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Patients coughing up too much, but who cares?

We shall soon know the future, or at least how the National Health and Hospitals Reform Commission would like to see the future of health care evolve in Australia.

Its final report is expected to be released within days but health policy analyst Jennifer Doggett warns that one important issue – the impact of out-of-pocket payments – doesn’t seem to be on the political radar. Doggett, a Fellow of the Centre for Policy Development, has released a paper on this issue today and it is available here.

Meanwhile, she has filed the following report for Croakey:

“Direct payments from individuals for their health care make up almost one-fifth of total health funding in Australia but have been largely ignored in recent health reform proposals. This oversight threatens both the equity and efficiency of our health system.  Unless it is addressed it will undermine the effectiveness of the Government’s reform agenda.

Individual payments are important because they have a strong influence on how consumers access health care and which goods and services they access.  There is ample evidence that co-payments within our health system are preventing people from accessing appropriate treatment.

A survey of people with mental illnesses, released yesterday by peak mental health body SANE Australia, found that the majority of respondents reported that they often had to choose between paying for healthcare or meeting daily needs.

Over half of the respondents (54%) said they had not been able to afford treatments recommended by their doctor, and 42% had not filled scripts for medication they had been prescribed because of the expense. One third of those surveyed were not registered for the Medicare Safety-Net and therefore would not receive additional subsidies available to people with high health care expenses.

A 2008 Commonwealth Fund survey of chronically ill adults in Australia, Canada, France, Germany, the Netherlands, New Zealand, the United Kingdom, and the United States found that over a third (36%) of Australians with chronic conditions reported problems with accessing health care due to cost.  This was higher than participants from any other country, apart from the US.

Individual payments are a widely used form of health care funding in almost all health systems around the world. However, Australians pay for a higher proportion of their health care in individual payments than citizens of many other countries, including the UK, Japan, Germany, France and the Netherlands. Even Americans, though they pay more overall than Australians for their health care, contribute only 13% of their total health funding through direct payments (compared with over 17% for Australians).

The level of individual payments for health care in Australia is not necessarily a problem. Like any form of payment for health care, co-payments have advantages and disadvantages and their impact varies significantly depending on the way in which they are implemented.

Many of the problems associated with co-payments in Australia are due to the fact that our current system of co-payments has developed in an ad hoc manner without an overall policy context or a coordinated approach between the providers and funders of health care.  Government programs involving co-payments have been treated in isolation from each other and different arrangements for co-payments have been introduced without consideration of their overall impact on consumers. The result of this policy neglect is a ‘system’ of co-payments which:

  • is inequitable, discriminating against consumers with certain types of health care needs or who live in particular geographic areas;
  • creates barriers to access cost-effective health care;
  • is confusing to both consumers and providers;
  • results in perverse incentives in the use of health care;
  • is complex and expensive to administer;
  • typically imposes the highest costs on consumers when they have the least ability to pay; and
  • does not support the diversity of consumer health care needs or promote consume.

The starting point for addressing the significant equity and efficiency issues associated with our current system is to develop a national approach to co-payments for health care, based on agreed principles which reflect community values.

As part of this process, innovative policy solutions should be considered, such as the following:


1)    Giving all consumers a ‘Health Credit Card’ to pay for health care without upfront payments.  The Federal Government would then assume responsibility for paying health care providers directly and bill consumers for the out-of-pocket costs.


2)    Creating a single comprehensive safety-net for all health-related goods and services (incorporating the existing Medicare and PBS safety-nets) to target consumers who have difficulty affording health care.


3)    Providing greater choice for consumers in public health care, through allowing them to trade public hospital benefits for higher primary care subsidies and/or pay additional fees for non-medical services.

Unless the issue of individual payments is given greater policy attention, the existing equity and efficiency problems within our health system will remain. This will threaten the long-term viability of public health care in Australia and undermine the potential success of other reform options, such as the governance changes recommended by the National Health and Hospitals Reform Commission.

When almost one in five dollars spent on health care in Australia comes directly out of consumers’ pockets, individual payments are a policy issue that we cannot afford to ignore.”

Meanwhile the Consumers Health Forum of Australia is not impressed by reports that pathology companies are pressuring doctors to reduce bulk billing of pathology services, and has put out a statement today calling on the Australian Competition and Consumer Commission to investigate.

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