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Shake up of the Australia health care system

Partner Institute: 
Centre for Health, Economics Research and Evaluation (CHERE), University of Technology, Sydney
Survey no: 
(14) 2009
Gisselle Gallego
Health Policy Issues: 
System Organisation/ Integration, Funding / Pooling, Access
Reform formerly reported in: 
Reforming the Australian Health System
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? yes no no no no no no


On the 30th of June 2009 the National Health and Hospitals Reform Commission (NHHRC) released its final report. In total the report contained 123 recommendations grouped into four themes. One of the most radical and perhaps controversial suggestions is to develop a ?single health system? through a new Health Australia Accord. The new governance model has been named Medicare Select and will be the focus of this report.

Recent developments

As previously described in the report Reforming the Australian Health System (survey 13 (2009), the NHHRC was commissioned to provide the blueprint for the largest reforms to the Australian health care system since the establishment of Medicare in 1984. 

Previously described as Option C in the commission's interim report, the Medicare Select model is described as a compulsory social health insurance scheme. Under Medicare Select the Australian Government would be the sole government funder of health services. All Australians would automatically belong to a government operated "health and hospital plan". Individuals could choose to take their entitlements to a private plan operated by either a non-for-profit or for-profit organisation.

A key aspect of the proposed system is the ability of consumers to move between plans in response to what is offered. The proposal is vague about what aspects will differentiate each plan (quality, price, coverage) making it difficult to assess the implications for efficiency and equity of the proposed health system. It is suggested that individual contractual agreements will be negotiated by each plan with both private and public providers of health services. All plans would cover a mandatory set of health services and the Commonwealth Government would determine universal service entitlements. Additional coverage could be purchased but what those additional services or the quality of services would be is not specified. (1)  

The NHHRC report only provides a broad outline of how Medicare Select might actually work leaving a lot of questions unanswered. The roles for Commonwealth and State governments are not clearly defined and neither is the way in which risk rating will be calculated. For example, how would the incentive to cream skim by the "health and hospital plans" be regulated? Will all publicly supported programs be rolled over into one? Would there be enough alternative plans to allow for competition among plans to provide consumers with a real choice and give an incentive to funds to negotiate efficient services with providers (compared to a single government insurer)? (2,3) How will consumers react? Who will move to a private plan and why? The commission has further suggested that the Commonwealth conducts a feasibility study to fill in the gaps. (4)

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Characteristics of this policy

Degree of Innovation traditional neutral innovative
Degree of Controversy consensual highly controversial highly controversial
Structural or Systemic Impact marginal rather fundamental fundamental
Public Visibility very low high very high
Transferability strongly system-dependent system-dependent system-neutral
current current   previous previous

As previously mentioned, the report only provides a broad outline of how Medicare Select might actually work.

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? yes no no no no no no

Initiators of idea/main actors

  • Government
  • Private Sector or Industry
  • Opinion Leaders

Stakeholder positions

Academics: Opinions are divided in terms of support for Medicare Select - those in favour consider the proposal will create a fairer, more responsive system with the potential to improve coordination of services and deliver greater equity. (5) Those against the proposal consider that there is no real choice in health care due to the inability of most consumers to understand the complexity of plans and the perverse incentives for plans to compete on the most visible rather than the most valuable aspects of care. There is a danger of increasing inequity depending on the coverage offered by the government basic plan and if supplementary insurance is used to significantly enhance treatment options. There is little evidence it would improve efficiency or equity. Some have also questioned whether the reform would improve quality and coordination of care.  

Consumers: Carol Bennett, executive director of Consumers Health Forum (CHF), commented that the devil was in the detail and that they are particularly concerned "that people with low levels of health literacy and little internet access will be particularly disadvantaged". (5) The main queries the CHF poses are: will the proposed model improve or reduce choice in access to health care in Australia? And will it improve or reduce equity in access to health care? (6)  

Private health insurance companies appear to support the proposal. (7)

Actors and positions

Description of actors and their positions
Health Ministervery supportiveneutral strongly opposed
Private Sector or Industry
Private health Insurance Companiesvery supportivesupportive strongly opposed
Opinion Leaders
Academicsvery supportiveopposed strongly opposed
Academicsvery supportiveopposed strongly opposed
current current   previous previous

Actors and influence

Description of actors and their influence

Health Ministervery strongstrong none
Private Sector or Industry
Private health Insurance Companiesvery strongweak none
Opinion Leaders
Academicsvery strongweak none
Academicsvery strongweak none
current current   previous previous
Private health Insurance CompaniesHealth MinisterAcademics, Academics

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Adoption and implementation

Before implementing any of the suggested reforms, the Prime Minister has committed the government to "engage in a detailed, direct consultation with the health sector and with communities around the nation …". A meeting between the Federal and State leaders is scheduled for late 2009, with the final decision on federal-state health arrangement expected early 2010. It is unclear whether a decision about Medicare Select will be considered at these meetings. (8)

The federal health minister is currently travelling across the country and preparing people for what's been labelled as "the next leap in the evolution of heath care". However, in a recent speech the Minister did not mention reforms to Medicare.

Monitoring and evaluation


Expected outcome

To date the Government has not responded to the final recommendations. The Prime Minister noted that the federal government's response will be influenced in part by the Henry Report on tax reform (due to be delivered in December 2009) and the third Intergenerational Report (due out in the next couple of months) (9), which  provides a basis for considering the Australian Government's fiscal outlook over the long term and the sustainability of economic growth in light of Australia's ageing population and other factors.

Impact of this policy

Quality of Health Care Services marginal neutral fundamental
Level of Equity system less equitable neutral system more equitable
Cost Efficiency very low neutral very high
current current   previous previous

It is uncertain if the proposed health care reform will be adopted and implemented by the Government. At this stage it is not clear if the proposed reforms will make the system more equitable and efficient.


Sources of Information

1.National Health and Hospitals Reform Commission. A healthier future for all Australians: Final Report June 2009. Canberra Commonwealth of Australia; 2009.

2. Scotton RB. Medicare: options for the next 25 years. The Medical Journal of Australia 2000; 173: 41-3. 3.        

3. Boxall A. What is Medicare Select? 2009. Available at: (accessed 6 Oct 2009).

4. Bennett C. A healthier future for all Australians: an overview of the final report of the National Health and Hospitals Reform Commission. The Medical Journal of Australia 2009; 191: 383-7.

5.Sweet M. Going Dutch? Let's talk about it, at least. 2009. Available at: (accessed 6 October 2009).

6.Consumer Health Forum. CHF Consultation Paper on the National Health and Hospitals Reform Commission Final Report - A Healthier Future for All Australians. 2009. Available at:"NHHRC" (accessed 6 October 2009).

7.Metherell M. Medicare backs system shake up. 2009. Available at: (accessed 9 October 2009).

8.Metherell M. Showdown with states looms over health reforms. 2009. Available at: (accessed 9 October 2009).

9. Stoelwinder JU. Final report of the National Health and Hospitals Reform Commission: will we get the health care governance reform we need? The Medical Journal of Australia 2009; 191: 387-8.

Reform formerly reported in

Reforming the Australian Health System
Process Stages: Idea

Author/s and/or contributors to this survey

Gisselle Gallego

Suggested citation for this online article

Gisselle Gallego. "Shake up of the Australia health care system". Health Policy Monitor, October 2009. Available at