42 thoughts on “Monday Message Board (on Tuesday)

  1. The world’s false recovery continues from the 2008 Global Finacial Crisis. This seeming recovery is false because the underlying financial and economic causes have not been addressed, just papered over. In addition, the herd of elephants in the room, growing major resource shortages, are simply being denied. (Such denial is possible only for a short time longer.)

    These resource shortages will manifest first and most obviously in ever higher world food prices and actual food shortages in many poor countries especially (but not exclusively) in the MENA (Middle East and North Africa) region. Food crises (high prices and shortages) correlate strongly as the cause of social instability, crisis, rebellion, civil wars, wars and revolutions. The events and instability in Tunisia, Libya, Egypt, Syria, Yemen, Pakistan and so on relate to the food crisis and associated lead-in crises in energy supply, water supply and basic services.

  2. The government looks likely to get its private health means test through parliament. This is a step in the right direction. The threshold really ought to be lowered to $0, but $80 000 is a no brainer.

  3. I do not think you have grasped the concept of facetious writing. In practice, a $0 threshold would mean no one gets the rebate.

  4. No. I want needy people to access public health care for free. I just don’t want to subsidise private health care.

  5. @Sam

    So those needy people currently choosing private health care – because of the rebate – will loose this right, by your policy?

    You do realise that the services offered in the private sector are different to those in the public sector? Also public services have different locations than private services.

    How would you handle the extra cost to the public system? and if the private system looses customer because of new politics, who compensates private providers? Otherwise presumably remaining private patients will face fee-hikes to replace lost revenue and invested private capital will not be as utilised as before.

    How do you ensure there is no over-crowding of the public sector – which would harm all current users of the system? Waiting times and queues would stretch out further. Do people who have a short journey to their present provider, have a right to be compensated for longer journeys because you have denied them their preferred choice?

    Does your policy lead to a two tier system, one for the rich, one for the poor?

    So whats the point? There is unlikely to be any benefit because any saving in rebate will be countered by extra spending in the public sector plus compensation for damaged private providers. The net effect is little overall economic benefit, but massive damage to social equity and to the efficiency by which society serves the health preferences for the greatest number.

    In any case, if most people in society are able to have similar demand for medical services, assuming a rebate for the poor, why wouldn’t this produce a better distribution of services compared to where the poor only produce minor demand but the rich produce most of the demand.

    If some want to deny access to private health care, then more resources need to be provided to the public system to compensate for this change and second effects.

    How would you fund this adjustment? Or would you support wage rises to match the lost rebate?

  6. @Chris Warren

    I was listening to Mr Rabbit briefly on this subject this afternoon, and it was Chicken Little from start to end. How dare this government deprive ordinary Australians of the benefits they get from subsidising PHI executives in a lifestyle they’ve become accustomed to… I mean, from the health services provided by those wonderful private providers (after marketing and administration costs). And nary a number in site.

    The Melbourne Institute, on the other hand, estimates that the extra cost would be about $1.4billion with a saving of $3.0billion on their assumed figures which I assume are close to the proposed legislative changes. Bit of a no brainer.

  7. Chris 7

    Your post 7 assumes that private health insurance is one of the “needs” of “needy people”. Assuming that they are not needy simply because they say they need private health insurance (a circular argument), this raises the question of what they actually need private health insurance for. That is a valid question. The “essential” (or “needed”) health services are still provided in the public health system, or in private health operators being paid as part of the public health cost. There is little or no evidence that private health insurance has reduced the (growing) load on public hospitals. Given this reality, surely if people are in fiancial need, one of the most sensible things for them not to spend money on would be private health insurance.

    If you are a private health insurance operator and you “need” to keep that system in existence to retain your own job, then retaining the rebate makes perfect sense. But for the other 99% of us, it may not.

  8. @Sam

    Just a repost of my reply in the wrong thread.

    Sam, I do understand what you’re talking about. Unfortunately the private health rebate do get excessively abused especially by the wealthy. In general I do agree with that thresholds should be lower than $80,000 however if the government do try to set the threshold too low say $45,000 etc. The media and Tony Abbott will not hesitate a second to start using the c or s word to use the ignorance of the general public to achieve their goal.

