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First published: Tuesday, January 7, 2014

Healthcare: GP co-payments not the real answer – there are far better ways to put budget back in shape
By: Tim Woodruff

The recent proposal to introduce a co-payment for GP visits has ignited debate about the financing of – and principles underlying – the health system.

The unambiguous aim of the proposal, prepared by a previous adviser to then health minister Tony Abbott, is to reduce or significantly slow the growth in medical benefit schedule outlays.

Despite targeting only GP visits, no mention is made of the fact that GP Medicare rebates constitute less than one third of such rebates, the rest being for specialist and other services. Rebates for specialist services have increased at least as fast as GP services since 2007 and cost about the same but have been ignored in the proposal. The estimated savings are less than $200 million a year.

If the real aim of the proposal is to save money from an ever expanding health budget, perhaps a more comprehensive approach to cost drivers and wastage is required. An easy first start would be to begin paying world market prices for generic drugs. This would save $1.3 billion a year, a Grattan Institute report says.

A second move, more complicated but financially rewarding, would be to respond positively to the multi-party recommendations from the Senate report of May last year, on the social determinants of health – those factors outside the health system that cost money by producing poor health.

The report noted estimates from the National Centre for Social and Economic Modelling, which suggested that $2.7 billion of savings in the health system, $2 billion to $3 billion of savings in income and welfare support, and $6 billion in extra earnings could be achieved annually through increased work participation and productivity if the issues identified were addressed.

Primary healthcare, that is, the first contact care in the community along with health promotion, illness prevention, community development and advocacy and rehabilitation, is widely regarded as central to efficient and equitable healthcare systems. We have first-class GPs and allied health professionals. But it is often a logistic and financial nightmare for patients to negotiate the complex care required for chronic diseases such as diabetes.

Co-ordination and simpler funding models are crucial to maximise the skills of these professionals. Investment in co-ordination through the development of regional health organisations of some form such as Medicare Locals can save money and lives. The funding model of fee-for-service and optional co-payments, however, stands in the way of optimum co-ordination and leaves many unable to afford the best care. It is time to revisit how we fund and organise primary healthcare in the interests of efficiency and equity.

The National Health Performance Authority says 7 per cent of public hospital admissions were preventable in 2012. These admissions were for conditions that needed better primary healthcare. Increased access to palliative care, advance care planning and home visits (including to aged care facilities) could reduce costs from over-servicing and hospitalisations.

Public hospitals cost $40 billion a year. Savings are there for the taking as decreased preventable admissions would help those on waiting lists to get treated early and return to the productive workforce or stop being a major drain on family and community as they wait for their necessary procedure.

A recent report in theHeraldshowed that $20 billion a year was being spent on low-value medical procedures. Even accepting that perhaps only one quarter of this can be saved, it still means $5 billion a year. But to do that requires a rethink about primary healthcare – which, when of high quality, leads to fewer referrals to specialists who perform most of these procedures – and fee-for-service funding of such procedures whether done in publicly subsidised private care (the doctor still gets a taxpayer-funded rebate) or in public care.

Then there is the $5.6 billion private health insurance rebate. It is a grossly inefficient way to fund healthcare, passing the money through private insurance companies, which then finance more expensive private hospital care.

Take your pick. There are many ways to improve the budget bottom line and the health of all Australians. The financial gains of a $5 co-payment, even ignoring the likely financial losses from patients not seeing doctors when they should, pale into insignificance when seen against these options.

This proposal would appear to be more part of an ideological crusade against a universal access health system and for a user-pays two-tiered system with an inadequate second rate safety net for the most deserving disadvantaged. It fits well with the Prime Minister’s previous agenda as health minister, when he supported the rise of the private health industry, let the federal contribution to public hospital funding decline from 50 per cent to 39 per cent, and presided over a fall in bulk billing rates to 69 per cent, only to belatedly realise that people liked bulk billing, which at least led to a backflip on that issue.

Perhaps he and the wiser heads in government can try another backflip and be economically rational. It could lead to better health for all.

Tim Woodruff is vice-president of the Doctors Reform Society.