Wednesday, March 16, 2005

Medical Loans


Here's a crazy idea. We take out a HECS loan (now FEE-HELP) in order to pay for university education, where we qualify to enrol. This is basically an interest free (although index-linked) loan, repayable only once we earn past an income thresh-hold, and at a rate of no more than 10% of our income. This excellent and entirely equitable system is the bedrock of Australian tertiary education. While University fees have been steeply on the rise, the payment scheme is genuinely good.

Why can't we do the same thing for medical care?

Let's just pause to appreciate that for a moment.

For eligible services, such as non-elective surgery, visits to the G.P., dentistry (I would argue), emergency care, intensive care etc, why not make available a HECS style loan? Currently, we have medicare, which is a bit like medicine insurance. The government covers most of the costs, with the exception of something called the "gap", which is the difference between what the service costs and what the government is willing to pay. We all get medicare for free, but are encouraged, and given a tax rebate for, enrolling in private health insurance.

How about we cease all government subsidy of the private system, provide full coverage under the new loan scheme, and allow people to spend what they want, at whatever doctor they would like, for any approved procedure? Then, those who can afford it start to pay it back, at a rate which is not a severe or sudden burden?

Why not, I ask you?

(p.s. a friend of mine, Euan Lindsay, may have suggested this to me. I'm still allowed to think it's a good idea though, right?)


Anonymous Anonymous said...

Why not, you ask?

Because it would lead to a massive blowout in medical expenses.

This would work in lots of ways; here's one. Suppose I have little or no income. Then there is no cost to me in racking up any amount of loan-based medical fees. I could visit a different specialist surgeon every day of the week, with the taxpayer paying for it. Sure, I assume a debt, but since I'll never be in a position of having to pay it back, who cares?

Medical professionals would send their fees skywards to exploit the willingness-to-pay-whatever-price of people who know they'll never have to repay any, or most, of their loans. The medical system would rapidly go into a fiscal crisis.

One result is that the more you earn, the more you would ration your own medical care, because the greater the repayment burden upon you. This is just the converse of - and hardly better than - the situation in purely or mostly privatised systems in which the poor ration their care because they need the money to eat.

3/18/2005 04:19:00 PM  
Blogger MelbournePhilosopher said...

Well, if you need to go to the specialist surgeon every day of the week, then I think society *should* fund it, at least insofar as it is able. There's probably a dollar-value cut-off, but in principle this should be unrestricted. You would still need a referral to see a specialist, just as you do now.

I agree that medical professionals would most likely raise their fees - however that would just encourage more people to become doctors... But of course you are right - any economic stabilisating through increased competition would take way longer than the economy could stand.

I think that no matter how rich you are, you will pay to meet the necessity of medical bills. The more you earn, the more able you are to meet the repayment burden, even if it is greater than for poor people. That's the whole point of the medicare system - the rich fund the poor because it's good social justice and makes for a better world.

I think the real objection is the one relating to people accepting massive financial burden, never intending to repay it. The key to addressing that would be to bring in the repayments at a relatively low level, so that people would have to make contributions at most levels of income.

Do you think you could modify / improve the idea? Do you think that our current system is the best possible system?


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