What happened next should send chills up the spine of Obamacare supporters. The Fraser government gradually undermined Medibank by amending it. It passed a tax to pay for the system, but allowed citizens who purchased private insurance not to pay the tax. It reduced payments to the public system. Finally, in April 1981, it repealed the Medibank legislation, ending the program. Two years later, however, with the economy again in recession, Labor under Bob Hawke won a resounding victory in the House and Senate. Labor also controlled four of the six state governments. One of Labor’s campaign promises was to restore the national health insurance system.
Labor then got a new system, dubbed Medicare, through the House and Senate. It was virtually the same as Medibank, but this time was backed by a levy on the income tax. Australians could still buy private insurance, but they would also have to pay the tax. And this time, the states cooperated with the federal program. The Australian Medical Association objected, but not as adamantly as before, since many doctors had abandoned fee-for-service medicine to work for hospital as salaried professionals. The program itself proved so popular that when a Liberal government took power in 1996, it did not try to undermine or repeal it. As happened in Europe, Canada and Japan, national health insurance became part of what the state did.
What, then, are the lessons that Americans and supporters of Obamacare can learn from Australia’s experience? The most obvious is that no piece is legislation is permanent, but must be sustained politically. If it is passed over the opposition of a rival party, and if that party comes into power, it can always repeal it or simply make it impossible to implement. The only way to ensure that the legislation will survive a change in the party in power is if the legislation becomes thoroughly popular. If it can’t be fully implemented—which is what happened to the original Medibank legislation—it will be vulnerable to a challenge.