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UK Health Minister Aneurin Bevan introduced the National Health Service (NHS) pointing out that “Illness is neither an indulgence for which people have to pay, nor an offence for which they should be penalised, but a misfortune the cost of which should be shared by the community.”

Advancing age brings with it infirmity and a much higher likelihood of ill health. People do not choose to become old and infirm.  

Whilst conservatives despise the sentiments expressed by Bevan, particularly the concept of sharing by the community, liberals do agree, but with very variable degrees of commitment.

Aged Care is a major concern. Recent discussion following the Royal Commission has been about what services should be provided, how to regulate quality, how to get appropriate workforce, and how to fund what is needed.

The main funding recommendations from the recently released Aged Care Taskforce report are means tested co-payments and a safety net to supplement ongoing government funding.

Examples of co-payments and safety nets.

The public hospital system provides first class hospital care to all and if it’s an emergency the care will be timely. If not, unacceptable wait times prevail. Public hospital care becomes a safety net. Those with means bypass the wait times and use the government subsidised private hospital system. Those without suffer.

Primary health care through GPs or other health providers is in theory accessible to all, except for the geographical inequities which have the greatest negative impacts on low-income earners in rural and remote locations. But even in the cities inequities abound.  Co-payments make a mockery of affordable access to care. The recently introduced increased rebates for pensioners, health care card holders (HCCH), and children does not mean they will be bulk-billed. It also leaves people just above the cut-off for an HCCH facing an average $40 co-payment per GP visit.

Visits to specialist physicians and surgeons regularly incur a $100 co-payment which sends many patients away and onto the years long waiting list at a public hospital.

A rebate subsidised psychology visit regularly costs $100 co-payment, well outside the affordability of an unemployed patient on sickness benefits, and a challenge to a low wage earner.

The above relate to voluntary co-payments applied by providers. Then there are government-imposed co-payments with safety nets. Prescription drugs are subject to co-payments of $7.30 per prescription for Pensioners and HCCHs and $30 per prescription for others. Despite the existence of a Safety Net, an estimated half a million people delayed or did not fill a prescription in 2021 according the Australian Bureau of Statistics Patient Experience Survey.

No Australian Government in recent history has delivered equity through a co-payment system. Equity in health has been defined by Starfield as ‘the absence of systematic and potentially remediable differences in one or more aspects of health across populations or population groups defined socially, economically, demographically, or geographically.’ The definition could be easily applied to Aged Care and education.

Conservatives are not interested in equity. Successive Labor Governments however, have also shown a lack of commitment. Many Labor politicians would describe themselves as social liberals. Perhaps this lack relates to the reality that equity is not at the heart of any form of liberalism. It is an optional extra, talked about by social liberals as an aspiration, but falling second to the priorities of the individual.

Problems with co-payments, fee-for-service.

Co-payments limit access to items of care. The size of the co-payment is at the whim of the provider or the Government. A Labor Government, led by Julia Gillard from the left faction, introduced a GP co-payment for economic reasons, knowing such payments would be inequitable. The vagaries of economic and political factors determine how much and who will pay.

To determine a co-payment, one needs an item of care. There are some situations where itemised care with appropriate caveats can help to determine appropriate payments. Itemised care, especially in primary health care and Aged Care, leads to a siloed approach, which is completely at odds with the complex care needs in Aged Care and chronic disease. It limits teamwork, including teamwork which involves the consumer/patient interaction with the provider team.

Problems with safety nets

Look at a net. It has holes in it. It sags. It has edges. One could regard the Aged Pension as a safety net. Imagine being a 70-year-old widow whose only work throughout life was low paid, and whose rental cost is 50% of her pension. She has rental assistance, another safety net. She lives below the poverty line.

The Safety Net for prescription drugs helps. But a 20-year-old couch surfer, living with a mental illness, doesn’t register for the net. Even if he did, it doesn’t cut in until he’s spent a certain amount. How does he afford his drugs until then?

The vagaries of economics and politics determine the level and quality of safety nets.

Conclusion

Firstly, when the more powerful and articulate in a community are not subject to the inadequate service provisions of health, Aged Care, and education because they buy their way past such inadequacies, their advocacy for improvements in the system for all is weakened. The safety net sags lower.

Secondly, to adapt Aneurin Bevan’s 1948 quote regarding introducing the NHS: “No society can legitimately call itself civilized if an elderly and infirm person is denied Aged Care because of lack of means”

Thirdly, inequity is entrenched with every introduction of a user pays, means tested co-payment system with safety nets. If Labor does not want inequity, the alternative is funding through an adequate progressive revised tax system.

