While architect of Medicare, Neal Blewett, basks in the glory of his Order of Australia, the past fortnight has revealed skimping on repairs and maintenance of the scheme that could be very costly in the long run.By any international measure Australia’s health system is very good, but it is in danger of becoming merely good and later, perhaps, mediocre.
It is not just a question of dealing with the aging population and the decline in private health coverage. It is a question of changing fixed ideological positions, attacking professional privileges and taking some courageous decisions about may engender short-term anguish for long term gain.
This week saw the fall-out from the Federal Budget decision to cut the number of medical graduates from 1200 to 1000. It threatens the clinical schools in Canberra and Darwin that are attached to the University of Sydney. Last week saw Opposition Leader John Howard affirm no change to the basics of Medicare.
The graduates decision, like so many in health, was made in the worst possible circumstances: the secrecy of budget deliberations. When will the Federal Government learn that major policy deicisions should not be put in the Budget. Good decisions require solid consultation with community groups, consumers, the professions and industry which can reveal flaws unforeseen by a few senior bureaucrats and Cabinet ministers in the Budget process.
If you reduce the number of doctors, there is no guarantee that you will reduce costs, which presumably was the aim of the exercise.
It seems that there is an over-supply of GPs in city an under-supply of GPs inthe bush and an under-supply of specialists in several fields in both the city and bush.
The Federal Government gives a Medicare provider number to every graduating doctor. It could have attached provider numbers to locations rather than graduates. The AMA would cry civil conscription, but no-one would be preventing a medical graduate from setting up shop anywhere _ it is just they could notbe a Medicare doctor in places of over-supply.
Fewer medical graduates will only enhance the monopoly position of doctors and perhaps affect the number who go on to specialise. It will also make medical schools less efficient. It will threaten clinical and medical schools in smaller places when all the evidence shows that teaching improves health care at hospitals.
The decision has little to do with health care and a lot to do with short-term cost shifting. It comes after a previous Budget-driven decision to rein in costs in 1991 _ co-payments for Medicare. The idea was essentially sound, but so poorly executed it had to be abandoned.
Under the scheme people had to pay cash at every doctors’ visit. The doctors’ surgeries would have to handle the cash and the accounting at great cost _ thereby destroying the major incentive for bulk-billing.
With some consultation, someone might have suggested that the Health Insurance Commission could collect the co-payment, perhaps through benefits deductions of the PAYE system. It could also administer a safety net system.
On any account, co-payments have help reduce over-servicing and cut costs with the pharmacuetical benefits scheme. Co-payments should be re-visited with Medicare. It has been worth it to the Government to pay the equivalent of 26 co-payments prescriptions (at $2.60 each) for pensioners in advance by increasing their pensions. If they have to shell out $2.60 in cash, pensioners are more careful about getting prescriptions and the Government saves the real cost of drugs (with a median cost of about $20 a prescription). Pensioners would be more careful if they had to pay for doctors’ visits, too.
But the Government and the Opposition is hanging on to the shibboleth of “free medicine”. With a bit of intelligence, medicine can still be free for benefit recipients and low-income earners by giving them the equivalent of 26 co-payments a year through increased benefits or tax cuts and making all visits beyond 26 free as a safety net.
It may be an artificial way of putting a price disincentive on something, but it would be more effective than cutting the number of doctors.
It seems illogical that Medicare is exempt from co-payments in a health system riddled with co-payments of one sort or another ranging up to 100 per cent _ dental, optical, wheelchairs, pharmacuetical, crutches etc.
In addition to the aging population and declining private insurance, the Government has to face the growth in the number of Medicare services provided per head. People of all ages are using more Medicare services (see table). There is no sign of the growth tapering. Perhaps people, particularly men over 55, are becoming more health conscious.
It is not just that there will be more older people in future years, but that each older person will use more medical services in future years than they do now. It will cost a lot more. Muddling through from one Budget to another or cost shifting from the public to private sector or from the Commonwealth to the states will not help.
The Opposition sees salvation in more private insurance. It has a manic belief that the private sector and the market are more efficient than the public sector. This is nonsense with health care if there is to be universal coverage and community rating. There is little difference having a health fund collect premiums and pay the bills than having the tax office collect the “premiums” and Medicare pay the bills. The only difference is that the tax office and Medicare do it far more efficieintly than the private sector, taking only 4 per cent on the way instead of about 13 per cent that the private funds do.
At present the health funds are just an expensive bill-paying service. That may change with the new arrangements that allow them to negotiate directly with health-care providers.
The Opposition’s approach is just inefficient cost-shifting. What people gain in tax deductions they lose in health-insurance premiums. We end up with more not fewer resources spent on health care _ the US model. It is not a market solution at all. As soon as you have insurance and government subsidy market signals get smothered and queing and over-servicing become inevitable.
Power and policy splitting between the Commonwealth and the states is a major difficulty. States control the hospitals; the Commonwealth controls broad funding and the system by which patients pay their bills.
The states attempt to shift costs by charging private patients different (larger) amounts for the same service as it charges public patients. In short they charge according administrative system, not according to cost of service provision. Inefficiency is inevitable.
There should be a full mix of private and public patients in both private and public hospitals. Patients should be able to mix and match a range of insurances with the common Medicare component and cash to pick the best for them, based on price, convenience and medical advice.
In the present system, the health-care providers like the anti-competitive forces that keep prices up: limited price advertising, generous drug patents and cosy professional arrangements. At the same time they resist the quid pro quo of price control. Like co-payments, those things need addressing if health costs are to be contained.
Also, merely giving tax deductions for present health insurance will not reduce health costs. To the contrary it will attract more people to the expensive private sector and as the insurance company picks up the bill, patients will do little to make choices based on price.
The new arrangements whereby insurers can do deals with certain providers and force insured patients to those providers will help somewhat. But the change did not go far enough because the Government had an ideological commitment to community rating. Under community rating everyone pays the same premium for the same level of benefit, whether you are young or old or whatever your health history.
It is hardly insurance at all. Moreover, the “insurers” tend to bundle the most expensive patients into the public system.
A better way would enable people _ especially the young and fit _ to take out catastrophe insurance: they pay the first $1000 every year and the insurance company picks up the rest. There would then be some price incentives to keep costs and over-servicing down at the low end of treatment. People could chose either system for treatment.
Until there is more coincidence between payment and receipt of health services, costs are bound to blow out and there are bound to be queues and over-servicing.
Unfortunately, it is unlikely that health ministers meeting in Alice Springs this week will take on the big health-cost issues. Ideology and muddling through to the next election is likely to take precedence over long-term reform and knocking over some inefficient shibboleths in the health system.
That said, Australia continues to treat health catastrophe very well. However, the danger is that, in the future, by allowing costs at the lower end of health delivery to blow out the treatment of catastrophe may be put in jeopardy.