    Now other than the political issues, some people from lower income do use private health especially some with serious health issues and terminal illness that requires fast treatments rather than the long queue in public system. These people without private rebate might possibly be unable to afford treatments and the consequences of queuing in the public system might be fatal. However these kind of patience only account for parts of the private health rebate, so the system is being abused which I do agree. However to say the truth it is hard to build a system that benefits the needy without abusers because of both systematic and political problems.

  9. @Tom
    Yes, I do agree that the money spent on this rebate very inefficiently accomplishes some public health goal. If we were to axe the rebate altogether, we should put some more money into public health, although much less because of all the inefficiencies of insurance. It goes without saying I think there should be enough money to mean no long queues for any potentially fatal diseases no matter how rich or poor the person is.

  10. @Sam

    Thats quite good news, anyway about the private health rebate discussion. I believe you’ve missed my position on the topic, I do agree that the threshold can be lower than $80,000, I do not wish to axe the program all together. Chris Warren had pointed out that some people might take quite a while to get to public hospitals if the rebate were to be axed and they can’t afford the full bill in private hospitals. It is true that not every area has a nearby public hospital; although this can be build from the funds withdrew from private health rebate, it does not necessary imply that everyone have access to public hospital nearby. This problem applies especially to rural areas.

    Also it isn’t easy to smooth out the long queue in public health system, to do so would require more public hospitals to be built (in cities and rural areas), more nurses and doctors which is so difficult to get a degree nowadays in those two areas (especially the work environment for nurses isn’t that attractive either). Also if people from low/medium income families can have their fatal disease surgery done in private hospital with the aid of private health rebate because the queue in public health system is too long, I have absolutely no problem with that. I only have problem with the wealthy families who get a new pair of glasses every month that worth over $1000 or going to massage every night with the rebate. An effective way to use the private health rebate I think is to strictly limit the rebate to certain treatments especially the ones that requires immediate treatment instead of axing the rebate as a whole, which not only that the government can save a significant amount of money from the private health rebate and also the low/middle income families can have their serious illness treated in private hospital which helps to smooth the queuing in public health system.

  11. @Ernestine Gross
    Without checking, it’s been reported that it’s per person. I think it’s $160ishK per household and it could be $250ishK per household for the complete loss of any rebate. [insert disclaimers, provisos & caveats here]

  12. From the Oz:

    ‘The means test would push up the price of health insurance for families earning more than $166,000 and singles on more than $83,000 a year by between $315 and $935 a year.

    Families earning more than $258,000 a year and individuals more than $129,000 a year would lose the rebate entirely.’

  13. @Ernestine Gross

    It is per person, a passage quoted on an ABC report “The Labor Party is out of touch with working Australians if they believe that a combined salary of $160,000 a year makes you rich,” he said.

    I wonder what percentage of Australian families earns $160,000

  14. Thank you Troy P., Dan, and Tom for your quick reply. My apologies, I should have read the SMH before asking.

    It seems to me the thresholds are very reasonable in the sense of not disturbing anybody’s budget in a way that could lead to a personal tragedy. I am all in favour of careful housekeeping. To reduce a budget deficit, the government’s goal as well as the demand from the opposition and the expectation of the public, by means of using a fine combe is possible in the case of Australia because there is no accute crisis. Many small ‘savings’ amount to a big one in the end.

  15. @Dan

    The means test would push up the price of health insurance for families earning more than $166,000 and singles on more than $83,000 a year by between $315 and $935 a year.

    So the richest individuals or families might end up paying about $17 per week extra? Gosh, that’s harsh … not. It seems that our household will be (just) under the threshhold, but in our case, if we had an extra $16,000 or so in gross family income we might have to pay an extra $6 per week. What a tragedy! Oh the humanity!

  16. @Tom
    To fix your concerns, my preference would be for something like direct government funding of private hospitals, or paying for public patients to be processed through the private system.

    To me, all health in Australia is fungible between public and private. If the private system got smaller and lost doctors, the public system could get bigger and gain them. What’s important here is total spending on health plus total efficiency of spending.

