tag:theconversation.com,2011:/ca/topics/paying-for-health-9088/articlesPaying for Health – The Conversation2015-03-05T19:26:40Ztag:theconversation.com,2011:article/383752015-03-05T19:26:40Z2015-03-05T19:26:40ZHow likely are doctors to charge more due to the rebate freeze?<p>The Coalition government has ditched its deeply unpopular plan to have people visiting doctors pay A$5, but has retained the Medicare rebate freeze for both general practitioners and specialists. Doctors groups have warned that the measure will mean patients will have to pay more for medical services.</p>
<p>The Medicare rebate – currently A$37.05 for a standard GP visit – is the money the government provides doctors for each medical consultation. But GPs and specialists can choose to charge patients additional fees, as there are no rules about what they can and cannot charge. Bulk-billing GPs, for example, claim the A$37.05 straight from Medicare on their patients’ behalf. But if a GP doesn’t bulk bill and charges, say A$70, then patients can claim back A$37.05 from Medicare themselves and are A$32.95 out of pocket. </p>
<p>The rebate freeze was actually introduced by the last Labor government, and initially took effect from November 2013 to July 2014. And it was <a href="http://amavic.com.au/icms_docs/187873_Freeze_on_Medicare_rebates.pdf">extended</a> for two years by the current government. At the time, the Australian Medical Association (AMA) <a href="http://www.abc.net.au/news/2013-10-16/medicare-rebate-freeze-row-as-patients-face-increasing-costs/5026996">recommended</a> doctors increase their fees by almost 3%.</p>
<p>The same prospect has been raised by the Royal Australian College of General Practitioners vice-president, <a href="http://www.smh.com.au/federal-politics/political-news/gp-copayment-fee-is-dead-buried-and-cremated-tony-abbott-20150303-13u3ec.html">Morton Rawlin, who said</a> extending the freeze will, among other things, “force GPs to pass on increasing out-of-pocket costs to patients”.</p>
<h2>A complex picture</h2>
<p>But the data presents a different story. As Figure 1 below shows, bulk-billing rates for GP services have continued to increase since the rebate was first frozen in November 2013. But bulk-billing rates for Medicare as a whole, that is, once specialist and diagnostic services are also included, have levelled off and fallen slightly. This suggests the effect of the rebate freeze on bulk-billing rates is concentrated on specialist and diagnostic services.</p>
<p><a href="http://health.gov.au/internet/main/publishing.nsf/Content/Quarterly-Medicare-Statistics">Figure 1. Bulk-billing rates in Australia
</a></p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/73779/original/image-20150304-15291-b9j23f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/73779/original/image-20150304-15291-b9j23f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/73779/original/image-20150304-15291-b9j23f.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/73779/original/image-20150304-15291-b9j23f.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/73779/original/image-20150304-15291-b9j23f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=425&fit=crop&dpr=1 754w, https://images.theconversation.com/files/73779/original/image-20150304-15291-b9j23f.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=425&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/73779/original/image-20150304-15291-b9j23f.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=425&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Medicare Australia</span></span>
</figcaption>
</figure>
<p>The lack of change in the bulk-billing rates since late 2013 may mean GPs accepted a reduction in their profits. Or they’ve been doing other things to maintain revenue or reduce costs, including changing the types of services they provide. </p>
<p>Still, the impact on bulk-billing rates is not the full story, and not the only way specialists and GPs can react to the freeze. Doctors are likely to start charging patients more because the costs of running a practice will continue to increase while Medicare rebates remain frozen. </p>
<p>The rate of increase in practice costs is not known, but is likely to be around the inflation rate of 2% to 3%. Generally, doctors adjust to these increasing costs through regular price rises and by keeping a lid on practice costs. </p>
<p>A practice can reduce costs to maintain profit, encouraging more efficiencies in the ways they provide services. This could mean reducing the hours worked by practice nurses and administrative staff, which could have knock on effects to services provided. Companies that own a number of practices may reduce costs across their network by merging administrative functions or even closing surgeries, which could reduce access to health care in some areas.</p>
<h2>Special cases</h2>
<p>GPs may not increase fees or change bulk-billing if they think fewer patients will visit, which will further reduce revenue. There’s <a href="http://www.melbourneinstitute.com/downloads/working_paper_series/wp2013n23.pdf">evidence that competition</a> between GPs holds prices down, at least in metropolitan areas, which may explain why bulk-billing rates have continued to climb overall for all GPs. </p>
<p>But the extent of competition between specialists could be lower, which would explain why patients face an increased out-of-pocket cost for their services. As shown on the figure above, this seems to have occurred for specialists and diagnostic services since late 2013, and is likely to continue.</p>
<p>Finally, GPs may increase revenue by increasing the intensity of services provided so that patients return for follow up visits. This could increase quality of care in some cases where it is currently under provided, say for chronic diseases, such as diabetes. Or it could expose patients to unnecessary tests and investigations and increase the provision of “low value” or “frivolous” care. </p>
<p>How big these effects will be is difficult to say, and depends on gathering <a href="http://melbourneinstitute.com/downloads/policy_briefs_series/pb2015n01.pdf">new evidence</a> on the impact of such changes doctors’ behaviour. But it is likely to increase costs, at least to to Medicare.</p><img src="https://counter.theconversation.com/content/38375/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anthony Scott is an NHMRC Principal Research Fellow </span></em></p>Doctors groups have warned the Coalition government’s plan to maintain the Medicare rebate freeze will means patients will have to pay more for medical services.Anthony Scott, Professorial Fellow & NHMRC Principal Research Fellow, Melbourne Institute of Applied Economic and Social Research, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/353822015-01-20T19:25:23Z2015-01-20T19:25:23ZNew funding models are a long-term alternative to Medicare co-payments<p>The Abbott government is struggling with its Medicare co-payment reform, <a href="http://www.abc.net.au/news/2015-01-15/medicare-government-shelves-propsosed-rebate-cut-changes/6018990">scrapping the latest version</a> for a period of consultation, starting this week. The government claims it wants to make Medicare sustainable by controlling costs. However the proposed reforms are piecemeal and inequitable, antagonising Medicare’s stakeholders without addressing underlying problems.</p>
<p>To recap, the <a href="https://theconversation.com/gp-co-payment-2-0-a-triple-whammy-for-patients-35334">revised Medicare co-payment policy</a> as of December 9, 2014 was to reduce Medicare rebates by A$5 and encourage GPs to recoup this from patients; freeze the indexation of Medicare rebates for all doctors; and perhaps most controversially, impose a ten-minute minimum duration for level B appointments. This would have meant a A$20 rebate cut for short visits but the government <a href="https://theconversation.com/autopsy-of-a-dead-policy-government-shelves-impending-medicare-change-36295">scrapped this part</a> of the plan. </p>
<p>Introducing demand restraints such as co-payments points to a lack of faith in the principles of universal health care and the <a href="https://theconversation.com/medicare-spending-on-general-practice-is-value-for-money-33948">preventive benefits</a> of primary care. Hence they prompt outrage from the public and doctors alike who see the “slippery slope” to further increased co-payments, and reduction in government funding for public health care.</p>
<p>A blueprint for Medicare reform must include cost control, but also support quality and equity. Crucially, it must also be accompanied by adequate piloting and evaluation strategies to find out what works best in Australia. <a href="http://theconversation.com/phase-out-gp-consultation-fees-for-a-better-medicare-13690">My suggestion</a> is to phase in a system based on capitation with some pay-for-performance and residual fee-for-service elements.</p>
<h2>What is capitation?</h2>
<p>Capitation is a system which pays doctors an annual fee for each patient they have enrolled in their practice. The payment is in return for the GP “looking after” that patient for the whole year. So GPs do not receive more money for seeing their patients more often, and indeed will benefit from lower costs themselves if patient’s health improves and they require less care in the future.</p>
<p>Capitation has been the primary funding method for general practice in the United Kingdom for <a href="http://www.historyextra.com/feature/nhs-what-can-we-learn-history">more than 100 years</a>. More recent examples of capitation implementation come from North America: from the growth of managed care in the United States, where capitation has been widely used, to <a href="http://www.cmaj.ca/content/181/10/668.short">the province of Ontario</a> in Canada, where a voluntary capitation system <a href="http://www.cmaj.ca/content/181/10/668.short">was introduced in 2007</a>.</p>
<p>Evidence from Ontario, Canada is particularly relevant to Medicare in Australia, because voluntary capitation was recently phased in from an existing fee-for-service system. The model has been termed “mixed capitation” as it allows GPs to charge small fees in addition to capitation payments for enrolled patients, plus full fee-for-service for non-enrolled patients up to a cap. </p>
<p>This is how the transition to capitation could be implemented in Australia.</p>
<h2>What does capitation achieve?</h2>
<p>Early evaluations are cautiously optimistic. A <a href="http://onlinelibrary.wiley.com/doi/10.1111/caje.12003/full">recent study</a> shows the mixed capitation payment method reduced the number of services (consultations) GPs provided by around 6% per day, while increasing their likelihood of meeting preventive care quality targets by 7%. </p>
<p><a href="http://www.sciencedirect.com/science/article/pii/S0168851013002698">Another study</a> by the same authors finds no evidence that GPs using the capitation model “cost-shifted” by avoiding enrolling high-cost patients, a potential concern in capitation. This evidence and others has led <a href="http://www.cdhowe.org/pdf/Commentary_365.pdf">experts to recommend</a> mixed capitation schemes to reduce costs and support quality.</p>
<p>An added advantage of capitation systems is that because patients are enrolled with GP practices they work well with pay-for-performance schemes. <a href="https://theconversation.com/should-doctors-be-paid-to-keep-patients-healthy-3298">Pay-for-performance</a> is when doctors are paid “bonuses” when they meet quality targets for patient care. </p>
<p>Pay-for-performance arrangements now play a large role in the funding of primary care in the United Kingdom and United States. Australia is lagging behind.</p>
<h2>Towards a mixed funding system</h2>
<p>Capitation and pay-for-performance arrangements are not completely new to Australia. The <a href="http://www.biomedcentral.com/1471-2458/13/1212">Diabetes Care Project</a> randomised 50 GP practices to receive capitation and pay-for-performance payments for their diabetes patients (alongside other interventions). Practices received up-front payments and performance bonuses for achievements on indicators such as patient HbA1c level (indicating good blood sugar control). </p>
<p>The trial finished in 2014 and the evaluation has yet to be published. The results of this trial could be a valuable input into designing capitation and pay-for performance schemes in Australia.</p>
<p>So how can an ambitious reform of GP payment schemes proceed in Australia? </p>
<p>Reform could be incremental and gradual, offering capitation initially as a voluntary incentive for enrolling patients, alongside existing Medicare “fee-for-service” incentives. </p>
<p>Phasing in the new funding arrangements by states would provide excellent opportunities for evaluating aspects of the reform such as different ratios of capitation, fee-for-service or pay-for-performance in the funding mix.</p>
