The Abbott government should reform Medicare by giving individuals the choice to cash out their yearly entitlements into Health Savings Accounts (HSAs), according to a new Centre for Independent Studies report.
Introducing greater choice in health would side-step the political obstacles that impede health reform, say David Gadiel and Dr Jeremy Sammut, co-authors of Lessons from Singapore: Opt-Out Health Savings Accounts for Australia.
'Given that the $7 GP co-payment appears certain to be blocked in the Senate, a 'Plan B' is needed to contain the escalating cost of Medicare,' says Dr Sammut.
'We need to look at a new vision for healthcare in Australia, one based on the low cost Singapore HSA model, which delivers First World standards of care and health outcomes.'
While Singapore devotes less than half the amount of GDP to health, and spends far less per person on health than Australia, the UK and New Zealand, life expectancy is superior to all three countries.
'We could emulate the Singapore model in Australia by allowing people to voluntarily trade their Medicare entitlements for an annual "Health Voucher" worth average per person government spending on health - approximately $4,300 in 2011-12.'
'The voucher would be deposited in a HSA linked to a person's superannuation account, and HSA funds would be used to meet the cost of specified health expenses including GP services and health insurance premiums to cover the cost of chronic and catastrophic conditions.'
'Over a person's lifetime, the savings generated by more cost-conscious use of services and lower insurance premiums would accrue as higher superannuation balances and retirement incomes.'
'The financial advantages would make HSAs an attractive option, but those who wished to remain with Medicare could do so.'
'In an ageing Australia, using HSAs rather than taxes to pay for health will relieve future health cost pressures on government budgets.'
In Singapore, personal responsibility is key, with more than half of total health expenditure paid out-of-pocket, which Dr Sammut credits as the secret to Singapore's success in health.
'Low public spending on health, low private insurance spending, and high personal spending has increased the affordability of health in Singapore without diminishing health status and quality, and this model can be adapted for Australia,' says Dr Sammut.
Dr Jeremy Sammut is a research fellow and David Gadiel is a senior fellow at The Centre for Independent Studies.The co-authors are available for comment.