THE Labor government has failed to deal with the ''glaring inequities'' in caring for the sick in Australia, according to a new analysis of the health system.

The high out-of-pocket costs facing Australians for healthcare and the rise in private care meant ''the poorer and sicker members of our community are clearly disadvantaged'', health economist professors George Palmer and Stephanie Short of Sydney University say.

The revised edition of their standard textbook Health Care and Public Policy published yesterday, finds that the government has failed to take on the ''powerful interest groups'' including the doctors and private health insurance in its ''reform'' of the health system.

They write that the National Health and Hospitals Reform Commission, whose brief excluded an examination of private health insurance subsidies, made no mention of the ''substantial and unexplained'' variation in provision of health services to people living in similar geographic areas.

No mention was made of the over-provision of surgical and diagnostic services and that equity of services meant that all people were entitled to receive care on the basis of need.