<p>This proposal would not be designed to provide a “quick fix” to health-care costs in the short term. Costs may even be higher in the first years of introducing new payment schemes than they would otherwise be with the status quo, as incentives are offered to doctors to adapt to change. Health care policy should aim over the time-horizon of our lifespans, not just the budget forward estimates.</p><img src="https://counter.theconversation.com/content/35382/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Sivey has received funding from the Australian Research Council, the National Health and Medical Research Council and Health Workforce Australia.</span></em></p>The Abbott government is struggling with its Medicare co-payment reform, scrapping the latest version for a period of consultation, starting this week. The government claims it wants to make Medicare sustainable…Peter Sivey, Senior Lecturer, School of Economics, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/353342014-12-10T19:42:36Z2014-12-10T19:42:36ZGP co-payment 2.0: a triple whammy for patients<figure><img src="https://images.theconversation.com/files/66850/original/image-20141210-6033-1ipepgj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The big losers will be ordinary patients.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-173814836/stock-photo-coprology-test.html?src=pp-same_model-173817368-98-GPQpuTsu9RpVg9Ze2Pg-6">Image Point Fr/Shutterstock</a></span></figcaption></figure><p>In the May budget, the Commonwealth government proposed a A$7 co-payment for GP services and tests done outside a hospital. After seven months of fierce criticism, the government <a href="http://www.health.gov.au/internet/ministers/publishing.nsf/Content/health-mediarel-yr2014-dutton111.htm">abandoned those plans</a> on Tuesday. The budget proposals have been replaced by three separate initiatives which will reduce Medicare direct spending by roughly the same amount as the budget initiative. </p>
<p>As with the $7 co-payment proposal, these savings will initially be directed into the Medical Research Future Fund.</p>
<p>The first change has grabbed all the headlines. It is to <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/strongmedicare_factsheet_patients">reduce</a> by $5 the rebate for general practice visits for most people. This excludes pensioners, concession card holders and people under 16. The government is <a href="http://www.abc.net.au/7.30/content/2014/s4145569.htm">encouraging GPs</a> to recoup the $5 rebate cut from patients.</p>
<p>The second change is to freeze the <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/strongmedicare_factsheet_doctors">indexation of rebates</a> for all medical practitioners. As the rebate drifts further away from the cost that GPs incur in running their practice, GPs are likely to increase their charges to cover their costs. </p>
<p>As a result, all patients (including pensioners and health care card holders) are likely to face increased out-of-pocket costs. The problem is likely to be worst in areas where access to care is lowest, where patients are <a href="http://grattan.edu.au/report/access-all-areas-new-solutions-for-gp-shortages-in-rural-australia/">already more likely</a> to pay out of pocket costs.</p>
<p>The third change is to the funding rules for GP consultations. Currently there are four levels of rebates for GP consultations:</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/66846/original/image-20141210-6039-1vtdrgk.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/66846/original/image-20141210-6039-1vtdrgk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/66846/original/image-20141210-6039-1vtdrgk.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=361&fit=crop&dpr=1 600w, https://images.theconversation.com/files/66846/original/image-20141210-6039-1vtdrgk.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=361&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/66846/original/image-20141210-6039-1vtdrgk.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=361&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/66846/original/image-20141210-6039-1vtdrgk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=454&fit=crop&dpr=1 754w, https://images.theconversation.com/files/66846/original/image-20141210-6039-1vtdrgk.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=454&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/66846/original/image-20141210-6039-1vtdrgk.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=454&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="http://www.mbsonline.gov.au/internet/mbsonline/publishing.nsf/Content/the-mbs">Medicare Benefits Schedule</a></span>
</figcaption>
</figure>
<p>The vast bulk of consultations are level B, up to 20 minutes. Under the rules announced yesterday there is a new minimum length for level B consultations of 10 minutes, shorter consultations will now be considered level As.</p>
<p>This change will dramatically reduce the rebate for those <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/strongmedicare_factsheet_doctors">shorter consultations</a>, from $37.05 to $11.95 for concession card holders and $16.95 for general patients. Again it is highly likely that GPs will pass on $20+ gap to patients. The $5 co-payment has quickly morphed into a $25 one. </p>
<h2>Higher patient payments</h2>
<p>At first blush it may seem that the government has listened to complaints and fixed the problems that torpedoed its initial proposal. Originally, the co-payments applied to all patients, including concession-card holders, such as pensioners and people without a job. GPs would be forced to collect the $7, which seemed unworkable. </p>
<p>But the comparison shouldn’t be with what the budget suggested. Instead, the watered-down co-pay plan should be judged by the impact it will have on patients, on GPs, and on the budget bottom line.</p>
<p>At budget time every year, the temptation has been to increase patient co-payments a little bit to reduce spending. This obscures the fact that for many people health care fees are already too high. The fees have crept up continually under successive governments. Partly as a result, Australia relies more on direct fees to pay for health care than most similar countries.</p>
<p>There is <a href="http://link.springer.com/article/10.1007/s10198-013-0526-8">strong evidence</a> from around the world that co-payments stop people from getting health care. That means less spending immediately, but those gains are offset when people skip visits they need. It costs patients, the health system and the broader economy <a href="http://theconversation.com/higher-health-co-payments-will-hit-the-most-vulnerable-29590">much more</a> if people get sicker.</p>
<p>The consequences are serious. Already 5% of people <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/4839.0">report</a> that they avoid doctor visits because of the cost, these changes will exacerbate that.</p>
<h2>Longer appointments</h2>
<p>The current payment scales encourage shorter consultations in each payment band.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/66849/original/image-20141210-6060-1kjbg33.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/66849/original/image-20141210-6060-1kjbg33.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=583&fit=crop&dpr=1 600w, https://images.theconversation.com/files/66849/original/image-20141210-6060-1kjbg33.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=583&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/66849/original/image-20141210-6060-1kjbg33.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=583&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/66849/original/image-20141210-6060-1kjbg33.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=733&fit=crop&dpr=1 754w, https://images.theconversation.com/files/66849/original/image-20141210-6060-1kjbg33.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=733&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/66849/original/image-20141210-6060-1kjbg33.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=733&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><span class="source">Grattan Institute/Medicare Benefits Schedule 2014</span></span>
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</figure>
<p>Currently, shorter level B consultations can lead to GP revenue of up to $9 a minute (see the notes under the chart for more detail on these figures). The government pays around $2 a minute for a level B visit that lasts 20 minutes. </p>
<p>With the new minimum length for level B visits, the potential hourly rates for the different types of consultations are much more even, essentially reducing the incentive for “6-minute medicine”. </p>
<p>The reality is that <a href="http://sydney.edu.au/medicine/fmrc/beach/bytes/BEACH-Byte-2014-002.pdf">most consultations</a> take much longer than that – the average is closer to 15 minutes and the median only a few minutes shorter – so this policy initiative may be “solving” a problem which isn’t there.</p>
<p>Discouraging turnstile medicine has previously been seen as a good policy. With increasing complexity of patients and more patients having multiple chronic conditions, longer consultations are probably appropriate to ensure more thorough assessments and management by GPs.</p>
<p>But Tuesday’s changes transformed a good idea into a bad one.</p>
<p>Previously, implementation of policies to encourage longer consultations was proposed on a cost-neutral basis. Now it is as a budget savings measure, much of the cost of will be borne by patients. What might have been able to be promoted as quality-enhancing will now almost certainly be access-reducing and probably quality-reducing as well if patients miss out on needed care.</p>
<p>The changes announced yesterday are much more complex than the simple $5 headline number. They save the Commonwealth government roughly the same amount as the budget proposals. This means that collectively, consumers, GPs, or both, will be out of pocket to the same extent as was proposed in the budget. </p>
<p>The distribution, though, will be different. Assuming GPs pass on the cuts, the big losers will be ordinary patients. Pensioners and concession card holders are protected from only one of the three changes, so they may face increased costs because of the indexation pause and the level B definition changes.</p>
<p>The rebate reductions are due to come into effect on July 1, 2015. But the level B definition changes are to be snuck in by regulation to apply from January 1, 2015. Because the Senate can disallow regulations, the government delayed the changes until a few days after the Senate rose for its Christmas break.</p>
<p>The big question is whether these changes will survive the Senate when it resumes on February 9. It will be an interesting summer.</p><img src="https://counter.theconversation.com/content/35334/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In the May budget, the Commonwealth government proposed a A$7 co-payment for GP services and tests done outside a hospital. After seven months of fierce criticism, the government abandoned those plans…Stephen Duckett, Director, Health Program, Grattan InstitutePeter Breadon, Health Fellow, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/353222014-12-10T05:30:21Z2014-12-10T05:30:21ZMedicare co-payment: what the changes mean for you<figure><img src="https://images.theconversation.com/files/66839/original/image-20141210-6030-jxb0yy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">If you don't have a concession card and are usually bulk billed, you may face a A$5 co-payment, or more.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-173815067/stock-photo-temperature-woman.html?src=pp-photo-173817368-98-GPQpuTsu9RpVg9Ze2Pg-1">Image Point Fr/Shutterstock</a></span></figcaption></figure><p>The Abbott government has scrapped its controversial A$7 co-payment plan and replaced it with a A$5 cut to GP rebates for patients over 16 without a concession card, and other rebate changes.</p>
<p>The revised plan comes after seven months of <a href="https://theconversation.com/back-to-the-future-with-coalition-attacks-on-medicare-bulk-billing-35311">failed negotiations</a> with crossbenchers and widespread concern a co-payment would reduce vulnerable patients’ access to care and drive people to already overburdened emergency departments. </p>
<p>Doctors may choose to pass the A$5 cut on to patients or they may charge more. GPs are currently able to set their own fees, with many using the AMA guide, which recommends a fee of A$73 for a standard consultation of up to 20 minutes. </p>
<p>Rebates for children, pensioners, veterans, aged care residents and other concession card holders will remain the same. Rebates for all health checks, mental health plans, chronic disease management plans will also remain the same. There will be no policy changes for blood tests and diagnostic imaging. </p>
<hr>
<blockquote>
<p><strong>Related coverage:</strong> <a href="https://theconversation.com/back-to-the-future-with-coalition-attacks-on-medicare-bulk-billing-35311">Back to the future with Coalition attacks on Medicare bulk billing</a></p>
</blockquote>
<hr>
<p>From July 1 2015, if you don’t have a concession card and are usually bulk billed, you may face a A$5 co-payment, or more. </p>
<p>If you’re not usually bulk billed, your GP may also set a new fee. This may be passed on to you when you visit your Medicare office to claim your rebate. In this case, you will receive A$32.05 rather than A$37.05 for a ten to 20 minute consultation. </p>
<p>The indexation of GP rebates has been frozen until July 2018 so GPs are likely to increase their fees over the next three years to recoup some of this lost income.</p>
<p>If your GP visits are usually quick, you may find your GP spends more time with you from January 16 2015. The government will introduce a ten-minute minimum time for level B consultations, which make up the bulk of GP visits. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/66833/original/image-20141210-6033-sx47yw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/66833/original/image-20141210-6033-sx47yw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=2122&fit=crop&dpr=1 600w, https://images.theconversation.com/files/66833/original/image-20141210-6033-sx47yw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=2122&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/66833/original/image-20141210-6033-sx47yw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=2122&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/66833/original/image-20141210-6033-sx47yw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=2666&fit=crop&dpr=1 754w, https://images.theconversation.com/files/66833/original/image-20141210-6033-sx47yw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=2666&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/66833/original/image-20141210-6033-sx47yw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=2666&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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</figure><img src="https://counter.theconversation.com/content/35322/count.gif" alt="The Conversation" width="1" height="1" />
