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Dental care: the problem and the solution

John Menadue

In 1974, the Whitlam government decided to exclude dental care from Medicare for two reasons. The first was cost. The second was political in that Gough Whitlam felt that combatting the doctors would be hard enough without having to combat dentists as well. Forty-four years later, with Australia much richer and the proven success of Medicare, it is now time for dental care to be progressively included in Medicare.

Gough Whitlam was well aware that any serious reform in healthcare would be greeted by the usual conservative response ‘where is the money coming from?’ The British National Health Service was wrongly criticised at the time for its alleged cost and waste. With the years, however, we can now see that the British National Health Service is probably the best value for money of any healthcare service in the world. Aneurin Bevan’s national health service was bitterly opposed by doctors and dentists.  It was supported by a minority of doctors and overwhelmingly by nurses, and most importantly by the community. But with the hatred of the NHS by Australian doctors, Gough Whitlam did not want to add to his political problems by upsetting dentists as well. So for both financial and political reasons dental care was excluded from Medicare in 1974.

Private health insurance: a damaging boondoggle

Medicare today should be progressively expanded to include dental care and by progressively tightening the means test on the $12 billion per annum subsidy which is used to underwrite an inefficient private health insurance system. If people want private health insurance, that is their right, but I see no reason why taxpayers should pay $12bn p.a. to subsidise PHI, a socially divisive and nationally damaging private insurance boondoggle when publicly funded Medicare is available for all.

PHI is a lame duck industry propped up with taxpayer’s money. As Ross Gittins of the Sydney Morning Herald has described it ‘it is a con’. It does not deliver any health services. It churns money, including taxpayer’s money, for the benefit of private hospitals and better off people and at great cost. The damage of PHI is increasing year on year. Since 1999 when John Howard introduced the government subsidy for PHI, overall consumer prices have risen by only 50 per cent but PHI premiums have risen by over 150 per cent. Many PHI policies are ‘junk’, hard to follow, with many surprising ‘exemptions’ and all sorts of gimmicks to try and attract new customers.

Medicare was established by Gough Whitlam in 1974 to address the same sort of mess we find that has developed again with PHI. The Nimmo Report at that time described the waste, inefficiency and unfairness of PHI. It is the same old mess today. In addition to high costs the parasitic PHI system has many other damaging consequences and risks:

  • It threatens our universal health system through seriously weakening the ability of Medicare as a single funder to control costs. We have seen the enormous damage that PHI has wrought in the United States. We are steadily going down the same dangerous path. On present trends, we will have a divided healthcare system, which conservatives want. One system will be for the wealthy with a safety net system for the indigent.

  • PHI not only weakens Medicare, but PHI companies do not have the market power to contest the power of health providers who set fees and prices for people privately insured.

  • It favours the wealthy who can jump the public hospital queue by going to private hospitals.

  • It penalises country people who have limited access to private hospitals.

  • It has administrative costs three times higher than Medicare.

  • It has made it extremely difficult for public hospitals to retain specialists who are attracted to remuneration which is often at least three times higher in private practice and private hospitals.

  • It has not taken the pressure off public hospitals.

The future of Medicare is at stake, but the Labor Party, the proud founder of Medibank/Medicare, does not seem to appreciate that. At least the Liberal Party looks after its own. Private hospitals like Ramsey Healthcare that profit under PHI are large donors to the Liberal Party. The total cost of the taxpayer subsidy to PHI is $12bn a year, which includes both the rebate and the loss of tax revenue through tax incentives for high income earners to take out private health insurance. This is middle-class welfare writ large.

A Medicare Dental Scheme

Given the mess and high cost of PHI, it is not surprising that the Essential Report has found that Australians believe their money would be better spent in a Medicare Dental Scheme, as shown in the results from polling published on 27 February 2018:

1. Most Australians with private health insurance currently receive a subsidy from the Australian Government to help cover the cost of their premiums. Would you support or oppose abolishing the subsidy and using those funds to include dental care within Medicare?

Some  48 per cent supported abolishing the private health insurance subsidy and using the funds to include dental care within Medicare while 32 per cent opposed. Those most likely to support this idea were Greens voters (65%), Labor voters (55%) and aged 18-34 (57%). Those most likely to oppose were Liberal National voters (45%) and the aged 55+ (44%). The polling clearly shows that most Australians believe that health and equity would be much improved if the $12bn subsidy for private health insurance was abolished over time and the funds were allocated to universal dental care within Medicare. I have estimated that a Medicare Dental Scheme, when fully implemented, will cost about the same as the PHI subsidy of $12bn (Private health insurance and funding a Medicare Dental Scheme)

In December 2016, the National Council of Social Services in NSW in its report ‘Poor Health; the cost of living in NSW’ found that:

  • Almost 40 per cent of people earning under $75,000 p.a. cannot afford to see a dentist.

  • Of those who do see a dentist, one in five do not go ahead with the recommended treatment because it is too expensive.

  • Poor dental health not only affects a person’s overall health but also makes it harder to find a job, particularly for young people.

  • There is a huge disparity in the availability of dental services, particularly in rural and remote areas.

  • There were 107,322 adults and 13,284 children on NSW public dental waiting lists.

