The cost of health care and health insurance in Australia: Some problems associated with the fee-for-service system

This paper reviews the health care system and the supporting health insurance framework in Australia. The importance of the health insurance mechanism is stressed in relation to the maintenance and growth of private fee-for-service medicine. The Medical Benefits Schedule, which is the negotiated basis for medical fees under insurance, is examined for the logic implicit in the fee structure. The high rewards for procedural medicine relative to consulting are suggested as part of the basis of the rapid growth in hospital admissions. It is also argued that the refund schedule has helped to determine the nature of the medical specialist manpower pool. Other problems associated with the complex nature of the refund schedule, such as fraud and wasteful over-servicing, are identified and discussed. It is asserted that the health insurance system and refund schedule are partly determining the nature of medical service provision and inducing inequities in the financing and delivery of medical care in Australia.