The Abbott government has scrapped its controversial A$7 co-payment plan and replaced it with a A$5 cut to GP rebates for patients over 16 without a concession card, and other rebate changes. The revised…Fron Jackson-Webb, Deputy Editor and Senior Health EditorEmil Jeyaratnam, Data + Interactives Editor, The ConversationLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/348512014-12-01T19:08:23Z2014-12-01T19:08:23ZReal-life decisions: why price signals for Medicare are flawed<p>Amid last week’s furore over the on-again, off-again Medicare <a href="https://theconversation.com/au/topics/gp-co-payment">co-payment</a> proposal, Prime Minister Tony Abbott emphasised during Question Time that <a href="http://www.sbs.com.au/news/article/2014/11/27/nothing-wrong-co-payment-abbott">his government wanted</a> “to see price signals in the system” in relation to public health and Medicare.</p>
<p>The principle of price signals is a compelling one – it forces people to weigh the benefits they receive against the costs of the resources they are using. This helps prevent wasteful use of our national resources, which is what economic efficiency is all about.</p>
<p>That said, there is a fundamental flaw: in an essential health system such as Medicare, flat-charge price signals have the capacity to hurt most those who are least able to afford its services.</p>
<p>A <a href="http://link.springer.com/article/10.1007/s10198-013-0526-8#page-1">recent survey</a> assessed 47 international studies on the behavioural effects of co-payments for health care. It found low-income people in poor health reduced their use of health services proportionally more than others. </p>
<p>Australian daily life is littered with instances of seemingly minor imposts exerting a far greater influence on behaviour than anyone could possibly have imagined. Why would health care be any different?</p>
<p>The classic example in the lives of commuters is toll-avoidance. Melbourne and Sydney are full of rat-running and toll avoidance every day of the week. The average price of a single toll trip might be only A$3.30 but this affects lived behaviour profoundly. It does not necessarily force people out of cars into public transport, to car-pool, or to telecommute. But it does mean that intersections at either end of a toll road are jammed at peak hour.</p>
<p>Take another example: petrol dockets. For a discount of just four cents per litre, thousands of motorists will clip coupons and will drive out of their way to branded petrol stations that honour their discount vouchers. Is this rational? Based on an average tank capacity of 60 litres, the total saving is less than A$2.50. Many drivers spend much of that “discount” just driving to the station. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/65909/original/image-20141201-20582-hcme4j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/65909/original/image-20141201-20582-hcme4j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/65909/original/image-20141201-20582-hcme4j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/65909/original/image-20141201-20582-hcme4j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/65909/original/image-20141201-20582-hcme4j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/65909/original/image-20141201-20582-hcme4j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/65909/original/image-20141201-20582-hcme4j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Some motorists go to extraordinary lengths to avoid tolls.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-163621679/stock-photo-melbourne-october-melbourne-s-traffic-jam-on-m-freeway-october-in-melbourne.html?src=tF_ijw8bMhnHoPE0H3-ipw-1-1">TK Kurikawa/Shutterstock</a></span>
</figcaption>
</figure>
<p>So powerful was this “small price signal” that in February 2014 the Australian Competition and Consumer Commission took <a href="http://www.accc.gov.au/media-release/accc-takes-action-against-coles-and-woolworths-for-allegedly-breaching-fuel-shopper-docket-undertakings">formal action</a> against the two major supermarkets for apparently not adhering to a promise to limit their fuel docket values, since they were skewing buyer behaviour so dramatically. Since the co-branding regime began, the market shares of Coles Express and Woolworths Caltex <a href="http://www.themonthly.com.au/issue/2014/august/1406815200/malcolm-knox/supermarket-monsters">have risen</a> to claim over 48% of the petrol-purchasing public. Many independent operations have simply closed.</p>
<p>This may be more emotional behaviour than a rational response. But it is real, nonetheless. </p>
<p>And the list goes on: Many people get intensely upset over A$2.00 charges for baggage trolleys at the airport. They are irked when their mobile phones drop out in a transmission dead-zone and they have to ring a number again. The average cost of a re-dial? Less than 29 cents.</p>
<p>Toll evasion on public transport is a serious, ongoing issue. The average cost of a journey? Less than A$3.00. </p>
<p>Many businesses add 1% (or more) of the purchase cost solely because the customer is paying with a credit card. Another major grumble. </p>
<p>Many pensioners will ask businesses to please provide them with a landline number to ring, because the former is about 40% cheaper than a call to a mobile number. The average saving per phone call? Less than 20 cents.</p>
<p>In the real world, small and personal price signals really do matter. So the argument that a A$7 fee hike for GP visits will not affect behaviour in negative ways doesn’t hold. </p>
<p>As many medical peak bodies have already <a href="http://www.ama.com.au/media/ama-transcript-7-gp-co-payment">observed</a>, the one certainty is that the most vulnerable members of the community will be the most adversely affected. Even more: that patients with less serious ailments will <a href="https://theconversation.com/gp-co-payment-would-increase-emergency-department-wait-times-28658">flood emergency departments</a> of public hospitals instead – those same waiting rooms that are already filled to overflowing.</p>
<p>Levying a A$7 co-payment for everyone who fronts up at the doctor’s office — regardless of their means — is just asking for trouble. Order a blood test for cholesterol? Another A$7. Get an x-ray to make sure your back injury is muscular and not skeletal in nature? Ditto.</p>
<p>Discouraging people from seeing their GP is counter to all sensible trends in preventative medicine. For the past 30 years, every cogent public health campaign has emphasised the importance of early diagnosis (of skin and breast cancers, of asthma, of diabetes). </p>
<p>This is especially true in the case of Indigenous health campaigns. The uphill battle has been one of persuading First Nations people to trust and visit their GPs in the first place. Over the past six months, Aboriginal medical services across the country <a href="http://www.ahcwa.org.au/index.php/news-a-publications/12-news/latest/73-aboriginal-medical-services-will-refuse-to-charge-Medicare-co-payment">have slammed</a> the co-payment idea for just that reason and have vowed not to charge it.</p>
<p>The biggest health insurers — including the recently privatised Medibank Private — have proven the worth of the preventative approach. Over the past decade, managing director George Savvides has overseen clever initiatives such as the <a href="https://flybuys.medibank.com.au/">adding of points</a> to any Medibank subscriber’s Flybuys account if they buy fresh or frozen fruit and vegetables from Coles supermarkets.</p>
<p>Can anyone doubt the importance of small price-signalling there? Or the premise that a milligram of prevention is worth a kilogram of cure? This is being undermined by an inflexible Medicare co-payment proposition that refuses to die.</p>
<p>Finally, the stated motivation for the co-payment — which is to help repair the budget and contain health spending — has been undermined by <a href="http://www.theaustralian.com.au/business/latest/gp-co-payment-a-windfall-dutton/story-e6frg90f-1227032321334">splurging A$5</a> of the co-payment on a medical research fund. This is not to deny the importance of medical research — far from it. But why ask the poor and sick to bear a disproportionate burden of the cost? </p>
<p>This has to be looked at seriously. It has to be looked at now. The price-signalling evidence suggests that the Medicare co-payment proposal should be buried once and for all on the floor of the House of Representatives.</p><img src="https://counter.theconversation.com/content/34851/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Amid last week’s furore over the on-again, off-again Medicare co-payment proposal, Prime Minister Tony Abbott emphasised during Question Time that his government wanted “to see price signals in the system…Adam Shoemaker, Academic Provost, Griffith UniversityRoss Guest, Professor of Economics and National Senior Teaching Fellow, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/339482014-11-10T19:30:47Z2014-11-10T19:30:47ZMedicare spending on general practice is value for money<figure><img src="https://images.theconversation.com/files/64088/original/z9s5p2p4-1415592573.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">If we want to ensure the health system remains sustainable, it makes sense to use its cheapest and most efficient arm: general practice.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-135751889/stock-photo-woman-with-child-waits-to-attendance-of-doctor-at-the-clinic.html?src=3duiKcJ9LH2Sx00LZbSGbg-2-72">Iakov Filimonov/Shutterstock</a></span></figcaption></figure><p>Last year taxpayers spent A$6.3 billion on GP services through Medicare, about 6% of the total government health expenditure. This was a 50% increase (A$2.1 billion) in today’s dollars over the past decade and equates to about A$60 more per person in real terms.</p>
<p>Health Minister <a href="http://www.transformingthenation.com.au/2014/10/facing-challenges/">Peter Dutton says</a> this growth is “unsustainable”. He plans to introduce a <a href="http://www.smh.com.au/federal-politics/political-news/health-minister-peter-dutton-says-medicare-fees-will-improve-health-outcomes-20140515-zre6k.html">GP co-payment</a> in hope of reducing the number of times Australians visit a GP and to ensure users foot some of the bill.</p>
<p>But targeting primary care for cost savings could backfire. Research we’re <a href="http://ses.library.usyd.edu.au//bitstream/2123/11883/4/9781743324240_ONLINE.pdf">releasing today</a> shows that while the number of GP visits has increased, the services are cost-effective. If the same services were performed in other areas of the health system, they would cost considerably more. </p>
<h2>Under pressure</h2>
<p>Unsustainable or not, Australia’s health-care system faces a number of challenges, most notably from the rising prevalence of chronic conditions, such as type 2 diabetes, heart disease and cancer. This is due to three major factors. </p>
<ol>
<li><p>Australia has an ageing population as our world-class health system keeps us alive longer.</p></li>
<li><p>In response to government encouragement through Medicare initiatives, GPs are diagnosing disease earlier and providing preventive interventions for health risk factors and diseases such as hypertension, high cholesterol and type 2 diabetes.</p></li>
<li><p>An increasing proportion of Australians are overweight or obese, putting them at risk for chronic conditions. </p></li>
</ol>
<p>Earlier diagnosis means people are living longer with diagnosed disease. The result is exponential growth in required care over their lifetime.</p>
<p>The search for more cost-effective health care for our population should be applauded. But reducing spending on GP services is not the answer. </p>
<h2>What do we get?</h2>
<p>Our team has been studying general practice activity for over 16 years through the <a href="http://sydney.edu.au/medicine/fmrc/beach/">Bettering the Evaluation and Care of Health</a> (BEACH) program. This cross-sectional encounter-based study uses changing random samples of about 1,000 GPs per year, each of whom contribute details of 100 encounters with consenting patients. This provides a representative sample of about 100,000 encounters per year from across the country. </p>
<p>Results from one of the <a href="http://ses.library.usyd.edu.au//bitstream/2123/11883/4/9781743324240_ONLINE.pdf">BEACH books</a>, released today, shed some light on what we got for the $2.1 billion of extra Medicare spending on general practice. In 2013-14 there were 35 million more GP services than ten years earlier, a 36% increase. This included 17 million more attendances by patients aged 65 years and over (a 67% increase). </p>
<p>Length of GP consultations recorded through BEACH suggest that the average consultation now takes almost one minute more than a decade ago. The result is that GPs spend an extra ten million clinical hours with their patients, a 43% increase. </p>
<p>The number of problems managed at these consultations has also significantly increased. GPs managed an additional 68 million health problems at these encounters (an increase of 48%), including 24 million more chronic problems. </p>
