Essays on The Privatization of Medibank Case Study

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The paper 'The Privatization of Medibank' is a wonderful example of a Business Case Study. Medibank is healthcare insurance in Australia that has a current market share of 30% (6 million policyholders) out of the thirty-four health insurers (Baer, 2008, p. 260). Baer has added that the liberal government in 1976 formed this insurer with an aim of providing cheap medical cover to its citizens. Unfortunately, as of the year 2009, Medibank changed its role as the not-for-profit organization; thus, it started commercializing its operations. Logically, this suggests that the organization commenced paying taxes and dividends to the government and shareholders that aided in relieving the public of the tax burden.

Notably, there are plans to sell the Medibank Private in the financial year 2014/2015, which has raised so many questions not only among the politicians but also among the Australian citizens (Al-sharqi, 2012, p. 453). In this paper, the writer seeks to evaluate the likely impacts of such a sale by giving supporting and opposing opinions. Proponents for the Privatization of Medibank The individuals who firmly believe that the privatization of Medibank is in line with societal expectations have a number of reasons.

Firstly, these proponents say that the Australian government should apparently define its role in the insurance market. Presently, the government is a regulator as well as a market participant in the medical insurance industry, which contradicts its responsibility. It would be wise if the government precisely defined its role by being a one-sided party in the insurance industry. Simply speaking, the government should strive to be the regulator only so that it protects the public interests. It is worth mentioning that taking such positions would also help the government cleanse its name in the public who would have already formed a tainted image as well as reduce the ambiguity that may stem out of being an authorizer and a participant.

Sometimes, the other private competitors feel that the Australian authority knowingly betrays them so that Medibank remains one of the largest insurers. Secondly, the government will realize a one-time gain from the sale of Medibank organization. The purchasing power of a unit sum of money depreciates with time due to the investment risks, inflation, and rising exchange rates.

Therefore, if the sale of the Medibank were to take place today, one would realize more valuable cash. Surprisingly, the funds that the government realizes from the sale can go into development activities. In view of this, it implies that the government can start income-generating projects that target to uplift the standards of living of the community (Al-sharqi, 2012, p. 459). Constitutionally, the relevant authority has the responsibility of providing its citizens with vital infrastructures and social utilities. Consider, for example, government ministries can use the sales proceeds to set up and improve conditions of learning institutions, health centers, electrification, roads, communication, and network systems and public halls.

Thus, the proceeds benefit both the government and its citizens. A third note is that the sale would have no effect on the level of premiums. An empirical study shows that there is little likelihood of an increase in premium contributions. According to the Scoping Study, there is no enough evidence to conclude that the cost of the cover will rise up(Australian Department of Finance, n.d. ).

Financially, the sale will have no impact on the public domain. Furthermore, the privatized Medibank must provide sufficient grounds and adequate justifications for an alteration at the premium level. The process of scaling up the premium rates follows the bureaucratic ladder where each stage critically scrutinizes the provided justifications. Knowingly, every department points out weaknesses in the proposed rates; hence, rates will only change in rare cases. It follows that if the government were to privatize the firm the public would be sure of continued quality services and products. Besides, the privatized Medibank has to offer competitive, but affordable terms to all its stakeholders.


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