    The private rebate is a very inefficient way of spending money on health. It should be axed completely, but this first step in eliminating not middle class but upper class welfare is really good news.

  17. Health is a mess. Inefficient practices are embedded within. I have a chronic condition which is treatable, and another illness which is treatable. The system is so clunky that in order to get that treatment, I have to go through a whole sequence of appointments, stretching out to the wild blue yonder. If I could see one person for say one hour, instead of 10 minutes, I could get through the medical history with that one person (instead of three or four separate people), and then they could decide upon the next step, *armed* with the necessary patient history. Instead of this, it can take several months—that’s right—to get an initial tentative diagnosis, by which time the patient has just lumbered through several needless months of ill health. And pays a private health premium.

    If alternative ways of checking out a patient are devised, it may be that the same pool of money can be stretched over more patients, without killing the doctors with overwork. At the moment though, it just doesn’t seem to work particularly well, and that is despite the best efforts of individual doctors and staff.

    Two areas absolutely crying out for a better over-arching structure are chronic pain, and mental illness. Diabetes is probably up there somewhere too. If those three major health problems had smoother linkages in terms of patients mapped to services, a whole lot of valuable doctor time could be better utilised.

    Finally, the health services are having to deal with more patients who have co-morbidities, a fancy way of saying two or more concurrent illnesses/conditions/syndromes/diseases, generally where two or more are chronic in nature. Diabetes and chronic pain overlap; chronic pain and mental illness overlap; all three overlap. The current system feels like each doctor is looking at the patient’s history through the wrong end of a telescope, and drawing conclusions based on that limited observation. Personally, and I feel I speak for many people in similar circumstances: I wish I could use the health services *less*, not more. If the initial consults were of significant time length, that would (ironically) improve the overall process of getting the patient to the care they need in a more timely and efficient manner. At least, I think so.

  18. quite true Donald Oats. when a person is ill the private system knows how to extract the maximum dollar before sending that person for the real deal in the public system. the current system works well for the doctors but a not so well for patients or taxpayers. The government legislation barely begins to look after the taxpayer while patients will stay on the medical hurdy gurdy.

  19. @Donald Oats

    You make a very important point, Donald Oats. IMHO, your point about the fragmentation of ‘expertise’ (knowledge management?) applies to more and more professions, including lawyers and economists. There is a limit to the benefits of the division of labour and this limit has been exceeded in a growing number of areas.

  20. I am really struggling to understand how private health insurance takes pressure off the public system. I’m undergoing knee surgery soon – going through a private hospital; but when I got the bill it seems my private health fund is paying bugger all, Medicare is paying a fair whack, and I’m paying the majority. I have no particular issues about having to pay myself (I earn a good income and I’m going to a top surgeon), but WHY does Medicare pay? Shouldn’t it be the private health fund? I really wish I knew what I was paying them for.

    Please can someone explain!

  21. Help.

    I am ‘discussing’ Greece with a friend and part of our disagreement has come down to
    whether countries’ finances can usefully be compared to houshold finances. I have offered
    straight forward reasons such as printing currency to no effect. Is there a generally agreed
    set of succinct reasons this analogy fails in the literature or on the web?

  22. In my opinion, het, household mangaement is the most complete analogy to national accounts as they more completely include the full set of government functions as destinct from a “business” comparison. Family budgets include work (first and formost), sustenance, health, education, entertainment, communication, community connection, etc.

    My opinion?

    Greece has to take on the challenge of reviving theie economy and take the hard hit. Greece has to go to work, and fast.

    For starters having a retirement age at 55 is an absolute luxury.

    Greece has to clean out the corruption agressively.

    Greece has to tax hard the tax dodgers and cheats. A good example was the swimming poll tax. A google earth study of an area that claimed under 1000 swimming pools actually had 10,000 ( or something like that). Massive cheating and lying. It has got to end.

    Older people have got to become business creators, and job creators.

    Greece has its special problems, such as having over 2000 islands. It also has a village subsistence focus in many areas, and this is a special thing. Part of the problem, I believe, has come from a European homogeneity of social welfare expectation. I could well be wrong. But I suspect that there is part of the problem, compounded by the foolish and expensive military conflict/standoff with Turkey.