<p>Management of these problems involved an additional ten million procedures (a 66% increase) and 12 million clinical treatments, such as counselling, advice and education, than a decade ago.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/64071/original/z6fbwn9t-1415584562.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/64071/original/z6fbwn9t-1415584562.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=849&fit=crop&dpr=1 600w, https://images.theconversation.com/files/64071/original/z6fbwn9t-1415584562.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=849&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/64071/original/z6fbwn9t-1415584562.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=849&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/64071/original/z6fbwn9t-1415584562.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1067&fit=crop&dpr=1 754w, https://images.theconversation.com/files/64071/original/z6fbwn9t-1415584562.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1067&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/64071/original/z6fbwn9t-1415584562.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1067&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><span class="source">Prepared by The University of Sydney for the BEACH study.</span></span>
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</figure>
<p>Clearly, increases in the amount and complexity of GP clinical work are reflected in additional Medicare expenditure. If other medical specialists and/or emergency departments had provided these extra services, they would have cost far more. </p>
<p>The average cost of a GP visit was A$47 from Medicare, plus a A$5 patient contribution. For a private specialist, the average visit costs Medicare A$82 plus a A$38 patient fee. </p>
<p>A visit to the emergency department, which is paid by state and territory governments, costs far more. In Western Australia, for example, an emergency department visit in 2011-12 cost A$599 on average. </p>
<h2>More, not less primary care</h2>
<p><a href="http://has.sagepub.com/content/33/1-2/56.short">International research</a> has repeatedly concluded that investment in primary care is the most cost-effective way to provide population health care. As GP services are far cheaper than other types of medical services, discouraging GP visits by introducing a standard <a href="https://theconversation.com/co-payment-will-hit-harder-than-expected-sydney-university-study-finds-28871">co-payment</a> for most patients would increase costs to governments, now and later. </p>
<p>It may seem counter-intuitive, but one effective way to contain the cost of Australia’s health care would be to expand the use of GP services. </p>
<p>One issue not acknowledged in the discussion about health costs is the increasing number of patients with multiple chronic conditions. These patients use more resources and are more likely to have fragmented care due to the number of health professionals involved. GPs play the central role in co-ordinating the management of patients with multiple chronic conditions, reducing costly hospitalisations.</p>
<p>As the age of government-supported retirement increases, many Australians will have to work until they are 70. This highlights the importance of promoting good health across the lifespan, through a strong focus on primary and secondary prevention and co-ordinated management of chronic conditions. </p>
<p>In any one year 85% of us visit a GP, but only about 15% of us are admitted to hospital, where a far greater proportion of health funds is spent. GPs supply the bulk of care to the population, so general practice is where our investment should be.</p>
<p>If we want to strengthen our health-care system and ensure its sustainability into the future, it makes sense to encourage people to use its cheapest and most efficient arm: general practice.</p><img src="https://counter.theconversation.com/content/33948/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Over the past ten years, the Bettering the Evaluation And Care of Health (BEACH) program has been funded through grants from the Australian Government Department of Health. It has also received financial support from the Department of Veterans' Affairs, other government instrumentalities, industry and not-for-profit organisations. Funding is paid directly to the University of Sydney and not to any individual.</span></em></p><p class="fine-print"><em><span>Clare Bayram, Graeme Miller, Helena Britt, Joan Henderson, and Julie Gordon do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Last year taxpayers spent A$6.3 billion on GP services through Medicare, about 6% of the total government health expenditure. This was a 50% increase (A$2.1 billion) in today’s dollars over the past decade…Helena Britt, Associate professor, Director of the Family Medicine Research Centre, Sydney School of Public Health, University of SydneyChristopher Harrison, Senior Research Analyst, Family Medicine Research Centre, Sydney School of Public Health, University of SydneyClare Bayram, Research Fellow, Family Medicine Research Centre, Sydney School of Public Health, University of SydneyGraeme Miller, Associate Professor of General Practice, University of SydneyJoan Henderson, Senior Research Fellow, BEACH Program., University of SydneyJulie Gordon, Research Fellow, Family Medicine Research Centre, Sydney School of Public Health, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/323222014-10-23T03:34:07Z2014-10-23T03:34:07ZKeeping people healthy is good for insurers’ bottom line<figure><img src="https://images.theconversation.com/files/62582/original/g96tyy2y-1414026307.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Several private health insurers are trailing schemes to prevent their members' health deteriorating.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/diacimages/5566454501">DIBP images</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Australia’s population is in the midst of considerable demographic change, with a proportional rise in older age groups. Medical successes can now save the lives of those who would have died from illnesses such as heart attacks and cancer. In doing so, the ranks of those with an ongoing and complex health problem have swollen. </p>
<p>Meeting the needs of these people will require a change in the way we deliver health service. Australia’s current health services are provided episodically, when someone gets sick; we need to move towards a system of continuing care, involving a mix of hospital and community support.</p>
<p>Acknowledging the financial benefits of keeping people healthy, several large Australian private health insurers are <a href="https://theconversation.com/balancing-public-and-private-as-health-insurers-move-into-primary-care-21995">trialling schemes</a> to provide additional services, such as telephone-based coaching, to encourage healthy lifestyle choices for members at risk of chronic diseases. </p>
<p>But so far their efforts have been limited and haphazard. While the United States system of managed care has been criticised in the past as being too prescriptive, it offers some important lessons for Australian insurers. </p>
<h2>Australia’s fragmented system</h2>
<p>All health-care providers – public and private – are increasingly investing in ways to better care for people with chronic conditions. We know that good primary care helps patients keep their illnesses under control. But when conditions go unmanaged, and the patient’s health deteriorates, they’re more likely to require costly hospital care. </p>
<p>However, Australia has a split health care system, where the Commonwealth manages primary care and the states manage hospitals. This funding system rewards cost-shifting from the Commonwealth to the states and back; the exact opposite of much-needed service shifting on behalf of the patient. It also stops investment following value. </p>
<p>Although hospital is the best place to be if your long-standing condition deteriorates, admission can be highly disruptive for both patients and carers. Picture this scenario: a patient with chronic lung disease with sudden severe breathlessness ends up in the emergency department. Two weeks and tens of thousands of dollars later he returns home. </p>
<p>This hospital visit might have been prevented with a call to his community-based general practitioner, who has been managing the patient’s bronchitis, and a follow-up consultation. It would also reduce the demands of hospitalisation on the individual, his family and the health system. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/62583/original/57sgygk7-1414026505.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/62583/original/57sgygk7-1414026505.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/62583/original/57sgygk7-1414026505.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/62583/original/57sgygk7-1414026505.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/62583/original/57sgygk7-1414026505.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/62583/original/57sgygk7-1414026505.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/62583/original/57sgygk7-1414026505.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Insurers aim to keep members healthy and out of hospital.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-187694114/stock-photo-empty-modern-hospital-bed-in-a-sunny-room-with-a-clean-blue-floor.html?src=mCMExOTXOnVDqrAEYkstyA-1-48">Hadrian/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Lessons from the United States</h2>
<p>The US has made progress in contemporary managed care. <a href="http://en.wikipedia.org/wiki/Kaiser_Permanente">Kaiser Permanente</a> (KP) is a health insurance and comprehensive care provider agency which has 9.3 million members (about seven million in California) and uses a system of medical centres, primary care facilities, preventive services and community-based practices. </p>
<p>You or your employer pays your premium and KP matches the type of care to your need. KP measures the outcomes of what their service provides and, in general, these are superior to those achieved in the expensive, unmanaged systems that co-exist elsewhere in the US. </p>
<p>An <a href="http://www.ncbi.nlm.nih.gov/pubmed/11799029">evaluation in 2002</a> by Richard Feachem and colleagues suggested that KP’s costs per patient per year were less than in the British National Health Service (NHS). This paper led to trans-Atlantic fury. </p>
<p>In an <a href="http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1122059/">accompanying editorial</a> in the BMJ, the editor, Richard Smith, explained:</p>
<blockquote>
<p>The authors think that Kaiser may perform better because primary and secondary care are better integrated and the whole system better managed; because it has hospital stays a third the length of those in the NHS and much better information technology; or because of competition.</p>
</blockquote>
<p>With comprehensive managed care such as at KP, the payer (the insurance company) has an interest in ensuring that you achieve the best outcome from medical or surgical care. The insurer is also keen that you, as the patient, stay well. To that end, preventive message about immunisation, exercise and diet, easy access to personal preventive services and quit-smoking classes are part of the insurer’s service to their members. </p>
<p>No-one other than the insurer pays for the health care of their members. Having one single payer means they’re interested in prevention and in the effectiveness of all forms of care they provide, and not just cure. </p>
<h2>What does this mean for Australia?</h2>
<p>Earlier models of managed care in the US were roundly criticised and disliked by the medical profession in Australia because they limited clinical freedom, requiring doctors to check with insurers before embarking on expensive diagnoses and treatments. </p>
<p>A third party was seen as intruding on the doctor-patient relationship. Resistance to early managed care programs was typified by the comment of one doctor who said: “Before I can treat my patient I have to call his or her insurer on 1800-Mother-may-I? to get permission!” Things have moved a long way. </p>
<p>It’s important to note that Australia does have an alternative system of care for patients with chronic conditions, similar to KP, and we should look at it carefully. It’s called the <a href="http://www.healthdirect.gov.au/partners/department-of-veterans-affairs">Department of Veterans Affairs</a> and it works remarkably well. </p>
<p>Veterans Affairs uses an inclusive data system for its patients that covers their treatment in different hospitals by different doctors. It can tell how patients get on and broadly what happens to them. It uses tailored programs for patients with different ailments. It supports good, quality, managed care. </p>
<p>So far in Australia, the participation of the private health insurers in managed care is limited and haphazard; they have a very long journey ahead of them to achieve the successes of the American industry. But fledgling efforts deserve more than knee-jerk criticism based on perceptions formed decades ago about what managed care can offer.</p><img src="https://counter.theconversation.com/content/32322/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Leeder does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia’s population is in the midst of considerable demographic change, with a proportional rise in older age groups. Medical successes can now save the lives of those who would have died from illnesses…Stephen Leeder, Emeritus Professor, Menzies Centre for Health Policy, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/308852014-09-04T20:04:53Z2014-09-04T20:04:53ZWhat can we learn from other countries’ health systems?<p>Health systems in all wealthier countries face similar problems, but their solutions are widely different. That should mean we can learn from other countries. To explore these differences, this week The Conversation published articles on health systems in the <a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-united-states-30266">United States</a>, <a href="https://theconversation.com/creating-a-better-health-system-lessons-from-norway-and-sweden-30366">Nordic countries</a>, <a href="https://theconversation.com/creating-a-better-health-system-lessons-from-singapore-30607">Singapore</a>, <a href="https://theconversation.com/creating-a-better-health-system-lessons-from-england-30144">England</a> and <a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-netherlands-30270">the Netherlands</a>.</p>
