Medicare: The creation of Australia’s most significant health policy

John Deeble joins the Institute

After completing his Bachelor of Commerce at the University of Melbourne, John Deeble was convinced by the Melbourne Institute’s founding director Ronald Henderson to join the Institute and focus on health economics. He had a background in health, having worked as an assistant manager at Peter MacCallum Cancer Centre while he studied part-time.

At the time, health economics was not being addressed at an academic level.

“When my first article was published, it was the first econometric work on health published anywhere,” he wrote in 2013.

Richard Scotton arrives in Melbourne

Richard ‘Dick’ Scotton joined the Institute not long after John Deeble, leaving a job as a bank economist to focus on health.

The two hit it off, and quickly developed a professional and intellectual partnership as they sought to understand the quirks and flaws of the Australian health system.

With little information at their fingertips, they started to travel the country, visiting health providers and private insurers, who had given the pair permission to analyse their clients’ medical history cards.

Making all health public health

The analysis, published in the Australian Economic Review, provided the foundation for a complete reimagining of the Australian health insurance system.

In their research, the two saw a clear need to make healthcare a national policy issue.

By funding health publicly and covering every Australian, the system could be easier and cheaper for those who needed it most.

“Our work had shown that most of the 20 per cent of the population who were uninsured (in the previous system) were relatively young and healthy,” Deeble said.

“Excluding them from the risk pool raised the premiums for others, some of whom faced serious cost burdens.”

Theory becomes reality

In July of 1967, Deeble and Scotton met with then-Opposition Leader Gough Whitlam, who was keen to hear their ideas.

By the following year, they’d refined their work, but sent it to Whitlam with a note that the concepts were "interesting but totally impractical".

“Nothing happened for some months until Whitlam announced… a program that was exactly what we had recommended,” Deeble said.

Labor won the election in 1972, but both the federal opposition and the peak medical bodies resisted change.

‘Medibank’ was passed during Australia’s only double-dissolution joint sitting in 1974, but after Whitlam’s dismissal, the program was changed substantially under Malcolm Fraser.

When Bob Hawke assumed the leadership in 1983, he reaffirmed the policy as Medicare, using the economic foundation laid by The Accord, the initiative of another FBE graduate, Ralph Willis.

Richard Scotton wrote that Medicare differed “only in matters of detail” from Medibank and his initial ideas.

Today, it is still largely the same policy, though facing the challenges of a modern economy.

Life after Medicare

After the bill passed Parliament, both Deeble and Scotton spent time advising its implementation, and were awarded PhDs for their research, as well the Royal Society of Australia’s research medal. They were both made Officers of the Order of Australia in recognition of their work.

Over a tenured career, John Deeble spent time working in the Department of Health and at the Australian National University. He was the founding director of the Australian Institute of Health and Welfare, which remains the national agency responsible for the collection and analysis of health information and data.

After Deeble’s death in 2018, he was described by colleague Professor Peter Read as someone who “treated everyone the same… with dignity and respect.”

After Scotton’s work at the Institute, he continued public service with stints at the Health Commission of Victoria and the Accident Compensation Commission.

Richard ‘Dick’ Scotton died just a year after his colleague in 2019.

Health economist Dr Stephen Duckett, who had been Scotton’s deputy and mentee, reflected on the difference he and Scotton made.

It is the Medicare card in your pocket, the taken-for-granted physical symbol of the institution he created, Australia’s universal and much-loved health insurance system Medicare, which touches every Australian, which should be his proudest achievement and greatest legacy.

Dr Stephen Duckett