Economists have called for health insurance to become mandatory, as part of the greatest health care overhaul since the introduction of Medicare.

Murdoch University’s Associate Professor Francesco Paolucci was a co-author of a new report that says a national health insurance scheme could be the right medicine for Australia’s ailing health care industry.

The report calls on the Australian government to adopt a blended insurance model, with a focus on care for chronic illness to stabilise the health care sector.

The report was launched by Victoria University’s Australian Health Policy Collaboration (AHPC), a health policy and research think tank.

Professor Paolucci says Australia’s health policies, funding and service models are failing about one quarter of the population.

“Preventable diseases and chronic conditions like diabetes, heart disease and stroke affect a huge number of Australians, and this number is growing day by day,” he said.

“Without an aggressive focus on reducing preventable illness and improving chronic disease management, governments’ fears of increasing health costs will be realised.”

The report finds that the key issue is not to control or reduce health expenditures but to provide a framework for a sustainable insurance system. It proposes the adoption of a model that focuses on equity, as well as demand and supply.

It also highlights the need to tackle duplication in private health insurance and fragmented care.

AHPC Director Rosemary Calder said: “These are some factors that have caused the current system to become an inefficient maze, where providers and patients face dead ends and diversions when seeking treatment”.

The report suggests ways to fund a new health insurance system taking into account the financial incentives of insurers, providers and covered individuals. They also provide a ten-year implementation strategy and timeline.

Ms Calder said a large part of current health care problems is due to funding and service models focusing on treatment instead of preventative care.

“It seems that for some Australians, access to preventative health care is an optional extra, and being chronically ill is an acceptable state. We need this to change,” Ms Calder said.

The report, The Case for Change Towards Universal and Sustainable National Health Insurance & Financing for Australia, is available online.