<p>As American political scientist Ted Marmor <a href="http://www.tandfonline.com/doi/abs/10.1080/13876980500319253#.VAU0WPmSx8E">points out</a>, there is an extraordinary imbalance between the magnitude and speed of the information flows about what is happening in other countries and the capacity to learn useful lessons from them. </p>
<p>The reasons for this imbalance include culture, the “not invented here” syndrome, and the fact that the preconditions that allowed policy change in one place might not apply elsewhere. </p>
<h2>Australia starts from a good place</h2>
<p>From the Australian perspective, we have to be careful what we pick and choose. As my <a href="https://theconversation.com/australian-health-care-where-do-we-stand-internationally-30886">introduction to this series shows</a>, Australia’s health system stacks up well in international comparisons, at least on measures of cost and life expectancy. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=424&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=424&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=424&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=533&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=533&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=533&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Life expectancy and health expenditure of selected countries, latest year (2011-2013)</span>
<span class="attribution"><span class="source">Grattan Institute/OECD</span></span>
</figcaption>
</figure>
<p>Not one comparable country performs better than Australia on the critical dimension of cost. Only one, Switzerland, is better on life expectancy but it is much worse on cost.</p>
<p>Overseas experiences can tell you a lot about what not to do, as <a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-united-states-30266">Lesley Russell argues</a> in her piece on the United States. Yet even the US, the poorest performing health system among advanced economies, can offer lessons. </p>
<p><a href="http://www.ihpa.gov.au/internet/ihpa/publishing.nsf/Content/funding">Activity-based funding</a>, adopted nationally as a way of making Australian public hospitals more efficient, was imported from the United States where it has been used for that country’s Medicare system for three decades. </p>
<p>However, significant modifications to key design elements were required so the US system would be fit for purpose in the quite different Australian health system.</p>
<p>Similarly, Australia’s Medicare system was modelled on Canada’s, again with modifications, and there’s much to be learnt from <a href="https://theconversation.com/fixing-australias-bad-drug-deal-could-save-1-3-billion-a-year-12707">New Zealand’s pharmacy pricing</a>. Other ideas have been picked up from other countries.</p>
<p>It is in wholesale transplantations that problems arise. Sure, <a href="https://theconversation.com/creating-a-better-health-system-lessons-from-singapore-30607">Singapore’s health system</a> is cheaper than Australia’s, but its Medisave scheme relies on key aspects of Singaporean culture, including family responsibility, and Singapore does not have the same welfare state tradition as other wealthy countries. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/58079/original/8h67yznn-1409715926.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/58079/original/8h67yznn-1409715926.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=446&fit=crop&dpr=1 600w, https://images.theconversation.com/files/58079/original/8h67yznn-1409715926.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=446&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/58079/original/8h67yznn-1409715926.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=446&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/58079/original/8h67yznn-1409715926.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=561&fit=crop&dpr=1 754w, https://images.theconversation.com/files/58079/original/8h67yznn-1409715926.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=561&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/58079/original/8h67yznn-1409715926.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=561&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Singapore’s Medisave scheme relies on Singaporean values of family and responsibility.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-65464249/stock-photo-mature-female-doctor-in-hospital-room.html?src=MF22UgHlXS1ky9LX-3Uoow-1-142">Blend Images/Shutterstock</a></span>
</figcaption>
</figure>
<p>The <a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-netherlands-30270">Dutch experience</a> with managed competition is also held up as a model to get us out of the mess of muddled governance that characterises the Australian health system. </p>
<p>Yet the Netherlands spends considerably more on health care than Australia does as a share of gross domestic product. And its health share of GDP has increased much faster than Australia’s has over the last decade. Whether managed competition will change these metrics is still unknown. </p>
<h2>Potential lessons</h2>
<p>What can we take away from the experience of other countries?
Poor aggregate system performance may hide hidden gems we can learn from. After all, activity-based funding and workforce role innovation came from the United States. </p>
<p>Second, we can also learn what not to do from other countries. Again, the US, with its heavy reliance on the inflationary administrative cost overlay from private insurance, provides a good example. </p>
<p>England’s story, with its <a href="http://jrs.sagepub.com/content/98/12/563.full.pdf+html">periodic “redisorganisations”</a>, and problematic implementation of a pay for performance system for general practitioners also provides a <a href="https://theconversation.com/creating-a-better-health-system-lessons-from-england-30144">cautionary tale</a>.</p>
<p>Third, while Australia’s health system is good, it’s not perfect. There is currently a huge debate about <a href="https://theconversation.com/au/topics/gp-co-payment">co-payments</a> in Australia, perhaps we can learn from the <a href="https://theconversation.com/creating-a-better-health-system-lessons-from-norway-and-sweden-30366">Nordic experience</a> about regulated fees and out-of-pocket costs. </p>
<p>Recognition of other ways of doing things opens our eyes to the potential of experimentation and innovation, characteristics that will be important over the next decade as we face challenges from the increased prevalence of chronic disease.</p>
<p><strong>This is the eighth and final instalment of The Conversation’s <a href="https://theconversation.com/uk/topics/international-health-systems">International Health Systems</a> series. Click on the links below to read the other articles.</strong></p>
<ul>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-netherlands-30270">Creating a better health system: lessons from the Netherlands</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-england-30144">Creating a better health system: lessons from England</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-singapore-30607">Creating a better health system: lessons from Singapore</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-norway-and-sweden-30366">Creating a better health system: lessons from Norway and Sweden</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-united-states-30266">Creating a better health system: lessons from America</a></li>
<li><a href="https://theconversation.com/infographic-comparing-international-health-systems-30784">Infographic: comparing international health systems</a></li>
<li><a href="https://theconversation.com/australian-health-care-where-do-we-stand-internationally-30886">Australian health care: where do we stand internationally?</a></li>
</ul><img src="https://counter.theconversation.com/content/30885/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Duckett does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Health systems in all wealthier countries face similar problems, but their solutions are widely different. That should mean we can learn from other countries. To explore these differences, this week The…Stephen Duckett, Director, Health Program, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/302702014-09-04T20:04:45Z2014-09-04T20:04:45ZCreating a better health system: lessons from the Netherlands<figure><img src="https://images.theconversation.com/files/58069/original/pyr8xbvw-1409710115.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Dutch like their health system, even though they contribute to it from their own pockets.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-210335716/stock-photo-woman-s-hand-waiting-for-doctor-in-hospital.html?src=ghCsxShDrFKXsGouBMmywg-2-54">Bohbeh/Shuttersock</a></span></figcaption></figure><p><em>Australia has a relatively strong health system by international standards, but it needs a makeover. To generate fresh ideas, The Conversation is <a href="https://theconversation.com/uk/topics/international-health-systems">profiling five international health systems</a> that have important lessons – good and bad – to pull Australia out of its health reform black hole.</em></p>
<hr>
<p>Much as many of us in Australia like to defend the status quo of Medicare and our health system, in reality, it’s best described as a dog’s breakfast. Policymaking, governance, funding and care are fragmented and complicated. </p>
<p>The Commonwealth funds and regulates pharmaceuticals, medical benefits, private insurance, and public hospitals – indirectly through unspecified grants to the states and now directly through <a href="https://theconversation.com/why-the-new-way-of-funding-public-hospitals-wont-work-7952">activity-based funding</a>. </p>
<p>State and territory governments fund and operate public hospitals and, varying by state, community care. Private insurers fund private hospitals and some medical specialist care. </p>
<p>All this has to be brought together by the user, especially if they have a chronic condition, and there they stand alone. A patient with diabetes, for example, needs ongoing care in the community from general practitioners and allied health and is more likely to require public and/or private hospital admission. </p>
<p>Each element of their overall care is the responsibility of a different funder. There is no single organisational entity with the knowledge, power and responsibility to support users achieve an efficient and effective outcome within the framework of a sustainable and equitable system. </p>
<p>Should we ever get the political will to significantly improve Medicare, we could learn some important lessons <a href="https://www.mja.com.au/journal/2009/191/1/sustaining-medicare-through-consumer-choice-health-funds-lessons-netherlands">from the principles</a> the Dutch government applied in its broad-ranging health reforms of 2006.</p>
<h2>Health care in the Netherlands</h2>
<p>Here’s how the new Dutch system works. </p>
<p><strong>The benefit package:</strong> The government sets the <a href="http://www.rijksoverheid.nl/onderwerpen/zorgverzekering/vraag-en-antwoord/wat-zit-er-in-het-basispakket-van-de-zorgverzekering.html">benefits package</a> of included services. These are essentially the same as Australia’s <a href="https://theconversation.com/explainer-what-is-medicare-and-how-does-it-work-22523">Medicare</a>, covering general practice, medical specialists, pharmaceuticals and hospital care. </p>
<p><strong>Setting the health budget ceiling:</strong> Each year the Dutch government sets an overall budget, based on predicted expenditure and revenue. </p>
<p>In Australia, there is no overall health budget ceiling because of the fragmentation of funding, with all elements uncapped, other than state funding of hospitals.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/58064/original/9hjjspwn-1409709411.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/58064/original/9hjjspwn-1409709411.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=397&fit=crop&dpr=1 600w, https://images.theconversation.com/files/58064/original/9hjjspwn-1409709411.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=397&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/58064/original/9hjjspwn-1409709411.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=397&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/58064/original/9hjjspwn-1409709411.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=499&fit=crop&dpr=1 754w, https://images.theconversation.com/files/58064/original/9hjjspwn-1409709411.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=499&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/58064/original/9hjjspwn-1409709411.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=499&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Dutch system engages the whole community in funding.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/reidab/15058281641">Reid Beels/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span>
</figcaption>
</figure>
