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HealthWrap – out-of-pocket costs, safety and quality, Medicare at 34 and a new author

Welcome to the first HealthWrap of 2018 – although it’s early in the year there is already a wealth of health issues on the political agenda, including out-of-pocket costs, private health insurance and public hospitals.

Regular Croakey readers will note a change in author from previous HealthWraps – after five years of regular HealthWrap contributions, the Sax Institute is stepping aside. Croakey is grateful that Dr Lesley Russell, a contributing editor at Croakey, has agreed to continue this popular fortnightly feature.

Croakey thanks the Sax Institute for its valuable contribution over the past five years and welcomes Dr Russell into the role.


Lesley Russell writes:

Note: I have taken on the task, at least temporarily, of compiling the fortnightly HealthWrap. You will soon realise that this comes with a fair load of my own perspectives and biases. I hope these do not distort the issues but serve to drive thoughtful (and polite) debate. I intend to include some issues from overseas, particularly from the US, in each HealthWrap, but my main focus will be on the issues that Croakey is currently taking up.

Out-of-pocket costs, private health insurance – and protecting the universality of Medicare

This year Croakey is committed to a sustained focus on out-of-pocket (OOP) costs. You can follow the analyses and commentary via #OutofPocket.

It’s pleasing to see that the Turnbull Government has finally recognised that OOP costs are a real barrier for many Australians and established a Ministerial Advisory Committee to investigate the issue. However, as Jennifer Doggett has pointedly noted, this committee has only one consumer representative, so it’s not clear how the voices of consumers and patients will be heard above the usual clamour about the inadequacy of Medicare rebates, the growing business costs of doctors in private practice, and the moral hazard of “free” medicine.

Moreover, the Committee is described in the Minister for Health’s media release as “part of the package of reforms to private health insurance announced on 13 October 2017” – does this mean only specialist and hospital costs will be considered, when we know that the costs of essential primary care are also prohibitive for many?

Croakey has published two excellent posts on this issue by Margaret Faux which you can read here and here.  Margaret raises the issue of Section 51(xxiiiA) of the Constitution, which enshrines doctors’ and dentists’ right to set their own fees. Elsewhere former High Court Justice Michael Kirby has argued that these rights “also include, of necessity, the patients who are the recipients of the provision of such services”. Do these protections to a private contract between doctor and patient remain when a government rebate is accepted as part of that contract? And what government, organisation or individual would be brave enough to test this in the courts?

January saw the announcement of PHI premium increases for 2018, effective April 1. Premiums will increase by 3.95% on average (the lowest growth for 17 years, but still twice the rate of inflation), although some people will see price hikes as high as 8.9%. A family might find themselves spending around $158 a year more on hospital cover. Compounding the price pressure will be simultaneous cuts to the PHI rebate, which decreases if the average premium increase is greater than CPI growth – which is always the case. Choice has an excellent description of the “premiums up – rebate down” problem.

Despite growing public concerns about the cost of premiums, the unexpected OOP costs when PHI is used, and the failure of PHI to deliver value for money, the Government is lagging in its commitment to address these issues. Opposition Leader Bill Shorten said last weekend that, in government, Labor would limit private health insurance premium increases to 2% while the Productivity Commission reviewed the issues. There doesn’t appear to be any commitment from Labor to eliminate or limit the PHI rebate, leading Ian McAuley to ask “Has Labor has lost its nerve on private health insurance?”

The expected responses from the various stakeholders came quickly – Health Minister Hunt started a scare campaign that Labor would push up premiums, the AMA admits there’s a serious problem but doesn’t seem enthusiastic about a Labor solution, and health funds called the plan “disastrous”. However, as The Guardian pointedly notes, the status quo is not viable, actions are needed.

Stay tuned! This is going to be an interesting – and difficult – challenge. Facts and data are important here, and the Consumers Health Forum of Australia is collecting stories about the pain of OOP costs.  It’s great to see Terrance Chang in The Conversation already asking the difficult questions about the value of the PHI rebate.

Improving quality and safety in Australia’s hospitals

No issue in healthcare is more fraught that that of acknowledging and addressing preventable harm and death in Australia’s hospitals. Some of us are old enough to remember the fracas that went on for years around the publication in 1995 of the Quality in Australian Health Care Study. Regrettably, more energy was expended in casting doubts on this study than in acting on the demonstrated potential to improve the quality and safety of health care.

This week Professor Stephen Duckett and his colleagues at the Grattan Institute bravely and boldly entered the fray over hospital quality and safety with their report All complications should count: Using our data to make hospitals safer.

The authors looked at acute care in public and private hospitals and found that, in the period 2012-15, one in nine hospital patients (900,000 people a year) developed a complication in hospital in addition to the condition for which they were admitted. The rate was higher for those patients who stayed overnight – one in four (725,00 patients a year).

There has been some argy-bargy on twitter about the methodologies used, but Duckett has been robust in his counters and the report includes a methodological supplement.

