Introduction by Croakey: So much of our day-to-day attention is focused on the problems facing healthcare systems now. Lifting our gaze to envision the likely future challenges – say in 2050 – can help set a course forward. (more…)
Jennifer Doggett
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Reforms and more funding needed to save Medicare
The release of the Strengthening Medicare Taskforce report has re-ignited discussions about reform of Australia’s primary healthcare system. (more…)
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Dissecting the controversy around Medicare reform and a disappointing response from the ALP
Any plan to change Medicare — especially if it comes from a Coalition government — is bound to attract controversy. So when health minister Greg Hunt announced a fortnight ago that more than 900 items on the Medicare benefits schedule would be changed with just a month’s notice, the reaction was immediate. (more…)
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Lobby Land: the Pharmacy Guild’s powerful influence over health policy
The Pharmacy Guild has been called the ‘most powerful lobby group you’ve never heard of’ and for three decades has had a stranglehold on funding for community pharmacy in Australia. (more…)
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JENNIFER DOGGETT. Even with massive taxpayer hand outs private health insurance is in a death spiral.(Croakey 7.2.2020)
If private health care has a future within the Australian health system we need to find a better funding mechanism than PHI. This means one that is sustainable, fair and efficient and designed to meet the needs of today’s health care consumers with chronic and complex conditions. (more…)
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JENNIFER DOGGETT. Interpreting Medicare data and bulk billing figures (Croakey)
New Medicare data, released today, has prompted a statement from Minister for Health, Greg Hunt, claiming that “nearly nine out of 10 Australians visit their GPs without paying a cent” and a media interview where he played down the impact of out-of-pocket costs on consumers, attributing any problems to a small group of specialists explaining that “the overwhelming majority of specialists do the right thing, but there are outliers.” (more…)
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JENNIFER DOGGETT and LESLEY RUSSELL. Tackling Out-of-Pocket Costs
At the end of February the Federal Government released the report, twelve months in the making, from the Ministerial Advisory Committee on Out-of-Pocket Costs and outlined a national strategy to tackle excessive out-of-pocket costs. It is our opinion that the report’s recommendations and the Government’s response (for a website that provides information about medical specialists’ costs and for an education campaign to improve the understanding of OOP costs for consumers, GPs and medical specialists) do not go far enough, given the substantial and widespread impact of OOP costs. Our recently published paperoffers a road map for tackling the problems associated with OOP costs through short- and long- term initiatives, backed by evidence and informed by on-going consultation and evaluation.
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JENNIFER DOGGETT. Healthcare’s out-of-pocket crisis (Inside Story, 24.10.18)
Fast-rising medical expenses are restricting access to healthcare and increasing long-term costs.
If two Australian capital cities were suddenly left without any dental services it would be considered a national crisis. But a problem of this size occurs each year and is ignored by governments and policy-makers. In 2016–17, more than 3.4 million Australians — equivalent to the combined population of Brisbane and Adelaide — delayed or avoided necessary dental care because of its cost. This startling figure is just one of the symptoms of the growing problem of out-of-pocket medical costs, which is undermining the equity, efficiency and universality of the health system. (more…)
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JENNIFER DOGGETT. AIHW Health Expenditure Australia 2016-17 report – five key lessons.
The Australian Institute of Health and Welfare (AIHW) has released its Health expenditure Australia 2016–17 report. This report contains detailed data on expenditure throughout our health system and is a valuable resource for governments, policy makers and health stakeholders. (more…)
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JENNIFER DOGGETT and LOUISA GORDON Out-of-pocket costs for healthcare are a problem for all Australians
Editor: Jennifer DoggettAuthor: Louisa Gordon (introduction by Jennifer Doggett)on: June 13, 2018In: Co-payments, health financing and costs, Healthcare and health reform
Out-of-pocket health costs (OOPs) are a major challenge facing the Australian health system. Australians pay for a higher proportion of total health care in OOPs than do citizens of almost all OECD countries. In fact, OOPs are the third largest funder of health care in Australia, after Commonwealth and State/Territory Governments.
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JENNIFER DOGGETT. Health Budget Gaps.
Prevention, out-of-pocket costs, and oral health.
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JENNIFER DOGGETT. 8th National Health Reform Summit to focus on equity, efficiency and sustainability.