<p><strong>Raising the money:</strong> By law, 50% of the Dutch health budget is raised by a payroll tax (currently 7.5%) and a tax on other income (currently 5.4%), up to an income ceiling. This way overall health spending is tied to economic growth. </p>
<p>The government pays for children 18 and under, representing some 5% of the total. </p>
<p>The remaining 45% is raised by nominal premiums set by competing health funds and a compulsory annual deductible of up to €360. The <a href="http://www.zorginstituutnederland.nl/binaries/content/documents/zinl-www/documenten/rubrieken/verzekering/risicoverevening-zvw/2014/1310-bepaling-macro-deelbedragen-2014/Bepaling+macro-deelbedragen+2014.pdf">average nominal premium</a> in 2014 is estimated to be €1,120 per adult. This way everyone is directly involved in funding health care.</p>
<p>The nominal premium is regressive (that is, a larger proportion of a lower income person’s income than a person with a higher income) so the government provides an offsetting income-related <a href="http://www.rijksoverheid.nl/onderwerpen/zorgtoeslag/wat-is-zorgtoeslag">“care allowance”</a>, to a maximum of €864, via tax credits. Around 60% of the population receives some level of this allowance. </p>
<p>In Australia, Commonwealth health funding is derived from general revenue. In fact, the Medicare levy makes up <a href="http://www.aihw.gov.au/australias-health-2010-data-tables/?id=6442475667">just 18%</a> of Commonwealth outlays on health. States also fund health from general revenue, much derived from Commonwealth grants.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/58183/original/72nngzd4-1409786687.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/58183/original/72nngzd4-1409786687.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/58183/original/72nngzd4-1409786687.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=458&fit=crop&dpr=1 600w, https://images.theconversation.com/files/58183/original/72nngzd4-1409786687.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=458&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/58183/original/72nngzd4-1409786687.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=458&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/58183/original/72nngzd4-1409786687.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=576&fit=crop&dpr=1 754w, https://images.theconversation.com/files/58183/original/72nngzd4-1409786687.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=576&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/58183/original/72nngzd4-1409786687.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=576&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>Australians contribute varying amounts to private health insurers and out-of-pocket payments, but the <a href="https://theconversation.com/infographic-comparing-international-health-systems-30784">national average</a> is A$731.</p>
<p><strong>Competing funds:</strong> All Dutch citizens are required to have private health insurance with a fund of their choice. No one can be refused coverage based on their health, and premiums are the same for all members (for the same product). </p>
<p>The government provides independent <a href="http://www.KiesBeter.nl">web-based guidance</a> for consumers, who are able to change funds each year, if they like. The funds are similar in structure and function as Australian private health insurers.</p>
<p>Funds also receive payments from the central pool of funding, based on the demographics of their members. This is determined by a sophisticated risk equalisation process that adjusts for predictable costs related to age, gender, chronic disease, recent high-cost care and socioeconomic factors such as region, socio-economic status and source of income. </p>
<p><strong>Purchasing care:</strong> Dutch hospitals and specialists are paid per episode in a bundled payment, but unlike Australian activity-based funding that only funds hospital based care, this covers the period from referral by the GP to transfer back to the GP. </p>
<p>Around 70% of the bundled episodes of care in The Netherlands – mainly elective surgery – are subject to price negotiation between funds and hospitals. Through these price negotiations, funds can establish preferred “in-contract” providers. </p>
<p>The remaining high-cost, complex episodes of care have prices fixed by government. </p>
<p>GPs are paid on a mixed <a href="https://theconversation.com/phase-out-gp-consultation-fees-for-a-better-medicare-13690">capitation</a>, where they’re paid a lump sum to care for a patient over 12 months, and <a href="https://theconversation.com/phase-out-gp-consultation-fees-for-a-better-medicare-13690">fee-for-service</a> basis. Australian GPs are paid via Medicare’s fee-for-service model. </p>
<p><strong>Performance:</strong> The Dutch health system is <a href="https://theconversation.com/infographic-comparing-international-health-systems-30784">more costly</a> than Australia’s. The Netherlands spends 11.8% of GDP on health, compared with 9.1% for Australia, and 9.3% for the OECD average. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/58097/original/xfh7nhvz-1409718592.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/58097/original/xfh7nhvz-1409718592.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/58097/original/xfh7nhvz-1409718592.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=479&fit=crop&dpr=1 600w, https://images.theconversation.com/files/58097/original/xfh7nhvz-1409718592.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=479&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/58097/original/xfh7nhvz-1409718592.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=479&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/58097/original/xfh7nhvz-1409718592.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=602&fit=crop&dpr=1 754w, https://images.theconversation.com/files/58097/original/xfh7nhvz-1409718592.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=602&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/58097/original/xfh7nhvz-1409718592.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=602&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<p>From a consumer point of view, the escalation of costs has been minimal. The payroll tax has ranged from 7.2% in 2006 to a maximum 7.75% in 2011, after the GFC. And while the average nominal premium increased by a 8.7% in 2011, this came down to 2.2% the following year and -1% <a href="http://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/prive/werk_en_inkomen/zorgverzekeringswet/veranderingen_bijdrage_zvw_2014/veranderingen_inkomensafhankelijke_bijdrage_zvw_2014">this year</a>. </p>
<p>Competition between the main funds is active, but there is market concentration and regional niche players, similar to the Australian private health insurance industry. Members generally stick to one provider, however, with only a quarter having changed funds at least once since 2006. </p>
<p>Importantly, the Dutch like their health scheme; the independent <a href="http://www.healthpowerhouse.com/files/ehci-2013/ehci-2013-index-matrix-a3.pdf">Euro Health Consumer Index</a> consistently ranks the Netherlands as number one in Europe on patient-set criteria. Access has <a href="http://www.ncbi.nlm.nih.gov/pubmed/23746931">improved significantly</a> since 2006, with waiting times for common surgical procedures dropping by up to three times – down to four to six weeks.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/58116/original/qfxzvc4k-1409722556.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/58116/original/qfxzvc4k-1409722556.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/58116/original/qfxzvc4k-1409722556.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=414&fit=crop&dpr=1 600w, https://images.theconversation.com/files/58116/original/qfxzvc4k-1409722556.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=414&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/58116/original/qfxzvc4k-1409722556.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=414&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/58116/original/qfxzvc4k-1409722556.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=520&fit=crop&dpr=1 754w, https://images.theconversation.com/files/58116/original/qfxzvc4k-1409722556.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=520&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/58116/original/qfxzvc4k-1409722556.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=520&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<h2>Long-term reform</h2>
<p>The implementation of the 2006 Dutch health reforms has been cautious. It followed 20 years of debate and technical preparation. </p>
<p>The pace of competition has been managed, with initially only 10% of hospital procedures subject to price negotiations. This avoided large swings in provider revenue and enabled funds to develop purchasing experience. </p>
<p>Funds receive retrospective adjustments for unpredictable changes in membership and costs and, initially, between-fund adjustments to avoid large swings in fund profitability. This adjustment is being progressively withdrawn.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/58067/original/pf2nqp83-1409709986.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/58067/original/pf2nqp83-1409709986.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=800&fit=crop&dpr=1 600w, https://images.theconversation.com/files/58067/original/pf2nqp83-1409709986.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=800&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/58067/original/pf2nqp83-1409709986.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=800&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/58067/original/pf2nqp83-1409709986.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1005&fit=crop&dpr=1 754w, https://images.theconversation.com/files/58067/original/pf2nqp83-1409709986.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1005&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/58067/original/pf2nqp83-1409709986.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1005&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Netherlands reformed its health system in 2006, after decades of planning.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/reisgekki/4029199127">Dietmut Teijgeman-Hansen/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
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<p>The system is truly universal in that it is the same for all. It is transparent, relatively simple and the engages the whole community in funding. Ask a Dutch self-employed taxi driver about the Dutch health system and they are likely to reply, as they have done to me on several occasions, “we have a terrific system, but it’s very expensive!”.</p>
<p>Australia has all the building blocks needed for a Dutch-style health system. Competing private health funds are gaining experience in provider purchasing and <a href="https://theconversation.com/balancing-public-and-private-as-health-insurers-move-into-primary-care-21995">chronic disease management</a>. And we have the appropriate regulatory process to oversee such a scheme. </p>
<p>Unfortunately, the politics of major health reform may be too hard for the Abbott government, as the Dutch health minister at the time bemoaned:</p>
<blockquote>
<p>… when it comes to controlling costs the government always stands alone … while the established powers in the health care sector – and they are very strong ones – make every change difficult.</p>
</blockquote>
<p><strong>This article is part seven of The Conversation’s <a href="https://theconversation.com/uk/topics/international-health-systems">International Health Systems</a> series. Click on the links below to read the other instalments.</strong></p>
<ul>
<li><a href="https://theconversation.com/what-can-we-learn-from-other-countries-health-systems-30885">What can we learn from other countries’ health systems?</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-england-30144">Creating a better health system: lessons from England</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-singapore-30607">Creating a better health system: lessons from Singapore</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-norway-and-sweden-30366">Creating a better health system: lessons from Norway and Sweden</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-united-states-30266">Creating a better health system: lessons from America</a></li>
<li><a href="https://theconversation.com/infographic-comparing-international-health-systems-30784">Infographic: comparing international health systems</a></li>
<li><a href="https://theconversation.com/australian-health-care-where-do-we-stand-internationally-30886">Australian health care: where do we stand internationally?</a></li>
</ul><img src="https://counter.theconversation.com/content/30270/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Just Stoelwinder received funding from Australian Centre for Health Research.</span></em></p>Australia has a relatively strong health system by international standards, but it needs a makeover. To generate fresh ideas, The Conversation is profiling five international health systems that have important…Just Stoelwinder, Professor; Chair of Health Services Management; Head, Division of Health Services & Global Health Research; School of Public Health & Preventive Medicine, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/301442014-09-03T20:16:58Z2014-09-03T20:16:58ZCreating a better health system: lessons from England<figure><img src="https://images.theconversation.com/files/58059/original/4mbb5kgd-1409707554.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In the UK, surgeries are awarded points and additional funding for keeping patients healthy.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/worldlifephotography/502291942">emanueletudisco photography/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p><em>Australia has a relatively strong health system by international standards, but it needs a makeover. To generate fresh ideas, The Conversation is <a href="https://theconversation.com/uk/topics/international-health-systems">profiling five international health systems</a> that have important lessons – good and bad – to pull Australia out of its health reform black hole.</em></p>