In Pearls and Irritations on 23 August 2018,  Professor Lesley Russell, adjunct associate professor at the Menzies Centre for Health Policy at Sydney University, pointed out that the total amount spent on dental care was $9.9 billion in 2015/16 and individuals contributed 51 per cent for out-of-pocket dental costs. Bad teeth are the cause of sickness, disability and even death. It can cause malnutrition and numerous complaints. In 2015/16, there were over 67,000 preventable hospital admissions because of poor oral hygiene.

The Whitlam and Hawke governments established Medicare largely because of the inefficiency and unfairness of private health insurance. But with the Liberal-National Party government pouring more and more subsidies into private health insurance, Medicare is being effectively privatised and dental care needs are being ignored.

What can be done?

On 23 August 2018, Professor Lesley Russell suggested the following.

If a Medicare-style (dental) program is a step too far and too expensive, I pragmatically offer a set of smaller options that could be implemented to put the mouth back into health care and close the dental/medical divide:

  1. Government funding should focus on the best-value investments, which span three broad areas: fluoridation, preventive services for children, and preventive and treatment services for the poor and those with special needs.

  2. Dental and medical professionals must become partners in delivering health care services. This should entail some shared training, a recognition that dental services are an integral part of primary care, inclusion of dental information on Personally Controlled Electronic Health Records and professional courtesies around patient referrals.

  3. A 'Dental Health Service Corps' made up of dentists and dental staff, doctors, nurses, community/Aboriginal Health Workers and public health professionals could ameliorate the maldistribution of the dental workforce and take oral health services and education where they are needed.

  4. Health promotion activities around tackling obesity, smoking and substance abuse, breastfeeding and better management of chronic conditions and the use of multiple medications need to include oral health information. Help with oral hygiene is also a critical aspect of care for the frail aged, people with mental illness, people with disabilities and those on certain medication regimes.

  5. Governments should consider establishing emergency dental services within hospital emergency departments, at least on weekends.

  6. If private health insurance funds are serious about greater involvement in primary care to keep patients out of acute care, they must consider providing better access to dental care with reduced out-of-pocket costs.

Neal Blewett, who restored Medicare under the Hawke government after it was savaged by the Fraser government, proposed the following in his Hayden Oration in August this year.

The tax rebate for private health insurance is already means tested and that testing should be used over time to gradually phase out the rebate. The phasing out could also include age as well as income so as to minimise the impact on the old who have had private health insurance all their lives. I recognise the political difficulties of such a policy. To encourage popular support for such a policy the billions gradually released should go directly into health services. For example, the 9 billion dollars ultimately released could go a long way to providing basic dental care for all Australians within Medicare. As the amounts freed would only become available gradually a first step could be a dental Medicare for children, thus minimising the impact of any age-related phasing out of the rebate.

Again as the private hospitals would be detrimentally affected by the phasing out of the rebate this could offer an opportunity to more fully integrate private hospitals into the Medicare system by either funding the States to buy private hospital beds to ease their public hospital waiting lists, or by restructuring Medicare in such away as to provide a hospital benefit as well as a medical benefit useable in public or private hospitals.

Out of pocket expenses require that we tackle the growth of medical gap insurance which has facilitated record increases in specialist remuneration. We need too to look at incentives to encourage doctors to bulk bill or at least to observe the scheduled fee. Particularly specialists. While 85 per cent of GP services are bulk billed only 30 per cent of specialist services are bulk billed.

Private fee-for-service as the method for paying doctors needs examination. It is probably an acceptable method for covering episodic, one-off treatments, but it is ill-suited as a method for covering chronic conditions requiring regular visits to the doctor, conditions which tend to dominate modern medicine. Nor is it ideal as a method for encouraging preventive services particularly by GPs.

Finally, there is a need to fully honour the historic 2011 hospital agreement with the states which would go some way to ending the blame game between the levels of government and would provide additional resources for our hard pressed public hospitals.

Such a politically difficult reform agenda would demand the courage, persistence and resolution displayed by Whitlam and Hayden a half century ago against many of the same opponents. The Whitlam government established Medibank/Medicare 44 years ago. The Hawke government revived and revised it 35 years ago. It is surely time for it to be updated and modernised. It has proved its value, but some changes are necessary, including coverage of dental care. As with the establishment of Medibank/Medicare, there will be strong political opposition to any significant change which might upset the providers. The key political issue is to go over the heads of the powerful providers, such as doctors, dentists, pharmacists, private hospitals and private health insurance companies – and win the debate with the community. The community is seldom consulted about its interests and needs in healthcare. Invariably the ‘debate’ is dominated by the loud and powerful voices of providers. But when the community was polled by Essential Media earlier this year, it showed very conclusively that it prefers expanded dental care within Medicare and reduced funding for the subsidy to private health insurance.


John Menadue AO has had a distinguished career as an Australian businessman, public servant and diplomat, and is a regular public commentator through his blog Pearls and Irritations, from where this article is reproduced with kind permission.


Suggested citation

Menadue, John, 'Dental care: the problem and the solution', Evatt Journal, Vol.17, No. 3, November 2018.<>


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