Approaching Death’s Door: Health Insurance Dilemmas in Australia and the US - Part 1

This article is Part 1 of a two-part series.

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When a person uses the healthcare system, it could be one of the most frightening and significant moments of their life — perhaps this is why there is so much passion about the benefits of public and private healthcare in countries like the US and Australia. From the “Medicare” debate about privatizing universal healthcare in Australia, to the vigorous ongoing debate over Obamacare in the US, the contention over healthcare reform has largely centered around determining the role of government compared to that of the private sector in providing health insurance. In Australia, all citizens are eligible for universal health coverage, whereas in the US, public health coverage encompasses just 34.4% of the population. Pressure on the public system in Australia has traditionally been alleviated by the private sector, with 54% of the population holding private health insurance, yet this balance is being challenged by young people who are increasingly choosing to hit the exit on private health insurance. In the US, Medicaid provides for people over the age of 65 or those with severe disabilities, and Medicaid covers a portion of those on low incomes. More than two-thirds of the population hold private health insurance, but limitations in the Affordable Care Act (ACA) and in its irregular adoption by states have left gaps in coverage. What accounts for these differences and where do the solutions lie?

Systemic Scrutiny: Shortfalls of Health Coverage in Australia and the US

As dire as it sounds, Australia is headed towards a “death spiral”: a phenomenon in which progressively rising health insurance premiums in the private sector continually price out consumers until policies become virtually unaffordable. This can be attributed to Australia’s mandated community rating system under which everyone pays identical premiums regardless of their age, health status, or history or claims. As healthier individuals - particularly young people - increasingly opt not to take out private health insurance, the pool of individuals within the private health insurance market becomes riskier and more costly, putting upwards pressure on premiums. From 2014-2019, the number of people aged 20-39 with hospital cover dropped 6%, with premiums rising at a faster rate than inflation and wage growth. The exodus of youth can also be attributed to the safety net and disincentive provided by the availability of Medicare: a national universal health insurance program that ensures that every Australian is eligible to receive free or low-cost public healthcare. As less people rely on private health insurance, pressure on the public health sector could quickly outpace capacity.

The US meanwhile faces unique limitations in accessibility of health insurance. Whilst employer-sponsored health insurance is more prevalent in the US, and coverage has been expanded under the ACA, there remains significant gaps and challenges for certain groups.

“Young people get the short end of the stick,” says Anjana Sreedhar, author of Health Care of a Thousand Slights, Connecting Legacy to Access to Healthcare and Administrative Fellow at NYU Langone Health. “If your parents don’t have good health insurance, you’ll be required to be on your university’s health insurance plan - that expires after you graduate. If you’re someone that just graduated into this job market, and you don’t find a job within a certain number of months, you have no insurance which is very stressful, especially if you’re on birth control, or on prescription medication.”

Beyond this, Sreedhar says there are problems with health insurance coverage being like “patchwork” in the US. Medicaid is administered by state governments, meaning that some states such as Texas, Florida, and Georgia, have more restrictions on eligibility for health insurance, and a resulting ‘Coverage Gap’ of two million poor, uninsured adults across the US.

Illustration: Ana Yael on Oprah.com website

“If you’re not poor enough to qualify for Medicaid in your state but too rich to be eligible for subsidies, and you can’t afford regular health insurance, that’s the part of the population that gets stuck.”

These issues also tie into deeper complexities such as race, gender, and sexuality that are informed by a history of racism and segregation. For instance, one of the primary issues facing the US is a persistent shortfall in coverage that disproportionately affects low-income, Latino adults aged 19-34.

“The challenge will be that a lot of people in the US think that we live in a post-racial society and that minority groups and immigrants are asking for too much,” says Sreedhar.

Behind the Contrast: Conceptions of Government and Polarisation

A key contrast between healthcare systems in Australia and the US is the extent of public sector involvement in the provision of health insurance. With such a big gap in public insurance between Australia and the United States, it is useful to compare common perceptions and attitudes towards the role of government in the two countries.

In Australia, universal health coverage has remained largely supported by the public and across the political spectrum since its implementation in 1984. In 2016, an Essential Poll found that Medicare ranked as the second most popular government initiative. The US by contrast, saw permutations of expanded health coverage under the Truman, Johnson, and Clinton administrations repeatedly struck down. After the passage of the ACA in 2010, a majority of Republicans have continued to work towards watering down or repealing the act.

“Republicans think it disincentivises people from working and pulling themselves out of poverty,” says Sreedhar.

 The resistance may therefore be socio-economic and attributable to strong profit motives in the US, which in turn tie into conceptions of the role of government that have traditionally been more libertarian and individualist than Australia.

 “The American Medical Association (AMA) fought very hard against universal health care because they were worried that it would compromise how much doctors could make,” comments Sreedhar. “Ever since the Watergate scandal there has been a huge mistrust of government and the idea that government spending is usually very wasteful. There are also narratives that universal health care is a European thing...that it’s not for countries like us.”

Political attitudes are also significantly more polarised in the US than in Australia, with a working paper published in January finding that affective polarisation has increased the greatest in the US amongst 9 OECD countries.

Sreedhar partially attributes this to the lack of government-sponsored national broadcasting networks such as the ABC in Australia, and the profit-incentive of private media companies in the US that aim to bolster their readership through subscribing to particular political opinions that will drive viewership and revenue.

“Our political climate is so incredibly polarised that people can’t even agree on what the facts are anymore,” she stated. 

As the US grapples with dissent over growing government and shortcomings in health coverage, and Australia faces a private health insurance dilemma, there is continuing debate over the solutions that may be pursued.