Questions :
1. In your own words, summarize the article, “Gov’t moves to sell Medibank Private,” by Jim McIlroy, April 9, 2014.
In particular, what are the main messages of the article?
2. Suppose a firm, like Medibank, is government-owned.
(a) If the government’s objective is to maximize welfare, what would be the price charged by this firm?
What would be the consumer surplus, producer surplus and total surplus?
(b) If the government imposes a buyer’s tax (a specific tax), what would be the changes in
consumer surplus, producer surplus and total surplus?
3. After privatization, the firm becomes private-owned. Suppose this firm has a monopoly power.
(a) If the firm’s objective is to maximize profits, what would be the price charged?
(b) If the firm’s objective is to maximize revenue, what would be price charged?
4. Why did the Australian Government like to privatize Medibank?
Is the market-based healthcare system superior to the government-provided healthcare system? Why or why not?
5. Find healthcare policies for at least two countries or economies, and do an in-depth comparative review on their policies.
Provide your views or suggestions on the best healthcare policies that could be considered or used in Australia.
1. The government of Australia expects a lot from the privatization of the medubank, which will take place in the coming years. They are expecting that this privatization will help to boost the productivity. The chief economist said that it would be helpful for the policyholders, as it will provide the preferential treatment towards them. From the past record, it is seen that the policyholders always got the preferences due to this privatization. Baldino et al. (2010) stated that as per the pure financial theory, the decision about to sell or not to sell should be made neutrally. This sale may take away the shareholders of a continuous stream of dividend. It is effective on the budget for the three consecutive election years.
Abbott and Cohen (2014) observed from the economic terms that in the situation where the governments are the active players within the competitive market, then it is better for the Medibank to become private and go out from the hand of the government. Private ownership of Medibank will help the owners of the health insurer. Though there is also a powerful opposition is created against this privatization. Strong resistance is shown towards privatization in the public opinion polling.
2. (a) When the Medibank was a government organisation, then it was run by the government managers those did not have high skills, knowledge and ability and they are also over bureaucratic in nature. On the contrary, Baldino et al. (2010) opined that after the privatization is done, the expenses of the private management of Medibank are more stable compared to the previous situation. Medibank private acted like a profit maximising organisation at the beginning. At this time, the excess revenues are used for to generate benefits for the health insurance holders. In the later period, the excess revenues started to come to the government. It is a good deal for the government to make the privatization of the Medibank and it is not at all a good deal for the owners of the fund.
(b) The government of Australia was unable to perform anything that creates welfare towards the health insurance holders of the Medibank. The government is the only choice for the Medibank and that generated less number of proper incentives. The sale or the privatization of Medibank provided the self-evident goods. It helps the organisation to utilize their available fund in more effective and efficient way. The privatisation of Medibank made the organisation the leader health insurance provider organisation within the competitive market (uk, 2015).
3. (a) Privatisation of Medibank will help this organisation through providing the company sufficient good incentives. It helps the organisation to ensure towards their insurance holders that the other options will not be taken care of. As per the NHS mandate, NHS will be responsible for providing high level of care that is more than a treatment for the older people. The number of carers is increasing in UK. The people’s life can be affected with the increasing desire of becoming a carer. It can create various diseases towards the carers as they spent lot of their lives in providing high quality care to the patients. NHS has started to increase the awareness among the people about the valuable contribution of the carers towards the society through generating stable communities and strong families (uk, 2015).
(b) Privatization will bring a huge competition for the Medibank. It will help the organisation to provide better services towards their customers those are the purchasers of the health insurances. Medibank privatization will create a challenge for the organisation and other health insurance organisation to encourage the health professionals and hospitals so that they can provide the best care services for the members (com.au, 2015).
4. Reasons behind the privatization of Medibank by Australian Government:
Australian government has confirmed to make privatization of their Medibank. The Finance Minister of Australia named Mathias Cormann has declared on 26th March, 2014 that the Medibank that is a health insurance company owned by the government will be sold off. They decided to sell this Health insurance company through public offering in the financial year of 2014-2015. After this announcement, a meeting was held on 28th March, 2014 of the state treasures and the federal (Baldino et al. 2010). The result of this meeting came out with a “historic agreement” for the state government of Australia towards selling the billion dollars of the public assets.
