Old Age, Gender and Physical Activity The 'older the more valuable' Philosophy and Golf The Allurement of Golf The Moral Value of Golf Every Golfer His Own Doctor The Up Swing - Golf Different forms of Swing - Golf The Making of a Putting Green A Few Golf Maxims Watering Greens The Right and the Left Hand "Strength is Health”: George Barker Windship Health Through Sport Learning to Svim Svimming Learning to Svim - Complete Confidence of Pupil Swimming - Dog Fashion The Great American Spa Boom How to Train the Body for Health and Poise Medicine, Science and Sport Running Back to Nature The Changing Face of Rugby League The Bicycle and Tricycle as Aids to Health and Recreation Passive Smoking What is Strength? Health Insurance Decisions What Makes Man a Sprinter? What to Fish for in February? Sport and its Economic and Social Importance Use of Weights for Health Long live the Revolution British Football Does Ageing Drive Health Expenditures Medicare: Policy Issues Indoor Training for Outdoor Sport Starting and Starters Insured versus Not Insured A Case for Bilateral Taxation and Amenity Rights Theories of the Universe Babylonian Astrology The Wrath of Heaven The Displaced Zodiac and the Beginnings of Astronomy The Duty of the Son of Heaven: Orientation Time Was Once Relative Why Mohammed Needed Astronomers Hamburgers - Sunday and Holiday Variations	Medicare: Policy Issues Health expenditures are very large. They exceed spending in either the mining or construction sectors or in agriculture and communications combined. This does not mean that Australia's health care system is without short run and longer term problems. As a result, there has been a continual flow of suggestions for reform, the most recent originating from the previous Minister for Health, Senator Richardson (Commonwealth of Australia, 1993). Significantly, the option of privatising and relying upon a simple and largely unregulated market now appears to be off the political agenda. While proposals have been made for the more sophisticated use of `managed competition' there is now a near consensus in western countries that governments have a responsibility for ensuring, if not providing, a high level of access to health services. In part, the rejection of the simple model arises from the special status given to health care which is revealed in both the political process and in direct surveys of population opinion. In part, the rejection is a recognition of market failure arising from the information asymmetry between patients and health care providers for all but the most trivial services. In the most exhaustive analysis of consumer demand to date, the authors of the US random control trial of health insurance (the `Rand experiment') found no relationship between the services deferred by a patient copayment and the clinical benefits of the services as judged by an independent panel (Lohr, Brook, Camberg et al 1986). As a result of this and other evidence of the consumer's inability to evaluate complex services, many economists have rejected the conventional analysis and measurement of consumer welfare (Rice 1992) and the great majority of health economists accept that the patient's agent, the doctor, has some ability to manipulate demand (Feldman & Morrisey 1990). The negative correlation found between health expenditures and the government share of total expenditures in western countries supports the belief that effective countervailing power to health care providers requires a large and powerful provider which, in practice, has been (but, in principle need not be) the government (OECD 1987). Short-Run Problems The most publicised short run issue is the relationship between public and private hospital use, private health insurance and queuing. In summary, the argument popularised by the health funds, private hospitals and the Australian Medical Association can be paraphrased as follows: Withdrawal of the Commonwealth bed day subsidy for private hospitals in 1986 resulted in an increase in both private hospital fees and the private health insurance premiums required to insure against these costs. As documented by the Prices Surveillance Authority (1993), this and the large increase in private hospital costs have been responsible for a very significant increase in premiums for private health insurance. This, in turn has tipped the historical balance between the public and private hospital sectors. Higher premiums plus the economic recession have led to less private health insurance. But as the best risk members are the first to leave, those retaining insurance have a worse risk profile which, in turn, forces a further increase in premiums and a further reduction in the number privately insured. This has resulted in an accelerating decline in insurance cover. As private hospitals depend upon privately insured patients, their share of the workload has declined, placing further pressure upon public hospitals and this has resulted in rising queues as the public sector cannot cope with the increasing workload. Present trends therefore jeopardise the existence of independent health insurance and with it the private hospital sector. Without the beds and dollars from the private sector, Medicare is not viable. Consequently, urgent measures are required to restore the position of private health insurance. The argument is only partly true. Health insurance has declined, largely for the reasons given (Table 3). Private hospitals do rely upon private health insurance for 80 per cent of their revenue. However, they depend primarily upon supplementary insurance and this has declined much less than basic insurance. Despite this small decline, the private hospital shares of hospital admissions and expenditures have increased, not decreased, in the past 10 years. Between 1982/83 and 1992/93 the percentage of admissions to private hospitals rose from 23 to 29.6 per cent of all admissions and, even allowing for the rise in day surgery, this indicates strong growth. The continuing decline in private insurance implies that this trend cannot be sustained indefinitely, and it is unlikely that the private sector would maintain its present share of the hospital market. Indeed between 1991-92 and 1992-93 private hospital admissions fell, albeit very marginally, from 30.2 to 29.6 per cent of the total. However, the private hospital industry could contract significantly before it was reduced to its 1982-83 share of the market. As the proportion of admissions to private hospitals has risen, not fallen, it is untrue that waiting lists in the public hospitals are attributable to a contraction in the private hospital sector. Waiting lists are very largely attributable to strict budget caps on public hospitals and, to a lesser extent, a shortage in the supply of particular specialists. On the other hand, a reduction in the length of the public queue would be likely to accelerate the decline in private health insurance membership, and hence increase the demand for public hospital care. 3 Short-Run Solutions The fact that the instability of Medicare originated with the withdrawal of a subsidy to private hospitals suggests the restoration of the subsidy as a solution to the decline in health insurance membership. Alternatively, and as advocated by the private health insurance funds and by the federal Liberal party, the subsidy could be directed towards private health insurance by making premiums tax deductible. The option could be supported by both an equity and efficiency argument. Private health insurance effectively competes against a public insurance system which is free at the point of service. Those who select private health insurance still contribute fully to the cost of the national scheme and are, in effect, paying for hospital care twice. A subsidy could therefore be viewed as equitable. As a subsidy would reduce the distortion in the relative marginal cost of private versus (free) public insurance, it could also be argued that it would lead to a partial fulfilment of one of the necessary conditions for economic efficiency. The contentious issue here is whether or not another necessary condition is fulfilled, namely, the existence of competitive and efficient private health and health insurance sectors. As noted later, present regulations ensure that private health funds are not concerned with efficiency in Australia, and there is no evidence to suggest the superiority of private hospitals. The option of reintroducing a subsidy has not, to date, been seriously considered, almost certainly because of its adverse effect upon the federal budget deficit. Indeed, the recent proposal by Senator Richardson sought, firstly, to induce high income earners to purchase private health insurance (or face a tax surcharge) and, secondly, to increase the attractiveness of private health insurance by requiring it to cover fully all hospital and private medical costs. These costs would have to be negotiated with hospitals and private doctors. The general consensus was that this latter proposal would not have the desired effect. Doctors and hospitals could be expected to resist the explicit attempt to reduce their fees and, in the absence of lower fees, private health insurance premiums would have to rise to cover the existing out-of-pocket expenditures. The result would be a reduction, not an increase, in private health insurance coverage. A further reform which was briefly discussed and immediately rejected was the modification in the requirement for `community rating' of the health fund contributions. Under community rating, there can be no difference in the premium between the young and healthy, and the elderly and sick; low risk members are thereby required to cross-subsidise high risk members. For this reason, as premiums have risen, the good risk members have been the first to leave the health funds, thus worsening the funds' risk profile and putting further pressure on premiums. The modification or elimination of community rating would allow the health funds to compete for healthier members but they would risk losing less healthy members as their premiums rose.