There has been a rush to purchase shares in Medibank Private since the Federal Government’s sale offer opened last Tuesday. Just two days later, the broker allocation was already eight times over-subscribed.
The popularity of the share float is not surprising, as past sales of government owned corporations such as Telstra have produced windfall profits for cashed up Australians able to invest. The sales are also hugely profitable for the Government, which in the case of Medibank Private expects to raise more than $4 billion. Win-win, it would seem, at least for those who can afford to participate.
But there’s an important question that needs to be asked, which is whether Medibank Private is the Government’s to sell. In other words, what are the rights of the policy holders who consider themselves members with equity in the company?
There is a view that the government merely provided $10 million seed funding for the establishment of Medibank Private, as a member equity owned entity, and that that fund allocation has since been returned to the government many times over. Ray Williams, the public servant who created Medibank Private, saysthe plan to sell the business and keep the profits is tantamount to theft.
If member ownership was to be established, possibly by a High Court judgment, the policy holders would receive an allocation of shares, as has been the case with other entities that have been owned co-operatively. Examples including the demutualisation of NRMA Insurance in 2000.
The New Daily online publication has been campaigning to establish the fact of Medibank Private’s policy holder ownership. It has published communications to policy holders in the 1990s demonstrating an understanding that ownership entitlements were among the benefits of remaining in the fund. One policy holder considering leaving was told: ‘We would be very sorry to see you lose the equity you have built up with the fund.’ New Daily published the ‘smoking gun’ letter.
John Menadue, who has been covering the issue in his blog, says the balance sheets of Medibank Private before 1997 clearly show that the members, and not the government, owned the assets of the company. He points out that the Howard Government changed the accounting treatment of Medibank Private 1997 in an attempt to establish government ownership by stealth.
The New Daily reports that at least 60 members have lodged complaints with the Australian Competition and Consumer Commission demanding an investigation into statements made to them by federal governments before 1998 that they were the owners of the health fund’s assets. There is also documentation and a petition at change.org.
Aside from The New Daily and John Menadue, there has been little media coverage or public discussion of the issue. That’s surprising, because generally the media take any opportunity to embarrass the government.
It could be that many of us are conflicted because we want to buy as many shares as we can in Medibank Private to get a share of the windfall. Whatever the explanation, the question of justice to the fund members is less important than that of the inequity of the entire system of private health insurance. Those who cannot afford the premiums receive inferior health care, and the government’s increasing reliance on public health insurance, and continued subsidies to those who can pay, undermine Medicare, the system of universal health care that does not exclude the poor.