Academic journal article Australian Journal of Social Issues

Privatising Health: The Demise of Medicare?

Academic journal article Australian Journal of Social Issues

Privatising Health: The Demise of Medicare?

Article excerpt

1. Introduction

Along with other aspects of the welfare state, health systems internationally have encountered retrenchment pressures over the past three decades as accelerating costs coincided with the introduction of neo-liberal economic policies privileging private enterprise, small government and tax cuts. As Shaoul points out, governments have curtailed public sector expansion, implicitly or explicitly promoting the re-privatisation of health provision:

   Healthcare 'reforms'--the introduction of financial targets, 
   quasi-markets, creeping privatisation, public-private partnerships, 
   outsourcing of 'non-core' services, hospital and ward closures, 
   user charges, 'targeting', cuts in funding and social division--are 
   being introduced by governments of every, political persuasion in 
   every country at the behest of the financial markets and giant 
   corporations. (Shaoul, 2003: 146) 

This paper examines developments since the introduction of Medicare, an integral component of the welfare state. In particularly it traces the process of 'privatising': the shift from public to private provision and funding through subsidisation of private health insurance, under-funding public hospitals, and increased co-payments. These developments represent an unequivocal retreat from the principle of universal health care, and constitute retrenchment of a fundamental aspect of the welfare state.

2. What is the welfare state and what constitutes retrenchment?

The international welfare state emerged in the postwar period, providing broadly similar welfare measures in industrialised countries, despite differences attributable to historical developments, philosophical outlooks, economic and social organisation. Its defining characteristic was an over-arching government commitment to accept responsibility for providing a socially determined level of welfare by: a) maximising employment, the primary means for the majority of the population to secure welfare and facilitate societal participation; b) ameliorating market outcomes to ensure minimum living standards through progressive taxation, access to services, and income support for those either unable or not expected to support themselves through market activities; and c) recognising entitlement through access as a right of citizenship.

The necessity for retrenchment has been attributed to financial constraints due to globalisation which dictates the destruction of working conditions and social provision to maximise international competitiveness (Faux and Mishel, 2000), and demographic pressures (Hirst and Thompson, 1999). A concomitant assault on values such as collective responsibility, universalism, equality and social solidarity attempted to justify transferring responsibility from the social to the individual sphere, that is, to 'legitimate' retrenchment. Governments and right-wing think tanks, along with international bodies such as the IMF, OECD and World Bank, have championed returning functions to the market through deregulation and privatisation and advanced the 'moral imperative' that individuals accept responsibility for welfare provision, claiming that those who can afford to pay for services have an obligation to do so. Notwithstanding concerted attempts to undermine public support, opinion polls internationally indicate strong support for most welfare state programs and overwhelming support for health and education.

Welfare state retrenchment encompasses: a) programmatic changes that either cut social expenditure or restructure welfare state programs to conform more closely to the residual welfare state model, and b) systemic changes that alter the political environment in ways that enhance the probability of such outcomes in the future (Pierson, 1994). Components of programmatic retrenchment include reducing or suspending indexation of benefits, or restricting access by tightening eligibility. …

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