Lifetime Health Coverage Issues - Term Paper Example

Running Head: LIFETIME HEALTH COVER Lifetime Health Cover Name Course Date Lifetime Health Cover Introduction This essay will examine Life Time Cover policy (LHC) which was established in July 2000 by Federal government. Life Time Cover is involved with financial loading for people who are over thirty years of age and who lack private health insurance cover. The paper examines the Life Time Cover policy in its social context, historical context, and political context in addition to its effectiveness. Thesis: In social context, the policy is really a burden to the poor more so because of the loading. The Federal government has been criticized of trying to change the entire health system and neglecting the public health sector. In the historical context, the policy was introduced by Federal government while the major effect of LHC has been a major decline in public demand for public hospitals and public health medical services (Dean, 2006). The introduction of Life Time Cover policy has led to remarkable changes in both private and public health sector. Policy identified This policy was Federal government’s plan designed to push people to take hospitals insurance cover early in their life and also it encourages people to maintain these hospital covers. If a person takes out the hospital insurance cover while it is still early, such person pays lower insurance premiums throughout their lives compared to people who take hospital insurance cover when they are older. In order to avoid paying LHC loading, people are required to take out insurance policy by first of July after their thirty first birthdays. For every year someone delays, one is expected to pay 2 percent more for the insurance premiums up to a maximum of 70 percent. People who were born before 1st July are exempted from LHC. Once a person has paid a LHC loading on a private health insurance for 10 constant years, the loading is removed from a person as long as someone is in a position to maintain hospital cover (Dean, 2006). Social context In a social context, the LHC can be more of a burden especially to the poor individuals. Basically, there are those people who will not afford the premiums and so their loading will continuously increase. This is unfair in someway since this system somehow favors the well off since they are in a position to pay the premiums and thus their loading will always be normal and not extra charges for declining to pay the premiums. Thus this system will only put extra charges to the people who already have insufficient funds to pay the premiums (Dean, 2006). Again, those who cannot afford to pay for the LHC are forced to go into public hospitals that have been neglected and have insufficient medical professionals. Furthermore, this policy has chiefly contributed into the shifting of medical professionals from the public hospitals to the private hospitals. This has deteriorated the quality of services in public hospital. Thus only those who cannot afford the private insurance seek public hospital services (Tumek, 1999). Finally, the impartiality and access to health services are conciliated by governments support for private insurance like in the case of LHC. Incase a person who is a member and is above 30 years falls on a difficult period and abandons the membership, such a person will be paying higher premium when they join back than their neighbor who has been fortunate to stay prosperous all through. Thus this system in a way favors the financially stable and disadvantages the financially unstable individuals (Baker, 2002). Political context The threshold at which a sole percentage of Medicare levy surcharge on individual without private health insurance is on increase, from 50,000 dollars to 100,000 dollars. The federal government argues that it is just adjusting owing to the fact that ever since the introduction of surcharge ten years ago it has never been indexed. So the increase in the earnings threshold is basically restoring the original objective of the surcharge, to motivate those with high incomes to enter into private health insurance. Those with high income are people on $100,000 annually, not $50,000 annually as was the case ten years ago; the Federal government argues (Baker, 2002). But in politics and in particular health politics it’s not what it seems to be. The measure of the health policy was developed by the Howard Government from 1998 to deal with the decreasing membership in private health insurance, whereby in LHC, those who were under 30 years and got into private health insurance acquired discounted premiums for life. This is a government’s measure that succeeded so well in attracting people to health insurance. The percentage of people with private health insurance cover increased from 30% to around 43% at present (Dean, 2006). However Federal government has been criticized for supporting an exact industry with tax penalties and incentives. Why would a government especially one with free market principal intervenes in market place in favor of particular industry? There were claims from political commemorators that with introduction of LHC, this government was attempting to transform the Australian health system. The claims were that the universal health coverage offered by the Federal government together with private cover which is additional for the people who are well off was being changed into user pay system, covered by private health insurance, with Medicare conserved as a safety net for the disadvantaged (Blackwell, 2003). There were also more precise criticisms as to how the LHC affected services on the ground. Raised support for the private health insurance industry left some individual worse off; which means in a worse economic state. In contrast, the Howard government argued that individuals who had hitherto and used to experience long waiting times for discretionary surgery in the public system can have a choice of having it performed in a private hospital. This was meant to decrease pressure on public hospital waiting lists. However many people who joined the LHC were people who did not really want to enroll in private health insurance but were attracted into it by the carrots and sticks (Dean, 2006). Most of the people who purchased the low cost policies- the general hospital cover-merely had the intentions of eluding the surcharge. If individuals needed to utilize their policy, they swiftly discovered the disadvantages that came with the policy, namely; high excesses, exclusions and large out pocket expenditures. The people never got the value for the money they used in purchasing the policies neither did they make any distinction to public hospital waiting times (Dean, 2006). Whereas the Federal government offered the private health system with one hand- the 30% rebate cost the government around $2.5 billion annually while conversely it took $3-4 billion annually out of the public hospital system. This means that the public hospitals are suffering. The effect was so apparent since the public hospitals experienced staff shortage as medical experts were moving to private hospitals. The ultimate result was run down buildings, closed wards and operating rooms. While the people who were able to afford optional surgery at private hospitals were better off, those requiring emergency treatment, chronic