The paper 'Government-Business and Privatization of Medibank' is a great example of a Business Case Study. Privatization of government Businesses is a move taken by various governments across the world as they look for additional funds to finance other public projects. The economic recession experienced in the year 2009, and 2012 affected the economy of various government entities. Privatization of government businesses especially in the health and finance sectors is on the rise especially in Europe and Africa. The Government of Australia also involves a series of privatization processes since the 2007 general election.
Most governments argue on the basis of increasing the public funds. The Government of Australia recently proposed the sale of the major medical services provider, Medibank in early 2014. This essay will discuss the opinions raised for and against the privatization of the Medibank entity in Australia (Peter, 2014, 3). The essay will also give a brief description of Medibank on the introduction part and the process that led the proposal for its privatization. Further, it will analyze the reasons for and against its privatization and its financial effects on the taxpayer. Introduction Government businesses are organisations, fully owned by the government whose profits go to the government kit.
The Government of Australia owns several businesses across the country. Medibank is the only medical insurance institution under full control of the government. The issue of privatizing Medibank was a main campaign agenda during the last general election. The current opposition was not for the privatization, but the current government insisted on its privatization. This issue is the most common debate across Australia given the fact that the institution provides medical care for most of the Australian population (Bhojani, 2003, 43). Medibank was established in 1976 by Ray Williams as non-profit entity, but currently operates as profitable Government Business whose dividends are paid to the national government.
The process of converting the bank into a profitable organisation was completed in 2009 after it was approved by the Private Health Insurance Administration Council. This is an authority tasked with regulation of the private health insurance sector. Since its establishment, Medibank has acquired several other insurance companies in Australia such as the Australian Health Management (AHM) organisation and the HSA group.
The AHM was acquired in January 2009 while the HSA group merged with Medibank in April 2009. The move enabled Medibank to create division for health solutions whose main focus was to provide occupational related health services. The health services are provided through Travel Doctors and Medibank Health solutions brands (Guido 2005, 709). The company solely provided health insurance services at reduced cost to Australian citizens. The company is also known for liberalizing the insurance industry in Australia through provision of cheap health covers. This forced other health cover providers to reduce the cost of their services.
This has made health insurance accessible to the majority of the Australians. The government extracts dividends from the company implying that its profits take care of projects that would otherwise be paid using the taxpayers’ money. This has reduced the amount of taxes paid by Australians especially in the health industry. Privatization Proposals The Howard government announced its intention to privatize Medibank if re-elected in 2007 general elections. The opposing Labour Party led by Rudd was opposing this opinion.
The opposition insisted that Medibank should be maintained as a government-Business operating under the ministry of finance (Michael, 2013, 3). The Labour Party eventually won the elections. Medibank management was ready to work with the Rudd Labour government which implied that the institution would remain as a Government entity as promised by the Labour Party during the campaigns.
Ben Woodhead, (2014). Spin doctors assembled for $4bn Medibank privatization. Fairfax Media Publications Pty Ltd. Pp. 23.
Bhojani. S. (2003). ‘The sale of Medibank Private: gone but not forgotten,' Health Cover, 13:4, pp. 43.
Coleman. E. (2006). ‘A prescription for competition: sell Medibank Private in pieces.' Australian. pp 9.
Guido W, (2005). The Role of the Propensity Score in Estimating Dose Response Functions. Biometrika, Vol. 87(3), pp.706–710.
Harvey. K. (2006), The sale of Medibank Private, New Matilda. Vol 1. Pp 3.
Ian McAuley, (2013). Why privatizing Medibank is good policy. Business Specter PTY Ltd. Vol 1. Pp 4.
La Porta, Rafael, F López-de-Silanes. , 2000. ‘The Benefits of Privatization: Evidence from Mexico, Quarterly Journal of Economics, vol 114(4), pp.1193-1242
López-de-Silanes., Florencio. A. Shleifer, R W Vishny, (2000), ‘Privatization in the United States,' RAND Journal of Economics, Vol. 28(3), pp.447–471.
Megginson. L. William. (2000), The Financial Economics of Privatization. Oxford Press, New York.
Michael Bennet, (2013). Medibank sale has adviser's circling, The Australian. Vol 10, pp 3.
Peter Ryan. (2014). Medibank Private: long path to privatization for chief executive George Savvides. ABC. vol. 6. Pp 2-4.
Rubinstein. E. (2005). ‘Unhealthy practices at health funds,' Australian Financial Review. Vol 2, pp. 6.