Rich keep out the poor

Within the next few weeks, the Government will publish its health care green paper. This is expected to propose that operation of the 64 existing government general out-patient clinics is contracted out to the private sector.

Contracting-out is being promoted as a health care reform initiative. But what benefits does it bring - and to whom? The report published last year by the Harvard consultants identified two main problems facing the health care system - variable quality of medical service and unsustainable financing. The former affected mainly the private sector, while the latter concerned the whole community.

Government clinics were not identified in the report as being in need of quality improvement. So the reason for proposing their contracting out in the forthcoming green paper must thus be a purely financial one.

Public health care services operate at a loss and are heavily subsidised by taxpayers. Each visit to a government clinic costs the patient $37 in fees. But the real cost to taxpayers to provide the service is $218. By contrast, the average private doctor manages to pay his clinic rent, staff salaries and other costs, yet still make a living by charging a consultation fee that is, on average, only $170.

It does not require great mathematical intellect (although it did take our bureaucrats a long time) to work out that the Government could 'save' $48 per consultation if it paid private doctors to treat public patients instead of providing the service itself. With more than 5.6 million general outpatient clinic consultations per year, that would result in an annual saving of nearly $300 million.

As a consequence of being able to reduce its expenditure, it is reasonable to expect that the Government would be able to announce a reduction in its fees. Not so. The Secretary for Health and Welfare has said that patients would have to pay significantly more for public outpatient services in future.

Reducing expenses while increasing income will definitely help the Government to balance its budget. But does it contribute towards improving the financial sustainability of the health care system as a whole? Hardly - the Government is solving its own financial problems by passing the buck to patients.