According to Abbott and Cohen (2014), in return of it, the government of Australia has provided an ‘Asset recycling pool’ of funds. It was helpful for the state as it gave 15% of sales value of the assets that helped them to invest again in the new projects related to new infrastructures like roads, railways, ports etc. This ‘Asset recycling pool’ includes the privatization as the trick that helps to sale the public assets in theft from the public money. This strategy helps the government to make the substantial profit in the government treasury at 1% in the bargain prices.
The government of Australia did not predict the sale price of Madibank Private. The previous estimation shows that the sale price of the Medibank Private went up to $ 4 billion. As per the Medibank sale act, no single investors were allowed to buy more than 15% of the company’s share. The pre-tax profit made by Medibank was $ 315 million in the year of 2013. When this asset is sold, the gains from this organization will be lost to the money of the common people. Medibank currently owns 30% of the private health insurance market. This selling of Medibank will increase the budget deficit for the government otherwise, the government will lose the annual dividend of Medibank for up to $ 500,000. The privatization of the health care insurance provider named Medibank will help to move towards the expensive and inefficient US style care system that will be clear in the Australian government’s agenda (Anon, 2015).
Market based healthcare system is superior to the government provided healthcare system:
Market based health care system is always better than the health care system provided by Government. The government failures in providing proper health care towards the people of the country. Baldino et al. (2010) stated that in the government healthcare policies, the private health insurance is bought through the workplace with the contributions of the employer which is excluded from the income tax. It is beneficial for those who pay the income tax in a proper way and at the higher marginal rate. It helps to increase the buy of the comprehensive health care coverage. It helps to manage the moral hazards, increases the health care demand and also make forecasting of the cost indifferences by the consumers.
The health insurance is not mandatory for the people. The survey says that about 17% of the country’s people are without the health care insurance coverage. For the healthy young people it is a rational strategy. The public hospitals are bounded to provide the health care equally to all the people. Health insurance performs at the state level of the country. The policies of the health care should include the non-essential benefits towards the owners of the health care insurance policies. When the coverage cost increases, then the purchase of the health insurance becomes unattractive. It lacks the wider coverage to the population. Medibank towards the low-income families and Madibank towards the elder people are the two different programmes performed by the government of Australia. These programmes help to influence the designs and operations of the plans of the private sectors towards market innovation (Medibank.com.au, 2015).
On the contrary, Abbott and Cohen (2014) opined that the market based universal coverage, the main goal of the health care system is to provide proper health care services towards the population in proper availability. It helps to provide beneficial health care packages towards the health care service owners. The people are free to buy more un-subsidised health care coverage. The function of the government is to ensure the availability towards covering the high risk group and low income group of people for those the purchasing of health care insurance is not easily affordable. It is also the role of the government to implement the appropriate regulatory framework for the insurance market’s efficient operation.
5. Healthcare policies in UK:
The health care policies in UK includes different policies those are helpful for the people of the country towards providing them better health care services. These policies includes providing the mental health care services more effectively, ensuring the health and social care services work together, Providing all the children to a health start of life, Improving care towards the people suffering from dementia, Protecting the patients from the avoidable harms, Decreasing the misuses of drugs and dependence, Improving care for the elder people. Helping the people to reduce smoking, reduce obesity through improving diet and many more (Gov.uk, 2015).
The health care organizations in UK provide better access towards the mental health care services towards the mental patients through making the waiting time shorter. The health care organizations in UK provided £ 400 million from the year 2011 to the year 2015 and it helped more people those are the patients of the mental depression towards having access to the psychological therapies. The health care organizations in UK provide the women a single midwife those can take care the women during their pregnancies and after the baby’s birth. They ensure that every women get the care of a particular midwife. They made the health and social care services work together for the welfare of the people of UK . They ensured that the doctors can provide the memory services towards the old people aged from 65 to 74 years old. They also took proper steps to reduce the misuse of the drugs that helped in the recovery of the people from the dependency on those drugs. Increasing smoking is creating highly risky lungs diseases and sometimes deaths to the smokers of UK. It is seen from the record that approximately 9,500 children got admitted in the hospital due to illness created by secondhand smoking. NHS took the initiative to increase the awareness about the disadvantages of smoking within the adults, older people and the pregnant women (Nlm.nih.gov, 2015).