While the results have been reported widely in the media, the best summary of the results and recommendations for what should happen to address these come from Duckett et al in their article in The Conversation. Their key message is that lots of data are collected, but the information contained in that data is not used to address the huge levels of variance in hospital outcomes which affect costs and health insurance premiums – and patients’ lives.

They argue that this information must be shared with hospitals, clinicians and patients to increase transparency, accountability and to help prioritise improvement initiatives and culture changes. While such transparency is strongly supported by consumers, it’s disappointing to see pushback from doctors, including GPs.

Two points worth noting:

  1. There’s also a lot of data about patient outcomes for individual surgeons working in the private sector, together with patient costs, available in the RACS / Medibank Surgical Variance reports. It’s not clear how, or even if, these data are fed back to surgeons and the departments they work in. They certainly reinforce the point that higher cost does not equate to better outcomes and that those surgeons (and presumably hospitals?) who do more procedures have better outcomes.
  2. The Turnbull Government is implementing, under the National Health Reform Agreement, an initiative (similar to that operated by US Medicare and a number of major US insurers) that will see some part of federal hospital payments withheld under new “quality adjustment” funding. There are more details about this contentious scheme, and whether it will prove effective in driving the needed changes here. Much of this effort will be focused on infection control. How easy will this be when the average compliance rate for handwashing is still only 84.8%?

RACGP President Dr Bastian Seidel responded to the Grattan Institute report by calling for increased funding and support for healthcare at earlier stages of the patient journey and an increased focus on prevention. “Access to patient complication rates would assist GPs in their referral decisions. But what is more important is that GPs are better supported to prevent having to make these referral decisions in the first place: patients want health, not necessarily treatment,” said Dr Seidel.

 A new report on government services from the Productivity Commission confirms that GPs are the most cost-effective part of the health system. Federal spending on general practice grew by just 80c per person in 2016, up from $370.60 in 2015 to $371.40 per person.

Medicare at 34 – time for a makeover?

As Alison Verhoeven states in her essay for Croakey, much has changed in the 34 years since Medicare was born. We are living longer, chronic diseases are a bigger disease burden than acute conditions, and there have been great advances in treatments, diagnostics and pharmaceuticals.

We have come to see that good health is about so much more than access to medical care, hospitals, medicines and new technologies. We must move from systems that see patients as separate diagnoses to seeing the whole person and the environment and community in which they live. Those reforms are wicked problems.

But we are not without some great ideas and proposals to guide us.  See for example the Healthy people, healthy systems blueprint from the AHHA, the briefing papers on key health reform issues from AHCRA, a raft of articles in The Conversation, including Sebastian Rosenberg’s piece on using citizen power to drive mental health reforms, the 10 year review of the Closing the Gap Strategy and Recommendations for Reset, and a recent article in Croakey from Marc Tennant et al.  There’s a lot of firepower in just this abbreviated list! And let’s not forget to mine the archive too.  Some of the best reform proposals have been around – ignored – for ages. A prime example is the 1986 paper from Professor Kerr White, commissioned by then Minister for Health Neal Blewett as part of Australia’s Bicentennial Health Initiative. Read it and weep for what could have been.

Healthcare reform shake-up in the US

The announcement that Jeff Bezos from Amazon, Jamie Dimon from JPMorgan Chase, and Warren Buffett from Berkshire Hathaway are teaming up to do something about their workers’ healthcare has rocked the United States and the stock market, despite the fact that there is very little detail about what they will do.

Their announcement said, “Tackling the enormous challenges of healthcare and harnessing its full benefits are among the greatest issues facing society today.” But it’s obvious that President Trump and the Republican controlled Congress have no interest in or ability to undertake healthcare reforms; their pronouncements and tinkering with Obamacare (which still continues to deliver real value) have only served to make healthcare providers and businesses nervous about the future.

These moguls are not sitting around waiting for action – they will take it themselves. They all have demonstrated their ability to deliver transformative change in their business space – can this be translated into the difficult, complicated area of healthcare?

There is so much that could be done to deliver savings and better outcomes, even absent transformative reforms. Between them the three companies have some 1 million employees, ranging from high powered bankers, to well remunerated technicians and low paid warehouse workers. The majority of Americans (55% or 155 million people) get their health insurance from employment but efforts to repeal Obamacare impact this.  Costs continue to rise and this means workers are paying more in their share of premiums, and co-payments and deductibles. It’s an economic issue for employers and workers.

You can hear my interview on this with Geraldine Doogue on ABC RN Saturday Extra here.

There’s a very pronounced theme to the issues in this HealthWrap: when governments (here and in the US) fail to address significant public concerns about healthcare costs and fail to see that ensuring affordable access to healthcare is a national investment in productivity, the drivers for change will come from outside groups. This may well be the best way to fill government policy vacuums, but governments’ failures in this regard will be held to account by voters.

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