Funding and Future Options for the Reform of Medicare

Short and long run problems of Medicare are reviewed. It is argued that the short run issues associated with private health insurance and the public-private balance of hospital services are very largely problems of our own creation. Long term `problems' associated with rising costs are commonly misinterpreted. Data are presented which suggest a dramatic misallocation of resources in the health sector. It is argued that the elimination of such inefficiencies represents the greatest long term challenge and the greatest potential source of health improvement. Failure of the medical profession to meet this challenge voluntarily will invite the adoption of managed care in a uniquely, regulated, Australian form.