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May 01, 2008

California Can Learn Health Care Lessons From Down Under

The health care reform is still on the table in California, which should consider carefully the achievements and failings of foreign systems. Canada is the usual candidate but Australia’s health care strategies deserve a closer look.

The negative effects of Australia’s government-run health system are predictable and apparent: limited distribution of technology, restrictions on the number of medical students and Medicare providers, and waiting lists. Recognizing this, the country recently reformed private health insurance – which is not mandatory – in order to attract more Australians to sign up.

Australian taxpayers finance almost 70 percent of total health care expenses, including a subsidy for private health insurance, under which almost half of the Australian population is now covered. Taxes fund a 30-percent rebate on private insurance premiums for Australians under the age of 65. Rebates go up to 40 percent for older patients.

Australia phased in a Private Health Insurance Incentives Scheme (PHIIS) to improve citizens’ access to care, which caused the number of privately insured Australians to rise from 31 to 46 percent. The plan incorporated several reforms. Most importantly, it allowed age-rating in private health insurance, which was previously forbidden.

With age-rating, insurers started charging lower premiums for younger people, attracting them to purchase policies. To manage the transition, those above 30 who signed up before a cut-off date in 2000 were also given a discounted premium. Those who did not sign up in time would pay higher premiums equal to the base discounted premium plus 2 percent for every year after age 30.

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Posted by healthinsurance at May 1, 2008 02:29 PM

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