The health care organisations in UK have become concerned about providing the safe health care services towards their patients, though many mistakes happen every day within the health care service centers. The recent studies shows a high rate of negligence among the patients within the health care provider organisations helps to understand that the health care organisation needs to change many more things to improve it. The National Health Services (NHS), England has taken the responsibility towards providing better patient safety. It is also seen that in UK, two thirds of the died people are from the age group of over 75 years and the deaths happen due to long-term diseases like heart and lung diseases, cancer and dementia. It happens due to lack of proper care at the end period of the lives of these old people. NHS published NHS Mandate in 2012.
Healthcare policies in USA:
The health care system within the USA is provided by different singular organizations. Among the total number of hospitals 80 of the health care organizations are non-profit organizations where 2% are owned by Government and rest 18% are the profit making organizations. The health care organizations in USA provide the health care programmes such as Medicare, Children’s Health Insurance Program, Medicaid, Veterans Health Administration. The government of USA generally provides the Health insurance towards the public sector employees and their families (Connection.ebscohost.com, 2015).
As per the survey on the 17 high income countries in the world, the USA has the highest rate of infant mortality, sexually transmitted infections, injuries, disability, diseases from heart and lungs, adolescent pregnancies etc. As per the World Health Organisation (WHO), in 2011, USA spent a lot more on the health case from the percentage of their GDP and more on the health care per capita compared to other countries. USA comes in the last position in providing the quality of health care services towards the service users compared to other similar countries as per the Commonwealth Fund. In 2014, the Bloomberg ranking of nations with the most efficient health care service providers was introduced where this country’s rank was 46th among the 48 countries. As per the report of the US Census Bureau, around 16.3% of the entire population of the country is uninsured by the year 2010 where it was 16.1% in the year 2009. As per the report of Institute of Medicine in 2004, the country an industrialized country that does not provide guarantee access towards the population about the proper health care (Connection.ebscohost.com, 2015).
Among all the OECD countries USA has achieved the universal coverage for their populations in the year 1990. The number of health care insurances decreases year by year. It helped to increase the number of unnecessary deaths from 45,000 to 48,000 per year. In the year 2010, on 23rd March, the Patient Protection and Affordable Care Act has become the law that provided big changes within the normal procedure. The federal regulations needed to be fulfill by the needed health care programs of the country (Connection.ebscohost.com, 2015).
Suggestions for Healthcare Policies for Australia:
The health care policies of Australia are needed to be improved so that it can provide better health care services towards their health care service users. The health care organizations in Australia should adopt the person centered approach. This approach will help the organization to provide care and services towards the patients of Australia. The health care organizations of Australia should also try to improve the integration within the community based programmes of the health care services. It will help the health care organizations to make a relation between health services and the current support services those are already available for the community of Australia.
The health care organization in Australia should try to understand the complexity of the health care needs for the older people of the country in a better way. This health care policy will help the health care providers in Australia to provide the better health care services towards the older people of the country through understanding their problems from the origin. The state, territory and the government of Australia should provide funds towards the public hospitals of the country. The government should provide the population health programmes, health and medical research, community health services, mental health services and health infrastructures. The smoking and drug related health issues should be considered seriously by the health care organisations in Australia. The medical camps should be performed by the health care organisations to increase the awareness among the population of Australia about the disadvantages of smoking and using harmful drugs. It will help the organisation to decrease the rate of lungs related diseases happens due to excessive smoking. It will help to increase the awareness among the pregnant women about the harmful effects of smoking on their unborn children. It will help to decrease the birth defects among the new born.
References :
Journals:
Abbott, M. and Cohen, B. (2014). A Survey of the Privatisation of Government-Owned Enterprises in Australia since the 1980s. Australian Economic Review, 47(4), pp.432-454.
Baldino, D., Drum, M. and Wyatt, B. (2010). The Privatisation of Prisoner Transfer Services in Western Australia. What Can we Learn from the Ward Case?. Australian Journal of Public Administration, 69(4), pp.418-430.
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