Health insurance in Australia - a second best solution

Comments on David Uren “Minister shows her unhealthy obsession”, 19/02/2010, http://www.theaustralian.com.au/politics/opinion/minister-shows-her-unhealthy-obsession/story-e6frgd0x-1225831948276

While I am not a fan of health minister Nicola Roxon's direct government regulatory approach to managing the health insurance companies, there are a couple of points in Australia that need to be considered.

One is the issue of the impact of government quasi compulsory insurance (otherwise punished by special levy for income exceeding a level).

The other is the non-competitive nature of the health insurance industry here.

These two issues distort the health insurance industry and consumer choices.

I think a potential solution to these twine issues, that is, to have a default government insurance non profitable organisation to provide a choice for people and to provide a pressure for competitor to private health insurers, so to limit their non competitive behaviours.

Thus, in the presence of government regulatory distortions in the first place, the government should provide a second best solution, as opposed to a heavily regulated approach as it has been for a long time.