On Tuesday, March 27th the Australian Healthcare Reform Alliance (AHCRA) is hosting the 8th National Health Reform Summit in Canberra. This biennial event brings together organisations, experts and individuals working to improve Australia’s health system. This year’s Summit has a theme of Equity, Efficiency and Sustainability and will focus on developing positions on key health reform issues in the lead-up to the next federal election. Registrations for this event and the associated Advocacy and Communications Workshop are still open at www.healthreform.org.au (more…)
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JENNIFER DOGGETT. Wasting government funds in subsidising private health insurance.
In the lead up to the recent Federal Budget, the Australian Healthcare Reform Alliance (AHCRA) ran a campaign to highlight the inefficiency of using health resources to subsidise private health insurance (PHI). The campaign focussed on calling on the Government to re-direct funding for the $7 billion private health insurance (PHI) rebate to address key areas of inequity and under-performance (while some estimates of the cost of the rebate are larger, AHCRA decided to use the most conservative figure for our campaign). (more…)
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JENNIFER DOGGETT. Seven Key messages in Health.
This week the Australian Institute of Health and Welfare released its Health expenditure Australia 2014–15 report.
This document contains a wealth of information about the way in which we allocate resources across our health system.
There are many interesting stories in this data which can help us understand how our health system works and what we can do to improve it.
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JENNIFER DOGGETT. Midway through the election campaign, how is health travelling?
It’s half way through the election campaign and both major parties have made some significant health policy announcements with Labor outspending the Coalition on health by over $2 billion (over four years).
However, despite the fact that health consistently rates as the number one issue for voters, neither major party has satisfactorily addressed the key issues essential to ensuring that our health system is fair, efficient and equipped to meet future challenges. (more…)
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Jennifer Doggett. Co-payments in the Australian Health System
Policy Series.
The growing problem of out-of-pocket health care costs in health care is undermining the benefits of Medicare and creating a barrier to increasing fairness, opportunity and security throughout our health system.
Out-of-pocket costs are the direct payments made by consumers for their health care which are not subsidized by any form of public or private insurance (or any other funding source). They include co-payments for care partially subsidized by Medicare and the PBS (for example GP services and prescription medicines), co-payments for goods and services subsidized by private health insurance (for those who have it) and the full cost of unsubsidized and un-funded forms of care, typically non-prescription medicines, allied health services not subsidized by private health insurance, medical aids and appliances.
Currently, individual co‐payments comprise around 17% of total health care expenditure in Australia – the largest non‐government source of funding for health goods and services.[1] This contribution by individuals represents a higher proportion of health care funding than in most other OECD countries and equates to $1,078 per capita per annum.
However, more important than the quantum of health funding contributed via co-payments is the way in which the burden of these out-of-pocket costs is spread across the population. There is a wide variation in the impact of co-payments on people with different illnesses and disabilities. People with conditions that can be largely treated by GPs or within the public hospital system generally incur lower co-payments than those with conditions that require allied health care and over-the-counter medicines.
This is the case independently of the length or severity of the illness/disability and its impact on both individuals and society as a whole. In fact, people with ongoing chronic conditions often end up receiving lower levels of subsidy for their health care than those with one-off or self-limiting conditions.
The overall impact of this ‘system’ is an inequitable and inefficient allocation of resources within our health ‘system’, compounding existing inequalities in our community. This is largely a result of the ad-hoc approach to co-payments and lack of leadership at the political level on this issue. Despite the fact that out-of-pocket costs make up almost one fifth of total health spending, Australia has no national policy on co-payments and there has been no comprehensive consumer or community consultation on this issue. Co-payments are set by governments, health care providers and others independently without any guidance from the community and without any overarching policy framework.
While there are a number of data and research gaps in this area, there is good evidence that existing co-payments within the Australian health system are causing financial hardship for many consumers and creating barriers to accessing care.
For example, the Commonwealth Fund’s 2013 International Health Systems survey[2] and its 2008 Survey of Sicker Adults[3] found significant evidence that co-payments were creating an access barrier for many consumers. Among the surveys’ findings were:
- 16% of Australians surveyed reported delaying access to treatment due to cost issues;
- 29% of Australians reported not accessing dental care in the past year due to cost; and
- 25% of Australians with a chronic condition reported not having a recommended test or follow-up treatment due to cost issues
These findings are reflected by recent research[4] undertaken by the Consumers’ Health Forum which found that more than 70 per cent of respondents had delayed going to the doctor, around half of whom attributed this delay to cost worries. Key findings of the survey include:
- Many consumers are already experiencing difficulty affording health care costs;
- Many consumers are failing to access needed health care due to its cost; and
- Any new co-payments – even if small – will further add to the financial difficulties being experienced by many consumers and create additional barriers to accessing appropriate care.