treatment for chronic diseases or rehabilitation found themselves in a public system without sufficient funds and obligatory ration services. By the time of 2007 federal election, public health was in crisis condition and a key election matter (Watts, 2000). Rudd’s opposition promised a major injection of finances within the public hospital structure and a closer cooperation with the states to enhance the management of public hospitals but did say anything about private health insurance which includes LHC. But shortly, in the budget the income threshold for the 1 % surcharge was increased to $100,000 annually and $150,000 for married couples. Despite the assurances form the Federal Health Minister that this adjustment was simply a long overdue and would result into abolishment of unnecessary tax, this issue has not been adequately addressed (Howe Institute, 1995). Historical context LHC is the private cover that eventually succeeded in increasing private health insurance coverage. This policy permits the private insurance firms to impose surcharge on individuals who are aged thirty years and above and do not have private insurance. The introduction of this policy by the federal government was accompanied by 8.7 million dollars worth publicity campaign urging people to buy the LHC. However, it is argued that the government instilled fear in people and this is what made the policy to succeed. People feared that if they did not have the private insurance they will not be in a position to obtain hospital care (Watts, 2000). The federal government tirelessly advertised the LHC and the cover succeeded into getting more new recruits even than the government had expected. As Rudd, the prime minister noted, added recruits meant extra costs yearly of about $500M. The government is using over $2 on the rebate for each dollar saved on public health expenditures (Ron, 2006). This policy is supported by the Federal Health Department documents which approximate that the 10.8 percent rise in private hospital activity within six months after the introduction of LHC saved the state governments of about 240 million dollars in public hospital expenditures. Nevertheless, over the same time, the expenditure to federal government of offering rebate was about $900 million. LHC was introduced by federal government in July 2000. The government introduced this cover to decrease public hospital demand by the public through raising the uptake of private health insurance and therefore increasing uptake of private health care services. Another reason as to why federal government introduced LHC was to do away with the problem of a predominance of older, elevated service users in the insured pool through raising the proportion of young and mainly healthy partakers to private health insurance. The government introduced the LHC to cut short the decline in private health insurance (Watts, 2000). After the federal government introduced LHC, the number of Australians with private insurance cover increased from 31 percent in September 1999 to 45.8 by September 2000. This offered a bonus to the health insurance industry. It is perpetuated that the Federal government managed to convince people to buy the policy because people did not know what they were at liberty under Medicare and were not purchasing the LHC by choice but because they feared possible ramifications of Lifetime cover. This probably was as a result of Federal government’s Run for Cover advertisement campaign (Varda, 2005). Effects of Lifetime Health Cover policy The overall effect is that LHC led to a decrease in public demand for public hospitals and public health medical services. LHC could have encouraged about 9% of Australians who insure themselves which means they use and pay directly from their individual funds for private care when and if they require it, in order to join the fund. Nonetheless, this can only have an insignificant effect on the demand for public health care services. Most of the Australians with a private health insurance prefer being treated as public patients unless they need an elective method urgently, want to choose their own personal doctor or need a private room (Baker, 2002). The introduction of LHC has led to an increase in the membership of a large proportion of young people with private insurance. The rise in private cover within young people has had negligible impact on demand for Medicare funded services since young people normally uses health care services less often. Still, there has been little impact on the percentage of LHC insurance among older Australians who have higher percentage within public sector (Blackwell, 2003). A research conducted by Rhema from Australian National University compared claims and insurance coverage date before and after the LHC was introduced (Abramovitz, 2008). Private hospital activities rose especially after 12 month waiting time for most services, but there were not essentially a parallel decline in public hospital activity or charges. Another concern is that raised private hospital activity could avert medics from the public sector, further worsening waiting times for some elevated demand procedures (Abramovitz, 2008). Conversely, the rate of complaints to the Private Health Insurance has increased dramatically since the LHC was introduced. The nine months after the policy was introduced in 2000 produced about 2557 complaints as against 1172 the preceding subsequent period a 118.2% increase or more than three time the membership increase (Abramovitz, 2008). Conclusion LHC is Federal government’s project aimed at encouraging people to take out hospital insurance cover while it is still early and maintain the cover. Those who take the hospital cover early pay lower premiums throughout their lives as compared to those who pay the premiums late. This policy has seen increased number of people seeking private hospitals services and reduction of overcrowding in public hospitals. The LHC is not always a choice since people are somehow forced to buy the cover since they fear the loading. The ones who cannot afford paying the LHC are viewed as poor by those who can (Baker, 2002). Moreover, the people who cannot afford to pay the premiums end up waiting in the public hospital’s lines unlike those who afford to pay. Finally, the most significant change that has come with LHC is decreased number of people in public hospitals and increased number of people within private hospitals. References Abramovitz, M. (2008). Welfare Policies. Boston: South End Press. Baker, M. (2002). Health Policies. New Zealand: University of Aukland. Blackwell, J. (2003). Life time Cover. Peterborough: Broadview Press. Dean, H. (2006). Social Policy. Cambridge: Polity Press Howe Institute. (1995). Social Welfare Policies - a qualified case for workfare. Winnipeg, Manitoba: Kromar Printing Ltd. Ron, H. (2006). Work over Welfare: The Inside Story of the 2005 Welfare Reform Law. Brookings Institution Press. Tumek, M. (1999). Poverty, Social Assistance and the employability of social policies - restructuring welfare states. Toronto: University of Toronto Press. Watts, M. (2000) "The developing workfare policy in Australia: a critical assessment" in The Journal of Socio-Economics (29) pi 73- J 88. Varda, K. (2005). Social issues and contradictions in Australian society. Toronto: Garamond Press. Read More