Prescription co-payments are imposed by the Federal Government for subsidised drugs. Australians pay $1.6 billion a year in co-payments. Why do we continue to have financial barriers to accessing these drugs?

Co-payments are $7.30 or $30 per prescription for Pensioners and Health Care Card Holders or the remainder respectively. Scotland, Wales, and Northern Ireland abolished prescription co-payments in 2011. New Zealand has just abolished co-payments in July 2023.

Purpose of Co-payments

Co-payments in general are designed to reduce inappropriate use and to generate income. Some also believe that without co-payments the consumer will not value the product appropriately. In terms of medical care that sad view of human nature would appear to contradict my reality of many gifts and thanks from my bulk billed patients. Humans value good service. They value prescriptions which help.

Determining appropriate use of prescription drugs is the task of the prescriber, not the patient. Arguments for co-payments to reduce inappropriate use are nonsense.

Co-payments are taxes, levied on those unfortunate enough to need prescription drugs. People do not choose illnesses. One must ask if the purpose of co-payments is therefore also to punish the sick?

Health and Social Impacts of Co-payments

Prescription drugs are approved for listing on the PBS because they have been shown to save lives and/or reduce severity of illnesses. However, multiple studies show a reduction in use of medication with introduction or increase in co-payments. Repeated surveys over decades have reported that patients delay or do not fill prescriptions because of costs. Half a million people delayed or did not fill a prescription in 2021 according the Australian Bureau of Statistics Patient Experience Survey. The largest effects are in those living in areas of low socio-economic status, the elderly, those with long term health conditions, and females. There are widespread reports from doctors that their patients are reducing the dose or taking the drug every second day to save money.

It is well established that mortality and morbidity correlate with income, socio-economic status, and postcode. Access to health care probably accounts for 20% of the differences in life expectancy in first world countries. Socio-economic status accounts for most of the rest. Cost barriers are either met by decreased usage of life saving drugs or forcing the most vulnerable to pay co-payments and forgo spending on other basics in their lives which contribute to improved socio-economic status.

Studies of the direct effect of prescription co-payments on health show for example, improved compliance with taking heart medication if drugs are free, increased adverse events after the introduction of co-payments, and most recently a study in New Zealand showed decreased hospitalisation rates across a variety of medical conditions following the removal of co-payments for a selected group.

Economic Impact of Co-payments

An inflation adjusted figure from the Australian Institute of Health and Welfare 2012 data indicates that the day cost of a public hospital admission in 2013 is $1300. The Grattan Institute estimates there are 750,000 potentially preventable hospital admissions adding up to three million unnecessary days in hospital per year . Most of these are due to inadequate primary health care which includes financial barriers to access as well as adverse socio-economic factors. The government would only have to see a reduction of 185,0000 admissions across Australia to have easily saved the estimated $1.2 billion cost of abolishing all co-payments. Whilst the causes of these preventable admissions are multiple, medication compliance is likely to be a significant part of the problem. Improving compliance by abolishing co-payments will save money and reduce the net cost. It might even be budget neutral.

Thus, we have both an ethical and an economic argument for abolishing co-payments.

Current Policy Initiatives

The current Federal Government has done well with respect to reducing cost barriers to accessing prescription drugs. It implemented a reduction in the general co-payment from $42 to $30 in January.

It has since taken on one of the most powerful lobby groups in Australia, the Pharmacy Guild by extending prescription lengths from the usual month to two months. This halves the cost to patients for many drugs.

It has supported the concept of increased prescribing by pharmacists for some specific limited conditions, thus saving patients the challenge of finding and paying for an appointment to get a prescription. These changes combined will lead to a decrease in revenue from patients from $1.6 billion to about $1.2 billion.

It has maintained safety nets so that over a year there is a limit to how much one pays per prescription. But just because a safety net kicks in after a patient had spent $262 or $1563 (different depending on Health Care Card) on drugs for the year, this might not happen until May or October. It doesn’t help the budget in March or January.

What Now?

More should be done. The Federal Government updated its National Medicines Policy in February this year. The stated aims of the policy include that

All Australians have fair, timely, reliable, and affordable access to high-quality medicines and medicines services.

It’s time to align actual policy with the above. Co-payments continue to be a financial barrier to accessing lifesaving medication. Co-payments kill, lead to more hospitalisations, and waste money. It’s time to axe killer co-payments.

Structural problems won’t be fixed by doubling rebates. Voluntary patient enrolment can improve access if funding varies with SES.

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Rorts and Revamping Medicare

This series of three articles looks at the above topic under the headings:

1. The Vision: Where could we be?
2. The Reality: Where are we now?
3. Implementation: How do we proceed with the needed changes?

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