Other international evidence reflects these findings and show that co-payments create barriers to access to health care for many consumers without decreasing overall health care costs.
Overall, international research in this area has found that:
- Co-payments result in decreased access to health care for vulnerable groups
- This decrease in access is proportional to the size of the co-payment
- Access to both high and low value health services decreases as a result of co-payments.
There is also no evidence that co-payments result in overall cost savings to the health system although there is some limited evidence that co-payments can increase downstream health care costs.
Without significant reform, co-payments will continue to threaten the equity and efficiency of our health system. However, addressing this issue requires an understanding of the unique nature of health payments and their impact on individuals and families.
Unlike many other household expenses, the costs of health care fall unevenly and unexpectedly and typically coincide with decreased earning capacity and higher expenses elsewhere. This means that even small expenses can be an intolerable burden for someone living from pay-to-pay, and large outlays can be financial crippling even for the well-off. Also, because health is such a fundamental criteria for participation in other aspects of life, any barriers to accessing care can have significant flow-on effects in areas such as employment and education, further compounding the gap between the least and most advantaged. To be successful, any reform measures must reflect the underlying and unpredictable nature of health expenses and the relationship between health and other aspects of well-being.
Part of the problem is the need to resolve areas of misunderstanding on both sides of the political spectrum in this area. On the left, the debate has focused on the role of universal health care as requiring ‘free at the point of service’ care. This has resulted in ongoing efforts to preserve bulkbilling and free public hospital services, while largely ignoring the rise in payments for other forms of care such as dental care.
On the other hand, conservative governments have misguidedly focussed on the role of private health insurance (PHI) in assisting Australians to meet their health care expenses, despite the multiple disadvantages of PHI as a funding mechanism (due the fact that it combines the moral hazard of insurance with the lack of price control possible with a single purchaser). The lack of understanding of the underlying issues affecting health co-payments by both sides of the political spectrum is a major barrier to progressing reform in this area.
Our federated structure can also prevent effort action in this area. Given Australia’s complex health ‘system’, with funding and service delivery responsibilities split between different levels of government and the public and private sectors, there will be no simple solutions. The cumulative impact of co-payments on consumers is multi-faceted, cuts across program and jurisdictional boundaries and arises out of the complex interactions between different areas of the health system.
Therefore, as radical changes are not likely to be politically palatable, the most realistic options for change involves smaller scale and targeted initiatives. This is likely to involve a suite of measures which partially address the issue within identified areas or populations. These may include:
- Workforce solutions: a reconsideration of when the GP gatekeeper role is essential, for example, through allowing practice nurses, pharmacists or others to provide clinically appropriate services (re-issuing of routine prescriptions, authorizing medical certificates, some preventive health activities) at a lower cost;
- Increased transparency around specialist fees: currently there is a large variation in fees charged by specialists and no evidence of a link between price and quality. Supporting consumers to find lower cost specialist services and working with specialist colleges to increase fee transparency, perhaps even shaming those whose fees are significant outliers, could help reduce the sometimes large out-of-pocket costs in this sector;
- The establishment of community health centres with salaried staff in areas of need. This would help in providing coordinated, prevention and chronic disease management services to a high risk group;
- Targeted assistance for people identified as having ongoing high health care costs. This would include people with chronic illnesses and seek to assist them in managing ongoing costs, for example, through identifying lower cost alternatives to their existing services/products, developing payment options to assist them in managing their costs, e.g. regular payment plans or providing targeted subsidies, e.g. PBS subsidies for people who rely on non-prescription medicine for serious illnesses; and
- Linking reduced co-payments and out-of-pocket costs to voluntary registration with a general practice and a pharmacy. There is some evidence that people with chronic conditions benefit from having a ‘medical home’ through improved management of their condition. Improving the health of people with chronic conditions is likely to also reduce their out-of-pocket health care costs and increase their productivity.
These proposals all have limitations and need further exploration. However, if developed further, in consultation with the community and based on existing evidence, they offer the potential to reform our current ‘system’ of health co-payments to deliver greater fairness, opportunity and security to consumers.
Jennifer Doggett is a Fellow of the Centre for Policy Development and a Consultant working in the health sector.
