Health policy was an important factor in the election outcome, but one of the most important issues in the health sector – out-of-pocket costs – was mostly ignored.
Labor made health policy a battleground at this election, claiming the poll was a “referendum on Medicare”. The ALP tried to whip up alarm by highlighting the risks of “privatisation”, bringing out former prime minister Bob Hawke as part of its campaign.
The Coalition naturally tried to keep health off the front page, even avoiding the normal National Press Club debate between the health minister and her shadow.
In health policy, as elsewhere, the second Turnbull government’s wafer-thin majority constrains what is possible. Some changes can be implemented administratively or with immediate bipartisan support. Some will only occur if the government takes the time and political capital to build public support for the proposal. Other changes should simply be ditched.
In the first basket of “can dos” are reforms to help the health system adapt to emerging needs. Examples of these reforms include better managing chronic diseases such as diabetes and improving end-of-life care.
The Coalition has started down this path with its “health care homes” initiative in the 2016 budget, but more needs to be done.
Other “can dos” include reducing waste in the health system, such as excessive hospital costs.
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Other reforms to improve efficiency may be harder but are achievable with a campaign to build public support. Examples include reducing unnecessary hospital admissions, addressing high pathology payments (for blood and tissue tests), reducing pharmaceutical prices in line with the additional benefit from the drug and updating the Medicare scheduleto remove outdated and inappropriate items.
Finally, some measures need to be ditched. Removing bulk-billing incentives for pathology and diagnostic imaging (such as X-rays and MRIs) is destined to join increased Pharmaceutical Benefits Scheme (PBS) co-payments as a zombie measure in the Senate.
If the government recognises political reality and takes these measures off the table, it would leave room to build support to address an emerging issue in health care: over-reliance on out-of-pocket costs.
Out-of-pocket costs are high and rising
In most countries, universal coverage, especially for medical care, meant the end of all financial barriers to access, including out-of-pocket payments.
In Australia, by contrast, consumers contribute almost a fifth of all health care spending through fees. Among wealthy countries, we have the third-highest reliance on out-of-pocket payments.
The proportion of health expenditure met by out-of-pocket payments in Australia is high compared to other advanced economies (2011 or nearest year)
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Since 2007, the average out-of-pocket payment across all Medicare out-of-hospital services where a payment is required has risen by 61% in real terms; about 5.5% above inflation every year.
Fees have grown fastest in very remote areas.
Out-of-pocket costs stop people receiving care
While Australia has a more efficient health system than most countries, rising health costs are a big source of our budget woes.
For the last government, increasing co-payments seemed like an easy solution. The Abbott government introduced a A$7 GP co-payment and a A$5 PBS co-payment. Neither was popular.
The latter measure is still stuck in the Senate and the former was substituted by a GP co-payment by stealth: a six-year freeze on Medicare Benefits Schedule fees that will push GPs to eventually increase co-payments themselves.