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The arguments for a GP co-payment do not add up

Much of the critique of the proposal for a GP co-payment (as published at Croakey and The Conversation and summarised at the bottom of this post) has argued that it would be regressive and exacerbate health inequalities.

In the article below, a health policy analyst critiques the arguments that have been used to advance the proposal.

***

“William Foggin” writes:

There has been much debate in recent weeks about a proposal that that bulk-billed GP services should involve a patient co-payment of $6.  The proposal was put forward in a paper by Mr Terry Barnes prepared for the Australian Centre for Health Research and presented to the Commission of Audit.

It is interesting for many reasons.

Those opposed to the suggestion condemn it on the basis that a co-payment will prevent people from seeking medical care – and indeed, the savings assumptions in the paper are based on a reduction in the volume of GP services rather than on a reduction in the benefit payable for services.

However, none of those groups opposed to the co-payment for GP services are suggesting removing the co-payments for pharmaceuticals.

From 1 January 2014, these stand at $6 for pensioners and other concessional cardholders, and up to $36.90 for the general population.  Arguing that a $6 fee for seeing the doctor is unacceptable, but a $36.90 fee for the drugs the doctors prescribes is acceptable, is quite illogical.

But the really interesting questions are those that arise from the claimed benefits of the suggested co-payment.  To paraphrase the paper, these are:

  • Finding savings in the MBS
  • Reducing avoidable demand for GP services and by helping to manage demand allowing GPs to concentrate more of their scarce time on patients who most need treatment or care management
  • Reducing incentives for GPs to overservice
  • Sending a price signal to consumers and reminding them that GP services are not a free good
  • Reducing moral hazard risks by making people think twice about going to the doctor about minor ailments
  • Offering a simple yet powerful reminder that we have a responsibility to look after our own health.

While the paper does not explain why savings in the MBS are necessary, Mr Barnes has suggested elsewhere that “Keeping Medicare sustainable is also an issue. It’s no secret that health costs increase well beyond the consumer price index norm”.

It is unclear whether the paper is referring to unit health costs or systemic health costs.  As far as unit costs are concerned, the paper makes the point that GP benefits per service have been increasing at a lower rate than CPI. More generally, the “total health price index” generated by the AIHW has been trending down since 2005-06 and has been lower than CPI in most of these years.

As far as systemic costs are concerned, total health expenditure is increasing faster than CPI. Given a growing and ageing population, this is hardly surprising.

However, policy changes directed to stifling demand for health services, and increasing private spending and reducing public spending on health, will not affect this trend.  What is needed are policy changes directed to improving the efficiency and effectiveness of what is spent.

The paper does not adduce any evidence of avoidable demand for GP services.  It relies on an implicit syllogism which runs:

  • free services will be over-consumed;
  • GP services are free; therefore
  • GP services will be over-consumed.

It also claims that there are incentives for GPs to overservice, apparently to maintain their income in those areas where there is an oversupply of GPs, and that a co-payment will by make people think twice about going to the doctor about minor ailments.

The problem with creating a price barrier to access is that there can be no assurance that it will prevent only the “unnecessary” GP services for treatment of “minor ailments”.

GP services (and emergency department services, for that matter) are only “unnecessary” in retrospect.  The lingering cough after a week after a cold may be just that – a “minor ailment” – and may disappear in a few days.  Or it may be incipient pneumonia.  Or it may be the first signs of lung cancer.

Medical expertise is needed for differential diagnosis.  Using co-payments to assign this task to patients will not be successful.

The claim that co-payments in areas of workforce shortage will free up GPs to spend more time on patients who most need care (the deserving sick?) suggest that there will not in fact be any savings in these areas – as GPs provide additional care to the deserving sick they will be billing Medicare for it.

The paper also argues that a co-payment will remind patients that GP services are not a free good.  But if they had to pay for them, of course, they would no longer be a free good!

Even if patients do not understand the fact that the GP is being paid by somebody to provide a bulk-billed service, the reality is that patients face transactional costs.

They need to travel to get to the surgery, they potentially need to take time off work, they need to arrange child care or child pick-up after school, and so forth.  And of course, any further treatment recommended by the GP in the form of pharmaceuticals or allied health services such as physiotherapy will not be free.

In suggesting that a co-payment will reduce moral hazard risks, the paper demonstrates a misunderstanding of moral hazard. It is not making use of services because one is insured – it is engaging in risky behaviour likely to lead to the need to use services.

Will the prospect of a $6 co-payment to see a GP lead more people to give up smoking, refuse sugary drinks, or exercise for thirty minutes a day?  Will it remind people they have a responsibility to look after their own health? I doubt it.

Perhaps the most interesting aspect of the paper is the suggestion that:

“Co-payments, and expenses below the EMSN threshold, could be covered by private health gap insurance” [emphasis in the original].

The whole rationale for a co-payment is that it will change people’s behaviour by making them pay out of their own pockets.

If they are able to then go and claim the money back from an insurer all the arguments in favour of the proposal fall away.  Insurable co-payments aren’t really co-payments.

• “William Foggin” is the pen-name of a health policy analyst who wishes to remain anonymous.

*** 

Further reading from Croakey and The Conversation

Co-payments a regressive move say public health experts

Busting myths on co-payments

Putting the vulnerable and primary prevention at risk 

An inelegant and unfair tool: a GP view

Ignoring the evidence: Jim Gillespie

Better options for reform

 

 

 

 

Comments 1

  1. Tim Senior says:

    “William Foggin” (May I call him Bill?) is right to include PBS co-payments in the Medicare co-payment debate. Claiming that people have been arguing in favour is stretching the truth a little. I think it’s more that it’s been ignored completely. However, the most universally liked and successful part of the government Indigenous Chronic Disease Package has been the PBS CtG Co-payment. This reduces the cost of medications for Aboriginal and Torres Strait Islander people who have or are at risk of a chronic disease and who register for the program. This eliminates the cost of PBS medications altogether for those on a pension.
    This has resulted in many Aboriginal and Torres Strait Islander people being able to take essential medication because they can now afford it. Granted there are other barriers, and there are certainly financial barriers in the health system.
    “William Foggin” is probably right to suggest that if we are rejecting a co-payment that isn’t there yet, we should perhaps start discussing all the financial barriers in Medicare that currently are there. The Indigenous PBS CtG Copayment gives us some evidence that removing them may reduce health costs down the line.

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Summer reading 2020-2021
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Testing Croakey News category 1
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Croakey Conference News Service 2013 – 2019
2013 conferences
Australian Centre for Health Services Innovation Forum 2013
Australian Health Promotion Association Conference 2013
Closing the Credibility Gap 2013
CRANAplus Conference 2013
FASD Conference 2013
Health Workforce Australia 2013
International Health Literacy Network Conference 2013
NACCHO Summit 2013
National Rural Health Conference 2013
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2014 conferences
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AIDA Conference 2014
Congress Lowitja 2014
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Cultural Solutions - Healing Foundation forum 2014
Lowitja Institute Continuous Quality Improvement conference 2014
National Suicide Prevention Conference 2014
Racism and children/youth health symposium 2014
Rural & Remote Health Scientific Symposium 2014
2015 conferences
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Population Health Congress 2015
2016 conferences
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2017 conferences
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Australian Palliative Care Conference
2018 conferences
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