both the specialists and GPs at the same time, and will ensure any proposal provides at least one group with benefits they value, whether in terms of narrow self-interest or genuine improvements for their patients.