Medical care contributes relatively little to population health compared to social determinants of health. Yet we continue to privilege medical care. Governments devote billions to hospitals and pharmaceuticals, while funding for disease prevention remains limited.
Political economy is the study of how power and economics intersect to shape social outcomes.
Unlike mainstream economics, which treats the mechanisms behind how goods and services are exchanged as neutral, political economy recognises that resource allocation reflects underlying power relations … and that these power relations ultimately determine who benefits and who bears costs.
If we look at health systems, it’s clear that they aren’t the result of some natural, inevitable order or even rational planning but the outcome of negotiation, contest, and influence. They reflect the conflicting interests of structured groups in society.
A political economy approach to health and healthcare asks: who defines problems; who frames and profits from solutions; and whose interests prevail in resource allocation?
Professional dominance
Australian health has historically been dominated by the medical industry. Doctors especially hold privileged authority as both providers of expertise and controllers of access to treatment. Professional lobbies such as the AMA exert influence over policy, remuneration, and regulatory design, ensuring that the profession’s interests remain central.
This dominance is embedded in institutional arrangements.
- Medicare is structured around fee-for-service reimbursement, reinforcing doctors’ autonomy and privileging episodic clinical interventions over prevention or integrated care.
- Efforts to expand the role of nurses, allied health professionals, or alternative funding models have often met resistance framed as a defence of patient care but reflecting deeper struggles over control.
- Proposals for a payer-provider model elicit scare campaigns.
- Requests for data on fees and on outcomes are ignored or shrugged off.
- Until recently, the AMA could veto the appointment of the director of the Professional Services Review, a Medicare oversight body.
- And look at the unbalanced composition of the Strengthening Medicare Taskforce.
The dominance is less a reflection of inherent necessity than of political authority and social legitimacy.
Medical sociologistPaul Starr describes how US physicians consolidated professional sovereignty through licensing, hospital organisation, and control over institutional design.
The profession thus secured a central role in policy design, resource flows, and the very definition of what counts as health … although it has been usurped by large corporate interests in recent decades.
Interests shape our institutions
Within a highly epistemic, specialised and arcane areas like health, institutional structures can be very self-reinforcing.
Australia’s mixed system — public hospitals alongside Medicare alongside private hospitals and insurers — reflects decades of compromise shaped by political pressure from the medical professions. Private health insurers and hospital corporations have grown more influential, lobbying for subsidies and favourable regulatory arrangements. But their power is still circumscribed by the profession’s authority.
Politicians, meanwhile, remain acutely aware that open conflict with doctors can derail reform, perpetuating the system’s treatment-heavy bias.
Thus, our complicated, difficult-to-navigate “marble cake” system isn’t the outcome of a rational, Habermasian deliberation. It’s the result of policy choices. And these choices are influenced by medical interests far more than by those for whom the system is meant to exist and who predominantly finance it — us.
The impact of curative care is less than what we’re led to believe
But here’s the thing.
Medical care contributes relatively little to population health compared to social determinants of health. Income, education, employment, and housing account for over 55% of health outcomes. Medical interventions contribute a much smaller share.
We see the effects in Australia’s persistent health inequalities. The gap in life expectancy between Indigenous and non-Indigenous Australians is driven by structural disadvantage and marginalisation, not differential access to medical care. People in lower-income suburbs experience higher rates of chronic disease – all shaped by things predominantly out of their control, beginning with educational attainment, which flows into work conditions, food insecurity, housing quality etc.
Yet we continue to privilege medical care. Federal and state budgets devote billions to hospitals and pharmaceuticals, while funding for disease prevention remains limited – accounting for a pitiful 2% of total health expenditure.
Related
Does this imbalance reflect the relative lobbying power of medical associations and industry actors compared to less organised constituencies advocating for social and structural determinants?
Most would say that it does. Why? Because every dollar of health spending = someone’s income. And that’s why 98% of what we spend on “health” goes to expensive curative services and not primary prevention, where some of the best buys can be found.
Knowledge as power
Controlling the production of knowledge is also important.
The profession not only provides services but also shapes the epistemology and etymology of not just healthcare but around the notion of health itself.
Specialties, along with the biomedical industry, determine diagnostic thresholds, which have edged towards what used to be considered normal. Who would thatbenefit most?
Research funding and health reporting are skewed towards biomedical measures while broader determinants receive less prominence.
A cycle of reinforcement ensues. Because the public equates health with hospitals and doctors, political demand focuses on visible medical spending. This strengthens the political weight of medical lobby and justifies further investment in curative services.
Social determinants remain marginalised because their benefits are long-term, diffuse, and harder to claim politically.
And so ever more funding flows to hospitals as opposed to schools.
And in a time when we increasingly need them, public health institutions are folding.
Note that the power imbalance is also evident withinthe profession. Again, at a time when we need more GPs, the disparity between GP and specialist incomes is one of the highest in the OECD.
What do we do about it?
Improving Australia’s health system (without blowing the budget) is not a matter of technical reform.
It’s about recognising and confronting entrenched power structures.
This doesn’t mean diminishing the importance of curative care, but acknowledging that its dominance narrows our policy imagination. Shifting resources toward upstream determinants demands that the power imbalance be recognised, and that coalitions strong enough to counterbalance medical and industry lobbies be supported.
This needn’t be as hard as it sounds.
A good start would be ensuring that future committees contain an equal number of patient and civil society representatives as those from industry.
We could also begin systematically convening citizens’ assemblies to help governments determine policy priorities.
And we could start answering a simple question with every new policy decision: who, exactly, does this benefit?
Health (and health policy) is the consequence of power: who holds it, how it is exercised, and whose interests the system serves. The challenge is to broaden the scope by confronting the imbalance that has formed over decades and slows us down today.
Luke Slawomirski is a health economist, policy expert and former clinician with international experience and expertise in health system strategy, performance, policy analysis, development and implementation.
This article was first published on LinkedIn. Read the original here.