Tuesday, February 25, 2014

Spending on health is sustainable precisely for the reason that we want to sustain it

Unsustainable? A generation ago the veteran Labor MP Barry Jones led an inquiry into expectations of life in the 21st century. He said the question was being framed as whether Australia could "afford" an ageing population. "At first sight this seems an ordinary sort of accountant's question," he reported. "Like: can we afford a new car?''

"But decisive differences emerge when we consider the answers. If we can't afford a new car, we don't buy one, and nobody suffers. But what if we decide that we can't afford the coming increase in the aged population?"

Jones said it was a deeply sinister question. Or a silly one.

Peter Dutton is Australia’s health minister. Joe Hockey is Australia’s treasurer.

(Dutton shouldn't be confused with the assistant health minister Fiona Nash who is more famous for pulling down health websites and defunding preventative health organisations).

Within weeks of taking on the health job last year, Dutton declared the system was on track to becoming "unmanageable".

Last week, in an address to the Committee for Economic Development of Australia, he said spending on Medicare was "spiralling", future costs were "staggering", and we were on an "unsustainable path with no prospect of meeting the needs of the health of our nation in the 21st century".

Then Hockey piled in: "If our health, welfare, and education systems stay exactly the same, Australia is going to run out of money to pay for them," he said as the G20 summit got under way.

Hockey is one of the few people who has read the Commission of Audit report. His concerns would reflect its concerns. But when it comes to health they are misplaced.

Health is about the last thing we will run out of money for. It matters more to us than does almost anything else. Jones was right. Spending on health is sustainable precisely for the reason that we want to sustain it.

We are spending more on health because more of us are getting older (the phenomenon Jones was inquiring into) and also because we are buying new and better health services. We would be mad not to. It is not normally thought of as waste to spend more to buy something that is better.

A year ago, Hockey had a relatively new form of surgery known as a gastric sleeve. As much as 80 per cent of his stomach was removed to make it more like a sleeve. It's expected to save lives. A few years ago it wasn't possible. It costs Medicare millions.

Offered a choice between an old dial-up internet connection and a new broadband service most of us would opt for the broadband. It isn't wasted money. Nor is it unsustainable, given rising incomes. Broadband matters to us. Health matters even more.

But the difference is that health is predominantly provided by governments. We tend to see it as a problem when governments buy more, even if we want them to, whereas we don't worry when we do.

There's little doubt that we want to pay more tax for health. The latest increase in the Medicare levy (due in July) was approved with scarcely a murmur. It'll help fund the National Disability Insurance Scheme.

Some 19 per cent of the Australians surveyed in the latest Australian National University election survey rated health as their No.1 priority. Only 11 per cent nominated tax. It used to be the other way around.

As recently as the 1990s, Australians were more concerned about tax than health. But we are richer now, and older. We are able to, and keener to, spend more of our GDP on health.

It's always wise to get value for money, but it would really be stupid to buy less of what we really want.
In The Age and Sydney Morning Herald