<hr>
<p>While Australia and England share much of their cultural heritage, the countries have answered the challenge of funding health care in quite different ways. </p>
<p>The Australian <a href="https://theconversation.com/explainer-what-is-medicare-and-how-does-it-work-22523">Medicare</a> system is predominantly based around private practice and fee-for-service. The English National Health System (NHS) is based on capitation, in which doctors are paid a fixed amount to manage a group of potential patients irrespective of the actual level of care.</p>
<p>Neither system is perfect, but each can learn from the other; after all, they both aim to achieve efficient, equitable, high-quality health services is the same. </p>
<h2>Fee-for-service vs capitation</h2>
<p>Australia’s emphasis on fee-for-service funding reflects both a strength and weakness. Paying for each consultation or service, mainly through the <a href="http://www.health.gov.au/internet/mbsonline/publishing.nsf/Content/Medicare-Benefits-Schedule-MBS-1">Medical Benefits Schedule</a>, incentivises doctors to do more. </p>
<p>But it can also lead to over-provision of care. Most of us have anecdotes about returning to the doctor for procedural issues, such as renewing prescriptions, or receiving test results, which might be more efficiently done over the phone, or by a nurse or pharmacist.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/58054/original/dw2kz422-1409705900.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/58054/original/dw2kz422-1409705900.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=458&fit=crop&dpr=1 600w, https://images.theconversation.com/files/58054/original/dw2kz422-1409705900.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=458&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/58054/original/dw2kz422-1409705900.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=458&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/58054/original/dw2kz422-1409705900.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=576&fit=crop&dpr=1 754w, https://images.theconversation.com/files/58054/original/dw2kz422-1409705900.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=576&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/58054/original/dw2kz422-1409705900.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=576&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p>The English system, with its focus on capitation, may be too far in the opposite direction. Under capitation, doctors are paid an amount to manage a set of patients, this amount usually determined by estimates of need. </p>
<p>If doctors are effectively paid no extra for providing additional care to a patient, then you can reasonably expect an average level of service below what is optimal. </p>
<p>Both the English and Australian systems have tried various ways of blending fee-for-service and capitation, but the two systems continue to sit some distance apart. </p>
<h2>Pay for performance</h2>
<p>One possible way out of this impasse is to move towards a system in which doctors are paid for results, rather than activity.</p>
<p>The English system has considerable experience in this area – good and bad – with its Quality and Outcomes Framework (<a href="http://www.hscic.gov.uk/qof">QOF</a>), which attempts to pay doctors directly for their patients’ health outcomes. </p>
<p>Under this system, surgeries are awarded points for a range of outcomes including chronic disease management, practice organisation, positive patient experience, and the provision of extra services such as child health and maternity services. These points are then translated into a financial payment for the surgery. </p>
<p>In England, there is mixed evidence about the appropriateness of this system. Design has proven a major challenge; in the first year, there was a cost blowout as surgeries achieved a <a href="http://www.bmj.com/content/331/7520/800.1.full">much higher proportion</a> of points than was expected. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/58055/original/dk3hqrvh-1409706002.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/58055/original/dk3hqrvh-1409706002.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=458&fit=crop&dpr=1 600w, https://images.theconversation.com/files/58055/original/dk3hqrvh-1409706002.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=458&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/58055/original/dk3hqrvh-1409706002.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=458&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/58055/original/dk3hqrvh-1409706002.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=576&fit=crop&dpr=1 754w, https://images.theconversation.com/files/58055/original/dk3hqrvh-1409706002.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=576&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/58055/original/dk3hqrvh-1409706002.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=576&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
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<p>So, could such an approach be taken in Australia? </p>
<p>The answer is that it would be difficult. Patients are registered to surgeries in England, meaning it’s easier to link clinical outcomes with the activity of particular doctors. </p>
<p>But Medicare data <em>does</em> show us which patients see which doctors, so linking to outcomes might be feasible in Australia. </p>
<p>However, as with much of the area of international transferability of health policy, the basic policy idea would need to be adapted to reflect the existing health system architecture.</p>
<h2>Keeping people out of hospitals</h2>
<p>Over the past decade, the English health system has pursued a policy of local commissioning of services. Led by local GPs, <a href="http://www.patient.co.uk/doctor/clinical-commissioning-groups-ccgs">Clinical Commissioning Groups</a> (CCGs) are responsible for allocating their local community’s health budget on emergency care, elective hospital care, maternity services and community mental health services. </p>
<p>CCGs place general practitioners at the heart of health care funding decisions, giving them a role previously undertaken by lay managers in primary care. </p>
<p>The aim is to strengthen primary care and keep people out of hospitals. If you make one body responsible for purchasing primary care (such as GPs) and secondary care (predominantly hospitals), you’re likely to make better use intensive GP interventions that would reduce the use of considerably more expensive hospital care. </p>
<p>In the <a href="http://www.legislation.gov.uk/ukpga/2012/7/contents/enacted">2012 Health and Social Care Act</a>, the Conservative-led coalition placed £65 Billion into the hands of 211 newly-formed CCGs, 65% of a total NHS budget of £95 Billion. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/58060/original/gszft9y5-1409707781.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/58060/original/gszft9y5-1409707781.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/58060/original/gszft9y5-1409707781.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/58060/original/gszft9y5-1409707781.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/58060/original/gszft9y5-1409707781.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/58060/original/gszft9y5-1409707781.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/58060/original/gszft9y5-1409707781.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">CCGs account for two-thirds of England’s NHS budget.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-74383099/stock-photo-morning-commuters-in-london.html?src=VHTKQPBvMfuPT8CfV5Oy7g-1-23">r.nagy/Shutterstock</a></span>
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</figure>
<p>The English experience of commissioning is still a developing story. It appears to offer benefit, but the design of the system is crucial. Those doing the local commissioning must be supported both logistically and financially, so they have the <a href="http://www.nuffieldtrust.org.uk/publications/clinical-commissioning-groups-supporting-improvement-general-practice">time to dedicate</a> to this work and it <a href="http://www.hsj.co.uk/news/commissioning/exclusive-over-60-per-cent-of-ccgs-choose-pct-manager-as-their-leader/5042683.article#.U-A032MvjDM">isn’t just passed on</a> to bureaucrats. </p>
<h2>Australia’s fragmented system</h2>
<p>Our health system is funded from a mixture of state/territory and federal money. Primary care is predominantly paid for by Medicare, while much of the financial cost of providing hospital care is met by the states and territories. </p>
<p>This poses a major problem for health-care reform. There is an incentive for both the states and the federal government to shift costs towards the other, which can be easily done by moving patients between primary and secondary care. </p>
<p>Further, the incentive to keep people out of hospital by providing more high-quality primary care is weak, because the government level responsible for primary care (federal) does not reap any savings from this extra investment. </p>
<p>Community-level organisations such as Medicare Locals are being given small pockets of funding to commission locally, and it is likely that this role will be included in the new <a href="http://www.nuffieldtrust.org.uk/talks/slideshows/holly-holder-clinical-commissioning-groups-one-year">Primary Health Networks (PHNs)</a> when they replace Medicare Locals.</p>
<p>One option is to give local commissioners more power through the PHNs and redirect some state government funding directly to the community-based organisations. </p>
<p>But caution is required, as English history demonstrates high-quality commissioning requires substantial time and financial investment, as well as effective leadership and the willingness of clinicians to engage. </p>
<h2>Designing a better health system</h2>
<p>Like most other countries, Australia cannot continue to fund the increasing demand for health care, and we need to look for ways to strengthen the role of primary care and keep people out of hospital. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/58061/original/p9sf36g6-1409708290.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/58061/original/p9sf36g6-1409708290.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/58061/original/p9sf36g6-1409708290.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/58061/original/p9sf36g6-1409708290.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/58061/original/p9sf36g6-1409708290.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/58061/original/p9sf36g6-1409708290.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/58061/original/p9sf36g6-1409708290.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Australia needs new policies to keep people healthy and out of hospital.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-173822594/stock-photo-waiting-room.html?src=MkaPqgXGo1WXRXfhl1HMVw-3-15">Image Point Fr/Shutterstock</a></span>
</figcaption>
</figure>
<p>In the endless debate around how to pay doctors in a way that doesn’t cause over- or under-servicing, adding payments for keeping people healthy is one possibility Australia should consider. But we need to keep in mind the possible negative consequences of such a policy. </p>
<p>Similarly, Australia should consider supporting local clinicians to make decisions that benefit their community. But because our health systems are so structurally different, the design of such a system for Australia would be a challenge requiring considerable thought.</p>
<p><strong>This article is part six of The Conversation’s <a href="https://theconversation.com/uk/topics/international-health-systems">International Health Systems</a> series. Click on the links below to read the other instalments.</strong></p>
<ul>
<li><a href="https://theconversation.com/what-can-we-learn-from-other-countries-health-systems-30885">What can we learn from other countries’ health systems?</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-netherlands-30270">Creating a better health system: lessons from the Netherlands</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-singapore-30607">Creating a better health system: lessons from Singapore</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-norway-and-sweden-30366">Creating a better health system: lessons from Norway and Sweden</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-united-states-30266">Creating a better health system: lessons from America</a></li>
<li><a href="https://theconversation.com/infographic-comparing-international-health-systems-30784">Infographic: comparing international health systems</a></li>
<li><a href="https://theconversation.com/australian-health-care-where-do-we-stand-internationally-30886">Australian health care: where do we stand internationally?</a></li>
