Why do we need a private health insurance system?

With all the talk of Australia's slide from universal health care towards the 'broken' USA style system it got me thinking.

Why do we need a private health insurance system at all?

Ok, cue the free market outrage..  but bear with me.

We pay taxes that go towards funding our public health system. There is a specific 'levy' (Medicare) and further funding from general revenue. We also fund, through our taxes, a rebate to those who choose to pay insurance to private companies to cover them for health care costs that are not paid for by the Government.

Like all insurance companies, most of these health insurers are in business to make a profit. So the total amount of premiums paid to these insurers are effectively covering the costs of the health care they provide, the administration, the marketing, plus the profit margin. Logic says (all things being equal like efficiency etc), that if this money were funneled into the public system there would be a net increase in the amount of funding for health equal to the value of the total profits earned by the insurers.

The additional benefit of removing the profit incentive is that any changes could be focused on improving health outcomes, rather than distorting those outcomes to improve an individual provider's bottom line.

So why not adjust the taxation system (through the Medicare levy etc) to take the money that people are already paying for private health cover and apply it to the public health system?

This is the point where people who pay significant dollars to private health insurers scream "But I want the ability to choose!!!!"

And that's it in a nutshell of course, and what the essence of this debate is all about. To what extent do we want a truly 'Universal' heath care system? That universality implies that those who who are well off will fund those who aren't. 'Privatisation' works against this principle.

Supporters of the private system love to use terms like 'choice' and 'efficiency', but in reality the system is no more than the commoditisation of health service as a product. A product that is marketed and sold at a profit. Should our nation's collective health be dealt with in this way?

Even with a truly universal system, I suppose this does not stop organisations from providing additional health services if people choose to pay for them. However our baseline public health system should not be dependent upon a private system to fill the gaps. Our public system should be funded sufficiently to provide the health services that a decent and fair society demands.