    Another of Greece’s problems will be the compounding effect the China business bleed. How do you become a small entrepreneur when every thing that you try is undermined by product from cheaper domains?

    The answer is in throwing out nearly everything that you have learnt in accounting and marketing school, and build an entirely new business model. A model that works in the real environment of today, with the business reality of today.

    The fact is that much of the business accounting model has been out of date for decades, and has to be rethought to a format that makes it possible for business to form and grow, and banking has to adapt as well. Government has to engage with business from a bottom up approach rather than the top down as it is at present.

  23. National accounts =/= household accounts

    1. Ability to mint currency
    2. Ability to run a deficit to fund capital expenditure
    3. Ability to run a deficit to create both first- and subsequent-round demand

  24. (Of course, the first of these doesn’t apply to Greece, nor the latter to for the time being. Essentially you could compare them to a bankrupt business undergoing restructuring.)

  25. I’m certainly no expert, but I know there are similarities and there are differences and it is complex. A sovereign nation can create or print more of its currency if it has its own currency which Greece doesn’t have right now. Doing this often (but not always) produces consequences like higher inflation and a devaluing of the sovereign currency which can have both positive and negative implications for dept repayment capacity, short-mid term economic prosperity and asset security.
    Greece had some pretty fundamental structural issues with its fiscal framework from my understanding – there was a widespread culture of tax avoidance by the rich and a very generous pension scheme for the public sector (75% of salaries) IIRC and an economic base which wasn’t competitive due to various reasons (corrupt/crony culture & the overtaxing of production). The Athens Olympics didn’t help either.
    The analogy with the household budget would be your boss significantly underpaying you, but your kids not prepared to miss out on their latest gadgets meaning your spending was higher than your income, so you leverage your mortgage to pay for it. As we all know, more debt = more interested to service and that’s another cost which needs to be considered.
    Add to the mix that Europe is quite a diverse mix of cultures, ideologies, economic bases, historical prejudges and fiscal cultures. The strongest of these countries have strong manufacturing sectors and generally more of a prudent or financially conservative culture, although that doesn’t necessarily extend to their actual financial sectors or even government levels. This is the case now and was the case when the Euro was created, which has to inevitably create strains on internal relationships within the zone, particularly when a crisis occurs.
    So, Greece can’t create more money, it requires the blessing of the power economies in the Euro zone to provide assistance, but you also have the avg joe in Germany saying “why are *we* bailing Greece out; a place than fundamentally can’t manage their economy”, “we know not to spend more than we save, so why are we paying for their mismanagement”. Fair questions to ask too. Solutions? Dunno. There’s a structural problem with the Euro and I’m not sure if there’s a long term solution for it.

  26. TroyP,

    I don’t see the printing money aspect of the comparison as being a relevent negation. Households have many mechanisms that can be considered to having similar effect to printing money. Bartering and making preserves for instance.

    There are many possible solutions, most of which would be seen as radical.

    One possible radical solution comes to mind. The Eurozone could create a second currency called the Eurette. Et. Countries in crisis would switch (their debts) to the second currency which would float at a much lower level, but allow numerical consistency within those countries, but have a declined purchasing power within the zone thereby allowing for these lower level economies to work their way out of debt and disadvantage. The Eurette currency would be the same as the current coins and notes only they would be trimmed on one edge or corner ie coins would be slightly “d” shaped for easy identification.

  27. @BilB

    ‘Households have many mechanisms that can be considered to having similar effect to printing money. Bartering and making preserves for instance.’

    Apart from the laboured analogy, where are you posting from? Amish country?

    I believe a North Euro and a South Euro will be enacted either as an interim or final measure.

  28. Well, Dan, as I said above I don’t accept that the printing of money is an issue. The ability to collect taxes would be a more siginificant issue, But I don’t think that het was attempting to be that literal in her/his discussion.

    How do you think that Greece can resolve their issues?

  29. Quite so Dan. I hadn’t seen your second comment before posting the question. Sere the comment time stamp.

    However there has to be much more than just a currency method. I guess that the solutions are really all obvious, it is just the Greek People have to face the reality of their situation.

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