Friday Soap Box: How Australia Funds Health Care

Michael Moore's new film, SiCKO, is bringing health care into the spotlight.

I don't need Moore's film to help me visualize a solution to the current situation here in the US: the solution is clear to me every time I travel from the US (no explicitly-funded universal health care) back to Australia (explicitly-funded health care for everyone) and visit my father, who has Parkinson's disease, and needs a lot of care.

Back in the sixties, the health care system in Australia was a mess. Then, during one highly-chaotic political period in the seventies, something very sensible happened: a system was voted into place (MediBank - now MediCare) that had two very easily understandable attributes:

1. Health care will be provided to everyone, free
2. Health care will be funded by a 2.5% income tax "additional levy" (this has been adjusted up and down over the years, but you get the idea)

So let's run some numbers ($A):

2006 Medicare Budget: $18,000,000,000 (Wikipedia)
2006 Individual Tax Payers: 11,259,600 (Australian Tax Office)
2006 Avg Annual Taxable Income: $52,000 (Bureau of Statistics)

If a blanket levy of 2.5% is assumed, this creates a pool of $14.5b, pretty close to the required budget of $18b. Add in a 10% sales tax on the sale of pharmaceuticals and sports equipment (!) and you're pretty close to break-even.

If this calculation too simplistic? Of course it is. But I am old enough to remember how easy it was for the government to *message* this simple solution, and I'm still grateful that our various conservative, socialist, and sovereign leaders during that time of political revolution saw eye to eye on the need for a revolution in health care.

BTW, I'm sure my parents did an even simpler calculation when the scheme was announced: $52,000 x 2 people x 2.5% additional tax levy = $2,600 = $433 per family member per year.

That's a pretty small amount to pay - in total, per person - for a working, largely self-funding health system.