Sector Report

Australian healthcare: The Government’s role

by Jan Van der Schalk & Dave Stanton / Jun 29, 2016

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Australia’s healthcare system is highly regulated and its focus has been on maintaining the principle of universal medical care. Although Canberra’s control has somewhat loosened with the sale of Medibank Private in 2014, it still plays a starring role in this sector. Together with private insurers and hospitals, they form a three-way triangle in a closed system.

CLSA invites industry consultant, Shaun Gath to turn the spotlight on the government and the story of Australia’s healthcare system. With his wealth of knowledge and expertise, he comments on the strengths and challenges within the private-health-insurance industry. Shaun discusses the topical concepts of affordability, changes to underwriting risk, premium-setting, consolidation prospects and, importantly, the direction of legislative and/or market-based solutions required to contain the escalating cost of medical care. In Sections 2 and 3, our healthcare and insurance teams put the case for the hospital providers and health insurers.

The value of this report is in the debate and stylised dancing between these two interdependent parties. The highly regulated nature of the country’s healthcare system was evident in the Australian Competition and Consumer Commission’s (ACCC) recent action against Medibank, which may spread to other insurers as the issue of affordability becomes a political football caught up in the brouhaha that is the Australian Federal election. Nonetheless, we don’t expect an onerous push from the watchdog, as it is in the regulator’s interest to promote a viable private-health insurance system that continues to support the provision of universal healthcare.