Are we being conned?
Trust in government is low. Is part of the problem the lack of consumer protection in regulated sectors?
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Aged care, energy, and private health. What do all these sectors have in common? They all provide essential goods and services. They are all heavily regulated by government.
The other thing in common is that they appear to operate on models based on consumer choice and competition, yet none of these markets operate under conditions of perfect competition.
Why is this last point important? Because a prevailing view of government and regulators of these sectors is that consumer behaviour and consumer choice will be powerful tools to manage prices and uphold quality.
What does this mean for you, the end user of these services?
It means you have to wade through websites, comparing products and services in some vain hope that you will find a cheaper price or higher product quality. Essentially government wants to use your time and effort to make regulated markets better.
Writing in The Guardian, Caroline Baum reported how she spent three months researching aged care options for her mother - visiting facilities and comparing reviews, which she said was “time consuming and frequently misleading”.
Aged care has been at the forefront of “consumer directed care” for many years, importing the concept from the United Kingdom as a panacea for poor performance. But what has it delivered?
In rural areas, there isn’t any choice. Even in urban areas, choice is problematic. Most people need care at time of frailty or crisis when all they want is high quality care and support.
What they don’t need, is to be the arbiter of quality – that is the role of government regulators.
In the electricity “market”, we are bombarded by retailers with a myriad of choice, each with a slight tariff variation supposedly saving you money. But most of these deals have a catch.
You have additional charges and fees if you fail to pay on time or move house and your special offer usually expires after a time, unless you renegotiate or switch.
We are told by government to shop around, get a better deal. But really, who has the time? Who could be bothered for a product that has no perceivable differences in quality (the same electrons are delivered regardless of your retailer)?
It’s the same in private health. There are 34 private health insurers (25 that are open to anyone), all selling the same product with variations on a theme. All competing for your dollar. All different, but impossible to compare. Yet the mantra is the same, shop around and get a better deal. But really, are they any different and can you be bothered?
Every dollar they spend on advertising to get you to switch, is a dollar that you don’t get when you make a claim. And does it make them more efficient or their premiums more competitive? Arguably not.
If you can’t shop around, or shopping around or comparing prices isn’t an option, then it’s not a fair market, so we should stop trying to pretend that a market exists.
We believe this faux competition isn’t just frustrating for consumers, as it was for Caroline Baum (and the many like her trying to get access to essential services), it’s also a drag on the economy as we waste millions upon millions of dollars promoting competition and choice, when markets are not competitive.
This is a problem for government, because they are the ones using market and market tools as means to control pricing or uphold quality.
National Seniors is the defender, protector, and promoter of older Australians. We think it’s time that government started acting in the interests of consumers.
In aged care, that means setting price caps for home care services and demanding better quality of care – as outlined in the new Aged Care Act.
In electricity, that means removing offers that are hard to compare, banning unfair charges and fees, and giving people access to their usage data (in real-time).
In private health, it means using a Productivity Commission inquiry to look under the hood of the sector and see where your contributions and tax money is going.
If these things annoy you too, we have campaigns on energy, health costs and aged care that you can join or support via a donation.
Best of all, if you are not one already, please consider becoming a member of National Seniors today to help us help fight for you!
