Money and Your Health - The Frugal's Guide To a Health Life

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At a glance, Australia seems to have the healthcare game down pat. Over the past ten 10 years, overall health has improved and infant mortality rates have sharply declined. Everyone has access to basic care through private or public coverage, and social wellbeing is given as much focus as physical and mental health. Babies have an average of 73 years of healthy life ahead of them; the actual life expectancy is about 10 years higher, making it one of the highest in the world.

But like most wealthy countries, Australia is sitting on a growing problem: an ageing population. As older citizens seek longer and more complex treatment, the financial burden falls on their healthy sons and daughters. According to the International Business Review, the cost of healthcare in Australia totalled $112.8 billion from 2008 to 2009, up by $9 billion or 5.8% from the previous year. That's a total of $5,190 per citizen.

Australia subsidizes some 70% of public hospital spending through federal and state governments. This includes Medicare, the country's primary public healthcare provider; the Pharmaceutical Benefits Scheme, which subsidizes prescription drugs and essential medicine; and the 30% federal debate offered on private health insurance spending. The rest of the cost is split between insurance companies, non-government health providers, and individuals. However, a growing demand for public care, most of it from older citizens, have made healthcare most expensive across the board: over the last decade, out-of-pocket costs for the patient have gone up 50%.

The problem, as we've mentioned, isn't endemic to Australia. It's been bubbling up in wealthy economies like the US, Canada, and the UK, who have previously thrived on a young and dynamic population who are now on the verge of retirement. In an article earlier this year, The Economist said the healthcare fix could lead entire countries to bankruptcy if no concrete steps are taken. The US may well be Exhibit A, if its health reforms (nicknamed Obamacare) don't take off as planned. Can Australia steer clear of a similar path and keep healthcare affordable?

Medicare's limitations

Find a doctor that will help you with your health but not to burden your pockets.

Medicare was established in 1984, although it had previously existed as Medibank since 1975. It currently takes up around 43% of the national healthcare budget, according to the Australian budget report from 2007 to 2008. Spending on Medicare was expected to rise by 4% annually over the next few years; the 2008-2009 figures surpassed that mark by going up nearly 6%.

Higher spending is the least of Medicare's concerns, if current projections are anything to go by. In a report published in the Medical Journal of Australia, a group of doctors and researchers outlined the challenges the healthcare system will face in the next few years. They include the aging population, costly medical advances that may not be available to everyone, and balancing public and private sector participation. As healthcare becomes more expensive, Medicare may become what experts call "reverse insurance," where an attempt to provide healthcare for everyone ends up doing exactly the opposite.

How does that work? Many Medicare services are fully subsidized, or "free" as far as patients are concerned. This increases the demand for these services, and as crowds fill hospital waiting rooms, there's less and less care and attention to go around. The Centre for Independent Studies said in a March 16 article that delayed emergency treatment at crowded hospitals accounts for some 1,500 avoidable deaths every year. Hospital bed counts have gone down since the introduction of Medicare, so one in three patients has to wait eight hours or more to get admitted.

The reason for this, according to the CIS article, is that minor medical costs are covered to from the first dollar, something that goes against sound health insurance principles because it harbours waste and abuse. Resources that could be used for better, prompter emergency treatment are channelled instead into unnecessary tests and consultations. Proposed health reforms may include a co-payment scheme where a token amount, say the first $10, is shouldered by the patient for basic consultations. This may raise the out-of-pocket costs of healthcare, but it's a step towards providing better service.

Reducing healthcare costs

Healthcare has always been expensive, even in Scandinavian economies like Norway and Finland whose socialist policies have created an impressive quality of life. More than cry out for better healthcare, Australians should take matters into their own hands and take on healthier lifestyles to make themselves less dependent on government services. After all, the country's biggest health threats are more a matter of choice than of regulation: according to the Department of Health and Ageing, Australia has one of the highest obesity rates in the developed world, and the National Tobacco Campaign points to cigarette smoking as the leading preventable cause of death.

The slew of overpriced "health foods" on supermarket shelves has spurred the idea that staying in shape is expensive. Radio host and author Clark Howard once famously claimed to eat fast food as a way to save, making up for it with daily exercise. But a doctor quickly countered him by saying the problems associated with obesity will quickly wipe out any pennies that McDonald's has saved him. Hospital stays can run you back several hundred dollars a day, and maintenance drugs such as cholesterol medication can cost another hundred a month.

According to the Center for Science in the Public Interest, a North American publication, healthier habits could save America some $200 billion per year in healthcare. There's no reason the same changes wouldn't work in Australia, where chronic illnesses are the product of obesity as much as aging. Simply spending more time in the fruit and vegetable aisle can make a big difference: at the very least, it keeps you from picking up soda by the 12-pack and large boxes of sugar-coated cereal. Most moms will splurge on junk food to indulge their kids, but find that a $3 head of broccoli is a bit much.

Nutritional counsellor and author M.J. Smith says a few substitutions can go a long way. Some of her suggestions include using diced chicken for soups and sandwiches, sweetening dishes with fruit and raisins instead of sugar, and replacing cream with low-fat evaporated milk. Making a shopping list before hitting the grocery can help you avoid unplanned, and often unhealthy, purchases.

Healthcare may be expensive, but healthy living doesn't have to be—and what's more, you don't need policymakers to make the shift for you. Indeed, making healthful choices available, and making consumers aware of them, may be a better investment in the long run than complex policy changes. It doesn't take a whole lot of figures to know that a health-conscious population is less of a burden to its government than a carefree, disease-ridden one.