The latest public opinion polls (here, here) suggest that the Abbott Government is in fiendish trouble. From Labour’s perspective, this is a budget that just keeps giving as more and more people work through the implications for them of the myriad smaller changes within the budget.
Perhaps the Government’s biggest problem is that this budget is simply seen as unfair. I am not sure what happened in Canberra’s pressure cooker, but in the end the Government seems to have gone a bridge too far.
From a purely practical viewpoint, one of my difficulties in assessing the budget is that I have very little idea just what measures might finally get through the Senate, what will need to be changed or dropped. Some measures do not require legislation, others do. Australia is in for a period of considerable instability while all this is worked through.
11 comments:
" Australia is in for a period of considerable instability while all this is worked through." Exactly my sentiment when I saw newspaper coverage this morning in the Sydney Morning Herald and The Australian Financial Review. Indeed, I thought of the street protests and policy drift of Greece of a year or so ago.
I've got a feeling that the biggest single problem is proposal for the co-payment charge for bulk billing. I know that this seems to upset everyone I know, including those who are very supportive of the coalition government. People seem less aware of the "adjustments" for the family tax benefit, pension etc.
Maybe the Medicare co-payment is a bridge to far?
trying to mount Greek style argument, but without the dire circumstances of that case.
With the co-payment, Rod, it depends a little on how it works. The response at the moment is really a combination of things. I suspect that it the combination of the newstart and education changes may have been more important.This is one case where survey data would be helpful.
Why is it OK to charge the General population indexed coinsurance capped at $36.90 for a PBS script (before safety thresholds) but moral turpitude to charge a $7.00 co-payment for a GP consultation? There are too, travel costs in obtaining public primary care—including car parking costs at inner Sydney public hospitals of $20 for three hours, even for patients undergoing debilitating treatment. State governments never fail minor opportunities to make patients share indirectly in the cost of their treatment, even though they are unable to charge for public treatment itself. Bridge too far? I think not.
DG
Hi DG. The practical issue on the co-payment is not the $7, but what impact it has on billing practices. If doctors drop out of medicare and leave it to patients to claim back,then the question is not the seven dollars but whether or not you have the cash to pay the total bill in the first place. Am I wrong here?
If a level of such dependency exists in a high income county such as Australia it is a poor commentary on our public policy. All the econometric data show that cost sharing at the point of consumption contributes to the efficient allocation of health labour and capital without impairing health outcome. Because of the moral hazard of Medicare, Australians are in any case generally over-treated and life problems are over-medicalised. This constitutes a deadweight economic loss. We have one of the highest hospital drawing rates amongst OECD countries without anything to show for it.
DG
Without evidence as to source, I don't trust your stats there, DG. They don't gell with my own understanding of the numbers.
Oh dear. Why don't you have a look at the extensive literature, for example, from the Rand Health Insurance Experiment? Have a look at what's been happening in Singapore - to name just a couple of sources. Price elasticity of the demand for medical services is very low (about -0.01) so that distortions associated with minor price changes are practically zero. There is an an extensive Australian literature on this (including contributions from even the most ardent advocates of Medicare) which is readily accessible.
DG
Thanks for the helpful contribution, DG. The evidence is all very inconsistent.
According to Wikipedia,the rand study concluded cost sharing reduced "inappropriate or unnecessary" medical care (overutilization), but also reduced "appropriate or needed" medical care.
The price elasticities of demand studies suggest that raising prices only minimally affects demand. This is not necessarily inconsistent with the Rand study because price elasticities are averages.A price increase may reduce at the margin both over use and required use among the small group affected.
The income elasticity of demand stuff is interesting too. As income rises, use of medical services rises faster than income. If incomes reduce, this implies use of medical services will decline more than income.
On the surface, this conflicts with the price elasticity data. However, if the price elasticity studies have been done in periods of rising income, then you would expect a low price elasticity.
I'm not sure what I draw from all this. I have been trying to complete a post in the delayed budget series on health. Here my focus is on market and industry economics that affect the end results of multiple interacting changes. I'm finding it all very complicated!
As a further brief comment DG, if the budget increases prices and while reducing disposable incomes of certain groups, wouldn't you expect a drop in the use of health services given the combination of price and income elasticities?
I agree, because you will be reducing the burden of moral hazard which yields an efficiency gain without compromise to health. Wiki's interpretation of the RHIE is misleading. Longitudinal data on income elasticities, incidentally, do not agree with cross sectional data (inter-country comparisions).
DG
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