Coalition and Medicare: Only Americans pay more now for out of pocket expenses

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The Coalition's continued hostility to Medicare has seen Australians paying more that $28 billion p.a. for so-called "out of pocket" expenses. Only Americans pay more. UNSW Emeritus Professor John Dwyer, reports for Pearls and Irritations.

CLEARLY THE future of Medicare was the election issue of greatest importance for most Australians. Community concern was focussed on the possibility that the primary care they receive from their general practitioner might be privatised such that a superior service would be available to those who paid more, either directly or though the extension of private hospital insurance to allow for coverage of GP services.

This was never going to happen but its important to understand what it was that had stimulated discussion of the possibility. Private health insurers, who are not permitted to cover services provided with Medicare dollars, are frustrated as community health services are not reducing the number of their insured who need hospital care.

Many insurers see 60-70% of their costs generated by 5-10% of their insured who need frequent stays in hospital. As there is much evidence that primary care systems elsewhere are better than us at reducing the incidence of hospital care, they would like to provide these superior services to those they insure. To do so would cost a fraction of the expense needed for hospital care.

Our state governments are equally frustrated. Public hospitals experience a 3-4% increase in hospital admissions of older and sicker patients each year. Budgets can’t keep up with expenses. Pressure continues to mount with many emergency departments reporting an increase of 9-11% in presentations this year.

The states don’t have any levers to pull to improve out of hospital care, the inefficiencies of which generate more than 600,000 avoidable admissions per year. Medicare may well need new computers but in fact, it is a very cost effective operator, it’s the system that it pays for that is the problem. Despite our love affair with our Medicare funded system, the truth is that for some time it has not been able to meet the health needs of contemporary Australia.

At the moment there are 11 OECD countries that have invested in evidence-based improvements to primary care and are reaping the benefits. Australian’s passionate support for universal taxpayer funded quality health care, available on the basis of need, is appropriate and affordable but only if we make major structural changes to the way we deliver care.

With the status quo, our current primary care is about to become more expensive for many. We already pay more than $28 billon a year for so called “out of pocket” expenses. Only Americans are asked to pay more. It was disingenuous of the Coalition to assure patients that bulk-billing rates would not decline because they are currently so high despite a “freeze” on Medicare payments to doctors.

Our general practitioners were waiting to see who won the election as Labor promised to lift the freeze. However more than a third of GPs surveyed recently said they would need to abandon bulk-billing if the freeze continued and many others are likely to do the same as their costs continue to rise. Our GPs are rigorously trained specialists in family medicine with major responsibilities for the community’s health yet earn a fraction of what many of their colleagues in other specialties earn.

This week I needed a gas fire serviced in my apartment, the call out fee was $225.00 and any parts needed would be billed separately. Medicare pays our GPs $37.00 for a standard consultation and $74 for a home visit. The ATO tells us that the average male GP takes home $175,000 per year while female GPs earn $130,000. The profession cannot absorb the revenue lost from the freeze. Alarmed at the way we remunerate general practice; only 16% of medical graduates express an interest in becoming “GPs”.

Our GPs deserve to be paid more but not by increasing their “fee for service” payments, a mechanism plagued with perverse incentives and a long way from the more desirable “pay for outcomes” model sweeping the OECD.

Our health system is sickness, doctor and hospital centric when the prevention of illness and better use of our health workforce should have equal billing with our care of established disease. Patients with chronic, often complicated conditions, are frustrated by the lack of integration of all their health needs. Indeed it is “Integrated Primary Care” (IPC), delivered from what are often called “Medical Homes” that we should be pursuing.

Fundamentally such a model involves the provision, in house, of a team of health professionals available to coordinate and integrate the full range of health care services required by those enrolled in the program. This is a significantly different approach to that of the “Super GP Clinic” where independent health professionals from various disciplines work from the one facility. We are talking about multidisciplinary teams in the one practice.

Such a model has been shown capable of delivering the imperatives for modern Primary Care i.e. improving health literacy, providing advice and encouragement that helps one stay well, early diagnosis and treatment of problems that could become serious and chronic if not treated, management of established chronic and complex illnesses by a team of health professionals all working in one’s medical home and community care by their medical home team for many who would otherwise need a hospital admission.

The Royal Australian College of General Practitioners and the AMA are committed to introducing this model of care. Nursing and allied health professionals are enthusiastic as the model is based around team medicine.

Pre-election the model was presented in great detail to both the Coalition and Labor. The Coalition’s response involves establishing a trial of “Healthcare Homes”, a pale reflection of the model described above. Participating doctors will get quarterly payments for integrating all the care needed by patients with multiple chronic problems.

On offer is $21 million (new money?) over 2 years to be spent in 200 practices on 65000 patients. As such it would be set up to fail. It would provide about $380 per patient over 2 years (10 visits). As there is no money for essential allied health assistance (a decision that saw the representative of the allied health profession resign from the committee advising government on the matter) the government suggests that the 31 Primary Health Networks set up across the country could arrange the additional services these patients need. There are too few of them for this to work. There is one such network for the whole of Tasmania, one for all of WA outside of Perth.

Properly resourced “Medical Homes” focus on prevention. Continuity of care for enrolled members of a Medical Home is a major benefit facilitating the early detection of problems that if not attended to could become severe and chronic.

This approach is particularly useful in the early detection of mental illness in teenagers where early treatment can prevent progression to psychosis. This approach is more important than ever in a world where we are all wondering how to better protect the community from the mentally ill whose psychosis, feeding on the violence they see being inflicted on society, leads them to take violent action themselves.

There are no prevention services in the “Healthcare Home” model. It’s like fire fighters asking for more water bombers for summer while paying no attention to hazard reduction in winter! Labor reacted more constructively to our urgings accepting the need to establish a Healthcare Reform Commission to drive and manage necessary change and promised $100 million over two years for a trial of appropriately resourced Medical Homes They intended to provide additional funding for prevention strategies.

It is encouraging that both major political parties and the medical profession have agreed that we need to move away from “fee for service” payments for established disease and in so doing all parties recognise the need for reforms to our health system; that a break through. Our politicians are voicing the need for constructive bi-partnership on major issues in our 45th parliament; we can but hope that that will be the case.

For Australians no issue is more “major” than health care. Politician have seen from recent voting how disillusioned is Australia with the efforts of the political establishment. To reverse that cynicism we need to see government and opposition work together to provide us with healthcare reforms that meet contemporary needs.

From international experience we can be confident that every extra dollar we spend on primary care, delivered from appropriately resourced Medical Homes, will save two dollars spent in our hospitals while improving the health of the Nation.

John Dwyer is Emeritus Professor of Medicine at UNSW.

This article was published on John Menadue's blog 'Pearls and Irritations' on 26 July 2016 under the title: 'Medicare and the 45th Parliament'.  It is republished with permission.

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