[1] Senate Reference Committee on Community Affairs. Out-of-pocket costs in Australian healthcare. August 2014. http://www.aph.gov.au/parliamentary_business/committees/senate/community_affairs/australian_healthcare/~/media/committees/clac_ctte/australian_healthcare/report.pdf
[2] http://www.commonwealthfund.org/publications/surveys/2013/2013-commonwealth-fund-international-health-policy-survey
[3] http://www.commonwealthfund.org/publications/surveys/2008/2008-commonwealth-fund-international-health-policy-survey-of-sicker-adults
[4] https://ourhealth.org.au/news-stories/news/empty-pockets-why-health-co-payments-are-not-solution-australia-needs#.VWO74Dr77IU
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Jennifer Doggett. Budget 2014 – Primary Health Care
While some commentators are calling this Budget ‘The end of universal health care’ others are seeing some opportunities to improve health system performance, in particular through better collaborations with state-funded health services and programs.
The most high profile Budget measures in the primary health care sector are the introduction of new co-payments for bulk billed GP services and increased charges for related tests and medicines. There will be caps for high level users and some support provided for people on low incomes but overall these changes will result in higher out-of-pocket costs for consumers.
These payments have been widely criticised by consumer groups, health economists, service providers and other stakeholders.
These criticisms have focused on the hardship the increased costs will cause to disadvantaged patients on low incomes as well as their impact on the quality and cost-effectiveness of primary health care. Many experts have warned that there could be an increase in demand for (much more expensive) hospital emergency department services as consumers try to avoid the co-payment. The Government’s answer to this is to allow the States, for the first time since the introduction of Medicare, to charge a payment for emergency department presentations. However, State Governments thus far appear reluctant to introduce these charges.
Another concern about the impact of the co-payments is that it will undermine efforts to improve preventive health services and continuity of care for people with (or at risk of) chronic conditions. This is partly because the payments will create a disincentive for consumers to access care early and also because of the likely shift of some patients to public hospitals. This will complicate already complex care pathways with an increase in the number of patients receiving care across the community/hospital interface. It is also likely to result in care that is much less efficient, both from a ‘health system’ and consumer standpoint.
In relation to Medicare Locals (MLs), the Government is responding to the findings of the Horvath Review which recommended consolidation of existing MLs into larger Primary Care Networks. While the Review was broadly positive about the need for some coordination primary health care infrastructure bodies, the Government (in rhetoric at least) has moved to clearly differentiate itself from the previous Labor regime, describing MLs as “a new layer of primary health bureaucracy”. However, there is little substance about the roles and functions of the proposed new Networks and Dutton’s description of their aims “to join up patient care in the community to keep people out of hospital” appear very similar to those articulated by Labor when establishing MLs. The key factors in determining the outcome of these changes will be if the focus on an evidence-based, population health approach to primary health care is retained. In flagging an increased role for GPs, the Government is responding to pressure from the AMA which has been concerned about sharing control of the primary health care sector with other health professionals. However, the inclusion of GPs (which have always been integral to MLs) should not occur at the expense of input from other stakeholders, including consumers, allied health professionals, pharmacists, nurses and practice managers.
Dutton also reiterated the Government’s interest in a greater involvement from private health insurance in primary health care saying “We will also be looking over the next few years at new and innovative ways in which we might fund and deliver primary health care, including through partnerships with private insurers.” Given the evidence that private health insurance pushes up costs for health care, without delivering improved outcomes, this proposal is not sensible policy even for a conservative government. Its political attraction, however, is that it may offer further opportunities to shift health costs from the public to the private sector.
Budget primary health care workforce measures included an increase in GP training places by 300, to a total of 1500, in 2015 and a doubling of the teaching payment to GPs for training medical students from $100 to $200 per three hour session. There are also 175 infrastructure grants for GPs in rural and remote settings to build training facilities in their practices and an increase in the funding available for incentive payments under the GP Rural Incentives Program for GPs to work in rural and remote areas. Also announced were 500 more scholarships for nursing and allied health workers (over three years). These measures are welcome, however, the lack of any significant workforce reform within the health sector means that the inherent inefficiency of the workforce will persist and the potential benefits of new health professionals will not be realised.
The challenge now facing the Government will be to get these measures through the Senate. With the Opposition, Greens and Palmer United parties all indicating their reluctance to pass the co-payment legislation, the Government may find that its agenda for primary health care is thwarted before it gets off the ground.
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Jennifer Doggett. Cutting waste and costs in health.
Cut expensive and low-value services: Health funding is not allocated to areas which deliver maximum output. We spend too much on expensive low-value services and not enough on preventive, high –value care. Recent research shows that a number of routine tests performed in the Australian health system do not improve clinical outcomes. These include x-rays for lower back pain, liver function tests for people on statin therapy and routine glucose tolerance tests for pregnant women.
