Bert Kelly, The Australian Financial Review, June 10, 1977, p. 3.

Eccles says that the real trouble with the welfare State is that there are too many people in it like me.

The origin of this sour comment was the escalating costs of health care paid by State and Federal Governments.

Eccles has been carrying this problem around with him for some months now, brooding about it. It shows up clearly in the accompanying table.

STATE AND FEDERAL HEALTH EXPENDITURES
Year | Expenditure at current prices ($m) | Per capita expenditures at 1966-67 prices (a) ($) | Increase per head at constant pricing (pc)

1964-65 | 276 | 25.33 |
1965-66 | 306 | 27.48 | 8.5
1966-67 | 336 | 28.71 | 4.5
1967-68 | 369 | 30.15 | 5.0
1968-69 | 410 | 32.86 | 9.0
1969-70 | 467 | 33.90 | 3.2
1970-71 | 567 | 38.01 | 12.2
1971-72 | 660 | 40.74 | 6.9
1972-73 | 764 | 42.74 | 4.9
1973-74 | 1027 | 49.36 | 15.5
1974-75 | 1528 | 61.17 | 23.9

The really serious column is the third one which gives the government health car costs per head adjusted for inflation and which shows an average annual increase of nearly 9 per cent.

This is a frightening figure particularly when you realise that these costs have not yet been influenced by the introduction of Medibank. The Medibank increase will show up in later figures with, I fear, a staggering impact.

Eccles says that there are three possible explanations for this cost increase. One is that medical science has progressed so much that more medical opportunities are opening up before medical practitioners and most of these are costly.

An example of this would be kidney machines and kidney transplants.

Second, the proportion of the population that is getting older is increasing all the time because medical science has found out how to enable old people to live longer, and, in a great many cases, to cling precariously to life. This naturally means that there is a greater need for more medical attention per head.

But we all know that the main cause of the cost escalation is the fact that as soon as the Government gets into any act, particularly in the welfare field, there is an immediate change in the morality of people.

Doctors, administrators and patients who, up to this stage, have been pillars of rectitude, and still are about other things, now become immediately indifferent to the cost of a service.

In short, they quickly come to regard the Government as a cow to be milked and they are not going to be backward in getting their bucket under her. Eccles pointed out yet again that you can always tell a man who is dining out on an expense account by the enthusiasm with which he summons the waiter.

Eccles suggests that patients should pay the first $30 of each year’s medical bill, or each family the first $100 and from then on the insurance system would pick up the tab. Then each family would be insured against serious illness but would have to carry the cost of minor sickness.

The car insurance companies had to do this. Years ago I had a car insurance policy which covered me against all kinds of damage to my old car so it wasn’t long before I was getting each little scratch repaired each time I had an oil change. And if the insurance companies had covered my oil change, I would have done that every 200 miles.

I was encouraged to behave like this because I thought I was getting my car repaired for nothing. I wasn’t, of course, my insurance premiums were going up all the time. But I didn’t realise this and thought I was being clever getting something for almost nothing. But when the insurance company made me pay for the first £100 of damage for my car, there was an immediate change in my behaviour. I now have only the important repairs done, not the cosmetic ones.

If we can’t do something like this with health insurance, our ability to spend more money on health and other welfare State needs, however genuine, will be gravely limited.

If I think I am getting something for nothing, or for less than the real cost, I always ask for more than is necessary.

That’s why Eccles says that the real trouble with the welfare State was that there are too many people around like me.