Out with the old, in with the young: lifetime community rating.
Lifetime community rating has some potential benefits to private insurers, but they can only be realised if there is much greater control over private care providers than is currently the case. There is reason to fear that insurers' initial gains will disappear through increased provision of marginal care. Some members will gain through reduced premiums, and the main benefits will be derived by people who continue to maintain insurance. Most members will benefit hardly at all, and some (and particularly those who were unwilling or unable to take out insurance when they were young) will be significant losers. The public health care sector will remain under pressure at best, and it is more likely that the pressures will increase. The majority of Australians who do not have insurance will tend to lose. The obvious winners are the private care providers. The overall revenues of private health insurers will be relatively higher than if lifetime community rating were not introduced, and most of that revenue ultimately finds its way into the private care providers' pockets. Assuming they are able to increase the level of marginally useful care, there could be an increase in profitability to the extent that marginally useful care is actually less expensive to deliver. Finally, the government will derive another Pyrrhic victory. It will reduce its own outlays, but cause a decline in overall cost-effectiveness of the health system. We have been here before, most recently in the period leading up to passage of the 30% rebate. There is good reason, therefore, to expect that lifetime community rating will be implemented. At least, the government will be able to claim it is defending Medicare from the more extreme privatisation ideas of Premier Kennett. This kind of argument will probably be sufficient. If so, the government will no doubt be stimulated to move to the next stage of dismantling of Medicare (which will presumably be something like means-testing of public hospital services). Many people believe that this is not an achievable goal in the near future. However, there was a popular view that the GST was not implementable after it lost the Coalition one election and led to Prime Minister Howard stating that he would 'never ever' raise the possibility again. The electorate is a sleeping giant, as is the public health care sector. It would be useful to know what could possibly serve as a wake-up call. Lifetime community rating is a small matter in the general trend towards killing off Medicare. But it is never too soon to send a message.
Hindle
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School of Health Services Management, University of New South Wales.
D000206:Actuarial Analysis; D001315:Australia; D003153:Community Health Services / Q000191:economics; D017047:Cost Sharing; D005249:Fees and Charges; D017048:Health Care Costs / Q000639:trends; D006801:Humans; D007250:Inflation, Economic; D007348:Insurance, Health / Q000191:economics* / Q000706:statistics & numerical data; D017149:Private Sector; D011907:Rate Setting and Review / Q000379:methods*; D020379:Risk Adjustment