Structural reform: There is significant duplication of functions, gaps and poor coordination across areas of Commonwealth and State/Territory responsibility. There needs to be a single funder and/or single point of accountability for all health care (as recommended by the NHHRC)
Reform the funding system: Funding arrangements for health services often do not reflect their value. We need a funding system which ties subsidies to value and which steers consumers towards the more cost-effective treatment option. For example, where physiotherapy is a more efficient treatment for a soft tissue sporting injury than conventional medical treatment it should be subsidised at a higher rate.
Remove interest groups: Powerful vested industry groups, such as the pharmaceutical industry and the medical profession, influence policy and funding decisions resulting in anti-competitive and rent seeking practices that disadvantage consumers.
Move away from fee-for-service: A (largely) fee-for-service payment system does not support doctors to provide comprehensive, preventive and multi-disciplinary care for people with complex and chronic health problems. At least for these people we should investigate alternative payment systems, such as a capitation model.
Workforce reform: Doctors in Australia undertake many tasks which in other countries are safely and efficiently done by nurses. Breaking down professional barriers should allow for the lowest cost person to provide the care, where they can do so safely and effectively.
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Repost: Co-payments: no rhyme or reason. Guest blogger Jennifer Doggett
This earlier post is reposted as it is relevant to the question of co-payments which a paper submitted to the Commission of Audit has proposed.
Australians are often justifiably proud of Medicare and its role in making health care accessible to all in the community. However, a largely unrecognised threat to Medicare is the increasingly large component of health funding which comes directly out of people’s pockets in the form of out-of-pocket costs or co-payments.
Co-payments are the second largest source of health funding in Australia, second only to governments. They currently contribute 18 per cent of total health funding or just over $21 billion per year,[1] more than double that contributed by private health insurance.
Co-payments are currently implemented in our health system without any overarching policy framework or assessment of their overall impact on consumers. The end result of this that many Australians find themselves unable to access care because of the co-payments they face. This has been shown by two Commonwealth Fund surveys[2] and a 2012 survey by the Australian Bureau of Statistics[3] which found that one in 15 sick Australians has put off seeing a doctor because it cost too much.
These problems are often not obvious to policy makers because, when averaged out across the entire population, the total co-payment contribution by consumers is not excessive (the AIHW estimates it is $900 per person per year).[4] However, in health care few consumers are ever ‘average’. Demand for health care varies widely with a small group of consumers requiring large amounts of health care and the rest of the population very little.
The level of consumer co-payments also differs significantly across the health system, as demonstrated by the following table[5]. This creates inconsistency across different forms of health care and results in inefficient and inequitable impacts on consumers.
Type of service Total co-payment amount ($m) Co-payments as a proportion of total funding Medical services 2 641 12.4% PBS/RPBS medicines 1 500 16% Other health practitioners 1 700 45% Dental services 4 600 61% Aids and appliances 3 560 70.2% Non-PBS medicines 4 036 94% Addressing this problem requires a ‘ground-up’ building of a co-payments system that reflects the values and priorities of the community. This should include a joint Commonwealth and State/Territory policy on consumer co-payments for health care, which clearly articulates the aim of co-payments and outlines effective safety-net and other arrangements to ensure co-payments do not create barriers to accessing care.
Within this overarching structure, options such as standardising co-payments across sectors, allowing structured payments over time and other arrangements can be explored. Unfortunately, none of these issues are addressed in the current health reform. This is a mistake from both a practical and policy perspective and if not addressed could ultimately undermine the goals of the health reform agenda and compromise the ability of our public health system to deliver accessible and effective care to all in the community.
[1] AIHW 2012. Australia’s health 2012. Australia’s health no. 13. Cat. no. AUS 156. Canberra: AIHW
[2] C. Schoen, R. Osborn, D. Squires, M. M. Doty, R. Pierson, and S. Applebaum, New 2011 Survey of Patients with Complex Care Needs in 11 Countries Finds That Care Is Often Poorly Coordinated, Health Affairs Web First, Nov. 9, 2011 and C. Schoen, R. Osborn, S. K. H. How, M. M. Doty, and J. Peugh, “In Chronic Condition: Experiences of Patients with Complex Health Care Needs, in Eight Countries, 2008,” Health Affairs Web Exclusive, Nov. 13, 2008, w1–w16.
[3] Australian Bureau of Statistics Patient Experiences in Australia: Summary of Findings, 2011-12
[4] AIHW 2012.
[5] Australian Institute of Health and Welfare 2011. Health expenditure Australia 2009-10. Health and welfare expenditure series no. 46. Cat. no. HWE 55. Canberra: AIHW