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One Voice: Health Insurance

The first sign of a national health insurance scheme in Australia had come in 1909. Its development needs consideration in some detail because it led to huge challenges to the structure and authority of the BMA in Australia and, as a result, to the evolution of the association into an autonomous Australian organisation.

The Commonwealth Government asked Sir George Knibbs, the Commonwealth Statistician, to take advantage of his attending the International Congress on Life Insurance in Austria in 1909 to detour to Britain to investigate the Lloyd George proposal and a similar scheme that had been proposed in Germany. There was broad agreement between both sides of national politics that a scheme was necessary, but disagreement over whether it should be compulsory or not. Sir George came back with a recommendation for a scheme similar to that being proposed by Lloyd George in Britain. The BMA was not enthused, but there were no more developments for the next 15 years, everybody’s minds being concentrated on the war and post-war recovery. In any case, Prime Minister Cook had promised a Federal Committee deputation in 1913, shortly after he took office, that no national health insurance scheme would be set up without the BMA being consulted.

In 1924, the Bruce-Page Government appointed a Royal Commission to enquire into national insurance. It reported the following year with a recommendation for a national insurance fund that would pay sickness, maternity, invalid and superannuation benefits. It was not until 1928 that the Government responded to the Royal Commission with legislation that agreed in general with a fund but, even then, it was not enacted at the time, partly because of a faltering economy. Governments came and went over the next seven years as they struggled to deal with the Great Depression and its aftermath but, at three elections between 1929 and 1934, the major parties agreed in principle that a national health insurance scheme was needed.

In February 1935, the Federal Council had adopted a motion by Sir Henry Newland that a sub-committee be formed to draft “a complete scheme of national insurance applicable to Australian conditions”. Its members were Sir Henry, his South Australian colleague Dr Bronte Smeaton and Dr Geoffrey Newman-Morris of Victoria. Sir Henry tabled the sub-committee’s report at a Council meeting in August that year. It had found it impossible to draw up a complete scheme, he said, and therefore its report was “of an informative nature” only. At the Council’s next meeting, in March 1936, it was reported that the matter had been discussed at branch level and that the Queensland Branch had dissociated itself from “certain clauses” in the sub-committee report. The Council resolved that no further action was needed at the time. But the insurance issue came up again when it met next, in August 1936, in the context of discussion about general principles that should underlie any federal or state medical service. The Council included among these principles the establishment of a Commonwealth Insurance Department, that an insurance scheme should cover “all below a certain [income] limit, against all sickness”, that there should be free choice of doctor, that payment of GPs should be by capitation fees and that the medical profession should be represented adequately in the scheme’s quality and administration.

After the 1937 election, the Lyons Government renewed active interest in the idea, bringing out to Australia a British health official, Sir Walter Kinnear, in 1938 to advise it on what such a scheme might include. His advice was that the Government should set up a scheme similar to that which then operated in Britain. This was a revision of the detested Lloyd George scheme. It would cover everybody earning up to £365 a year, the costs to be shared by the government, employers and employees. It would exclude unemployed and self-employed people and dependants of wage-earners.

The Federal Council agreed on its response to Kinnear at a meeting in August that year. It favoured (among other things) an annual income limit of £365, a capitation rate of £1 a year if medical benefit was available to the insured person only and £2 a year if it was available to the insured person plus dependants, 1,500 as a maximum number of insured persons on the list of a medical practitioner and a maternity benefit scheme “on a compulsory and contributory basis” to replace the current maternity bonus scheme, which would have a material effect on lessening maternal morbidity and mortality in Australia.

At its next meeting, in February 1938, the Council agreed, “after a full discussion”, with a motion by the President, Sir Henry Newland, that “in view of the imminence of the introduction of a National Health Insurance Bill into the Commonwealth Parliament”, an executive committee be formed “with full power to act for the Council”, which “could, in an emergency, be consulted by the Government”. The new committee comprised representatives from all the States. Later in that meeting, Dr Hunter reported that some branch councils held different views from those of the Federal Council, including on the annual income limit and terms of service. Having discussed this, the Council resolved that “the whole matter of National Health Insurance be left in the hands of the Executive Committee”. The decision would have consequences. It raised the question what power the Council had to make decisions on behalf of members, especially one that would have material effect on their incomes. As the history of medical organisation in Australia had consistently shown, doctors were not easily corralled.

Some months later, in line with Prime Minister Cook’s promise in 1913, the Government invited the BMA to discuss the Kinnear scheme with officials. The Executive Committee accepted the invitation. Though the discussions were to be confidential, details leaked that suggested that terms had been agreed on such matters as capitation fees, fees for after-hours calls and other services. The leaks were inaccurate. The Council had favoured fee levels and other bread-and-butter matters in developing its response to Kinnear (as reported above) but it had not reached any agreement on them with the Government. Indeed, it was still insisting as late as March 1939 in a meeting with Treasurer Casey that the Government should provide “such actuarial calculations as may assist our deliberations” on these bread-and-butter matters.

Nevertheless, members reacted with fury, the leaks coming “like a thunderbolt”, according to a report in the MJA. They complained that they had not been consulted, that the Federal Council was exercising plenary powers that it did not have, that the discussions had not covered the very principles of the proposed scheme. Members feared that the agreement meant for all practical purposes that they would be public servants. According to the Council’s annual report for 1939, in December 1938 it distributed a pledge among members that they would not apply for or accept service in the scheme until terms and conditions were accepted by a majority of BMA members. Nearly 77 per cent of these pledges were signed and returned. Doctors assailed members of Parliament with protests.

Treasurer Casey was reported as being worried that the doctors’ opposition was “seriously embarrassing” the Government. Unless the problem was resolved, the part of the proposed scheme governing medical benefits would be unworkable. In July, the Government therefore was considering appointed another inquiry to clarify the medical benefits proposals. But, eventually, despite Dr Page’s enthusiasm for it, the whole idea of a health insurance scheme was dropped by the Government, lost when disagreement over it between Dr Page and the then Mr Robert Menzies led to the UAP-CP governing coalition breaking up.

A difficulty for the federal leadership of the BMA throughout this episode – and for the BMA as a whole – was that, in all the time that the notion of a national health insurance scheme had been debated, it had not developed a clear BMA policy for it. A basic reason for that was that – though the leadership had long realised that a national scheme was inevitable, though it had prepared for it with its efforts to solve the problem with the friendly societies, though it had discussed it with the branches, and though it had appealed to branch members for interest in and ideas for it – the profession in general had not responded and it had not been able to get a policy through the association’s structures.