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Where the Government is going on wrong on out-of-pocket costs

The Ministerial Advisory Committee on Out-of-Pocket costs disappointed many health stakeholders when after a year of deliberations, its report recommended only a narrow range of strategies to address the problems associated with out-of-pocket costs, all of which centred around some type of fee disclosure resource to increase transparency of medical specialist fees.

The conceptualising of the out-of-pocket cost problem as one of insufficient consumer information obscures the wide-ranging impact of the access barriers and inequities inherent in the current Australian health system. It also denies the important role that governments and medical professionals can play in reducing these barriers through individual actions and policy changes, including options such as capping Medicare-subsidised fees.

In the article below, Dr Tim Woodruff, President of the Doctors Reform Society, discusses these issues and argues for a focus on timely universal access to health care as a central goal for health reform.


Tim Woodruff writes:

One of my patients has epilepsy. She sees a neurologist for that and he charges $200 out of pocket per visit. He has controlled her epilepsy very well. She is on a disability support pension. She believes she will get better care seeing him privately despite the fact that he also works in the public system.

Out of pocket (OOP) costs have been in the news particularly since the ABC’s 4 Corners program exposed huge costs impacting significant financial hardship on many sick Australians. As a result of a Ministerial Committee report the Health Minister has proposed tackling the issue with a website of specialist charges and an education campaign for patients. The Committee consisted of ten health care provider representatives and one consumer representative. My suggestion to the Minister that more consumer representatives might be appropriate resulted in an intensely angry response.

The effect of OOP costs

OOP costs affect patients in two ways. They either cause financial hardship or they stop patients using the service. The 4 Corners program and everything that has followed have concentrated almost exclusively on the former which have indirect effects on health through stress but don’t affect medical care.

There is a 6 month waiting time to see an arthritis specialist at my hospital. This scenario is typical of most public hospitals. Some of these patients’ lives are endangered by this delay. Many suffer unnecessarily. Waiting times for elective surgery around the country can be years. The patient may not be able to work for that time or may be dependant on their family and require narcotic analgesics through that time, but if the problem is deemed not life threatening or progressive, the lowest urgency rating applies. They wait.

Patients wait for both specialist outpatient appointments and elective surgery because they can’t afford the OOPs. For surgery the biggest cost is the Private Health Insurance premium, which is beyond the capacity of the majority of Australians. These patients whose health care needs are not being met have been largely ignored despite the talk of OOP costs and the limited action planned by the Federal Government.

The different types of OOP costs

There are two types of OOP costs which stop patients accessing services adequately. The first is government imposed. The most striking example is the $40 prescription co-payment for a month’s supply of a single drug. On $40,000 a year with three scripts a month that can and does lead to patients not filling out prescriptions. Thus in 2017, 7% of Australians delayed getting or did not get a prescription drug according to the Australian Bureau of Statistics. Not taking prescription drugs which are subsidised by the Government because they save lives, means some people will die because of that co-payment. Others will suffer unnecessarily. On $4 million a year, a banking executive will face the same co-payment. He will not be affected. Such co-payments represent a regressive tax on illness.

The second type is that imposed by health professionals, mainly doctors. This is determined by the health professional and the size of these co-payments reflects a mixture of the financial needs of running a practice or small business, the sense of worth or entitlement of the doctor, the amounts colleagues charge, the amount the Australian Medical Association recommends, and competition. Successive Federal Governments have avoided testing the Constitution as to whether it is legal for Government to put any conditions on receiving the Medicare rebate e.g. fix the co-payment at a certain level. It could be tested.

The importance of a strong public sector

Competition can be a very effective tool for controlling prices in health care. Improving quality however is probably better served by co-operation. The single greatest competitive threat to the private sector is a strong public sector. Since the Howard Government, there has been a progressive intentional weakening of the public sector relative to the private sector, which itself is heavily subsidised by taxes. The aim has been to relegate the view of the public system to that of a safety net.

The alternative is to restore that belief that our public system is there for everyone, truly universal, and that we need to resource it with both better policies and adequate funding. Imagine public specialist outpatient waiting times of about a month. Imagine public elective surgery waiting times of about three months. Patients who now suffer because they cannot afford private care would receive the timely access to care they deserve. Patients who now suffer financial distress as the victims of the flawed private sector could vote with their feet or threaten to do so, and one would see private charges fall across the country. There would still be those who want a single room with a view over the park, the convenience of choosing the date of surgery, and choice of doctor.  They would be free to pay.

Two recent articles on this topic highlight the limited nature of the Federal Government’s approach to the issue of OOP costs and make many valuable suggestions to better address the problems of financial distress and delayed access to care due to OOP costs. The emphasis in addressing these issues must be on delayed access to care, not fiddling with the private system to address financial distress.

Labor’s position

To that end, it is encouraging to see that Labor has promised their permanent Health Reform Commission will have priorities of increasing specialist access in public hospitals and improving chronic disease management. There are many other areas where public health services are desperately in need of improvement. We need investment in our public system. Then we could see how many specialists can still get away with causing financial hardship as they live the lifestyle to which they have become accustomed.

We currently have universal access to an inadequate rebate for medical care, and access to public hospital care and dental care years after it is needed. We should be aiming for a system which provides universal access to timely health care. That is what a publicly funded health system can do. Improving private health care for those who can afford it is not the answer.

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CRANAplus conference 2014
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
#CPHCEforum
#CRANAplus15
#HSR15
#NRHC15
#OTCC15
Population Health Congress 2015
2016 conferences
#AHHAsim16
#AHMRC16
#ANROWS2016
#ATSISPEP
#AusCanIndigenousWellness
#cphce2016
#CPHCEforum16
#CRANAplus2016
#IAMRA2016
#LowitjaConf2016
#PreventObesity16
#TowardsRecovery
#VMIAC16
#WearablesCEH
#WICC2016
2017 conferences
#17APCC
#ACEM17
#AIDAconf2017
#BTH20
#CATSINaM17
#ClimateHealthStrategy
#IAHAConf17
#IDS17
#LBQWHC17
#LivingOurWay
#OKtoAskAu
#OTCC2017
#ResearchTranslation17
#TheMHS2017
#VMIACConf17
#WCPH2017
Australian Palliative Care Conference
2018 conferences
#6rrhss
#ACEM18