</ul><img src="https://counter.theconversation.com/content/30144/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Norman receives funding from the NHMRC and ARC.</span></em></p><p class="fine-print"><em><span>Suzanne Robinson receives funding from Curtin University</span></em></p>Australia has a relatively strong health system by international standards, but it needs a makeover. To generate fresh ideas, The Conversation is profiling five international health systems that have important…Richard Norman, Senior Research Fellow in Health Economics, Curtin UniversitySuzanne Robinson, Associate Professor of Health Policy and Management, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/306072014-09-02T19:55:36Z2014-09-02T19:55:36ZCreating a better health system: lessons from Singapore<figure><img src="https://images.theconversation.com/files/57981/original/7dc5b3cc-1409628734.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australia is just ahead on life expectancy; Singapore is ahead on infant mortality. </span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-107140067/stock-photo-mother-hug-baby-in-her-breast.html?src=RsKub5mFDVdIkIoPpGEWJg-1-77">stockphoto mania/Shutterstock</a></span></figcaption></figure><p><em>Australia has a relatively strong health system by international standards, but it needs a makeover. To generate fresh ideas, The Conversation is <a href="https://theconversation.com/uk/topics/international-health-systems">profiling five international health systems</a> that have important lessons – good and bad – to pull Australia out of its health reform black hole.</em></p>
<hr>
<p>As a small city state with a population of 5.4 million people, Singapore has a clear sense of what it wants from its health system. This is captured in the 1993 Singapore Government White Paper <a href="http://www.moh.gov.sg/content/moh_web/home/Publications/Reports/1993/affordable_healthcare.html">Affordable Health Care</a> – a 60-page manifesto that clearly embodies a national health policy, a vision and a guiding philosophy. </p>
<p>In contrast, Australia has no health care manifesto that clearly states what we want from our health system. </p>
<p>Singapore spends <a href="http://www.oecd.org/health/health-systems/healthataglanceasiapacific2012.htm">about half</a> the proportion of GDP on health than we do in Australia – in 2012 4.7% of GDP versus 9.1% in Australia. </p>
<p>Health outcomes in terms of life expectancy, maternal and child health <a href="http://www.oecd.org/els/health-systems/HealthAtAGlanceAsiaPacific2012.pdf">are similar</a>. Australia is just ahead on life expectancy; Singapore is ahead on infant mortality. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/57980/original/5dkxpp6g-1409626588.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57980/original/5dkxpp6g-1409626588.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=479&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57980/original/5dkxpp6g-1409626588.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=479&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57980/original/5dkxpp6g-1409626588.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=479&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57980/original/5dkxpp6g-1409626588.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=602&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57980/original/5dkxpp6g-1409626588.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=602&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57980/original/5dkxpp6g-1409626588.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=602&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-132966020/stock-photo-close-up-of-asian-surgeon-working-with-assistant-in-surgery.html?src=2F9ZHcjvCc0nsuH-PN2oEQ-1-3">OECD and World Bank</a></span>
</figcaption>
</figure>
<p>But as you might expect, the cost burden <a href="http://www.moh.gov.sg/content/moh_web/home/statistics/Health_Facts_Singapore/Consumer_Price_Indices_CPI_and_Household_healthcare_Expenditure.html">falls greatest</a> on those who can least afford it. In Australia 68% of health spending comes from the public purse. That figure is just 38% in Singapore. The remainder comes from <a href="http://www.oecd.org/els/health-systems/HealthAtAGlanceAsiaPacific2012.pdf">individual’s pockets</a>, in one way or another.</p>
<p>So, how does Singapore’s health system work, and what can we learn from it?</p>
<h2>Affordable health care</h2>
<p>The heart of Singapore’s national health-care policy is a system based on balancing individual and household responsibility with state control (a single state – not the federated system that we have in Australia), balancing transparency, information and data sharing with market forces, balancing equity, expenditure and choice with affordability. </p>
<p>In the <a href="http://www.moh.gov.sg/content/moh_web/home/Publications/Reports/1993/affordable_healthcare.html">Affordable Health Care document</a>, there’s no disguising the darker forces that can play in health-care delivery: doctor supplier-induced demand, markets that fail due to information asymmetry, price control, inequitable access to health care and workforce anomalies. All of these issues are laid out for all to see. Whether or not you agree with their approach, the rules of the game are clear.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/57987/original/m3jkp66d-1409630913.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57987/original/m3jkp66d-1409630913.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=560&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57987/original/m3jkp66d-1409630913.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=560&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57987/original/m3jkp66d-1409630913.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=560&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57987/original/m3jkp66d-1409630913.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=704&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57987/original/m3jkp66d-1409630913.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=704&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57987/original/m3jkp66d-1409630913.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=704&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">OECD and The World Bank</span></span>
</figcaption>
</figure>
<p>Singapore, it seems, is open to a public conversation about money and health care, even if that conversation may appear a little one sided to an outsider. We try to have the same conversation in Australia and we encounter a major problem – we don’t have a national health policy against which we can measure the impact of change. </p>
<p>Sure, we have Medicare, a Pharmaceutical Benefits Scheme and a well established mixed system of public and private health-care financing and delivery. But does anyone really know what to expect from Medicare beyond the promise that every Australian has a right to basic health care irrespective of whether they can afford the bills?</p>
<h2>The Singaporean way</h2>
<p>The Singapore government blends the notion of individual responsibility and government control through a financing system of government subsidies for primary health care, hospital services and pharmaceuticals, along with individual savings accounts. Health care is not unique in that sense. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/57982/original/rxj9hwhy-1409628896.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57982/original/rxj9hwhy-1409628896.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57982/original/rxj9hwhy-1409628896.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57982/original/rxj9hwhy-1409628896.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57982/original/rxj9hwhy-1409628896.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57982/original/rxj9hwhy-1409628896.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57982/original/rxj9hwhy-1409628896.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Out-of-pocket health expenses are significantly higher in Singapore than Australia.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-183311657/stock-photo-singapore-march-people-strolling-along-the-new-pedestrian-walkway-next-to-jurong-lake.html?src=SFqzZBK8QoYW1K7FgNlEmA-1-28">Zhanrui Ye/Shutterstock</a></span>
</figcaption>
</figure>
<p>Apart from the general pool of taxation revenue collected by the government, Singapore has a <a href="http://mycpf.cpf.gov.sg/Members/Gen-Info/mbr-Gen-info.htm">Central Provident Fund</a> (CPF). Each month individuals and employers contribute to three accounts:</p>
<ul>
<li>an ordinary account (savings to buy a home, insurance investment and education)</li>
<li>a special account (savings for retirement) </li>
<li>a Medisave account (money used to pay for personal medical expenses or the hospital bills for immediate family members). </li>
</ul>
<p>The accounts are held by the government and earn a minimum risk-free return.</p>
<h2>Medisave</h2>
<p><a href="http://www.moh.gov.sg/content/moh_web/home/costs_and_financing.html">Medisave</a> has been likened to a bank savings account for health care: the more you have in your account, the more you can spend; if you want to be imprudent with your personal savings that’s your business. But that’s not actually the case with Medisave; there are strict rules about how individuals can use their savings for medical expenses. </p>
<p>Hospital care is broken up into classes and levels from class C wards (lowest) to A (highest). The gradient of service refers to the amenity provided. If you want “… additional comforts such as air conditioning and privacy” then you will need to opt for the higher cost B1 and A class wards (is air conditioning really an optional extra in Singapore?). </p>
<p>The government provides a subsidy of 65% to 80% of the cost of a class C ward hospital stay, 50-65% for B2 class. The gap can be paid from a Medisave account. </p>
<p>If you are tempted to fly hospital business class on a beer budget and you run out of money to settle the bill, the Medisave accounts of your immediate family members can be used. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/57994/original/cywk7h4x-1409636263.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57994/original/cywk7h4x-1409636263.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=560&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57994/original/cywk7h4x-1409636263.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=560&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57994/original/cywk7h4x-1409636263.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=560&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57994/original/cywk7h4x-1409636263.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=704&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57994/original/cywk7h4x-1409636263.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=704&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57994/original/cywk7h4x-1409636263.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=704&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="http://www.moh.gov.sg/content/moh_web/home/statistics/Health_Facts_Singapore/Consumer_Price_Indices_CPI_and_Household_healthcare_Expenditure.html">Data from Singapore Ministry of Health</a></span>
</figcaption>
</figure>
<p>If you are unlucky enough to need hospital care that results in a very large bill, there is a reinsurance pool known as <a href="http://www.moh.gov.sg/content/moh_web/home/costs_and_financing/schemes_subsidies/Medishield.html">Medishield</a> that provides basic health care in subsidised wards. </p>
<p>There is also a basic care safety net for all Singaporeans known as <a href="http://www.moh.gov.sg/content/moh_web/home/costs_and_financing/schemes_subsidies/Medifund.html">Medifund</a>.</p>
<p>The government subsidises the cost of primary health care in polyclinics. And GP visits and dentist visits (at approved providers) for lower- and middle-income Singaporeans. Medisave can also be used to pay for screening services.</p>
<h2>Medisave for Australia?</h2>
<p>While Singapore health expenditure is less than half that of Australia, there are <a href="http://www.oecd.org/els/health-systems/HealthAtAGlanceAsiaPacific2012.pdf">worrying signs</a> on cost control in Singapore. Over the decade 2000 to 2010 the real rate of health expenditure growth per person in Singapore was 8.1%. In Australia the comparable figure is just 2.0%. </p>
<p>It’s also unclear whether all Singaporeans get appropriate care when they need it, in a timely fashion, and whether that care is affordable. To make this call, I would want to see data on unmet need, waiting time for care and variations in health status by socioeconomic status; not to mention the quality of care. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/57983/original/rg388rpt-1409629091.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57983/original/rg388rpt-1409629091.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57983/original/rg388rpt-1409629091.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57983/original/rg388rpt-1409629091.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57983/original/rg388rpt-1409629091.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57983/original/rg388rpt-1409629091.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57983/original/rg388rpt-1409629091.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Singapore’s Medishield scheme is supposed to protect locals from large medical bills.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-132966020/stock-photo-close-up-of-asian-surgeon-working-with-assistant-in-surgery.html?src=2F9ZHcjvCc0nsuH-PN2oEQ-1-3">Burlingham/Shutterstock</a></span>
</figcaption>
</figure>
<p>In Australia, medical savings accounts and the notion of individual responsibility for health-care financing may seem like the inevitable response to the failure of collective responsibility through universal health insurance. </p>
<p>But Australia has not crossed that threshold. We should never allow Medicare to get to that point. </p>
<p>We do, however, need a strong sense of what we expect from Medicare, what it can deliver and how. It’s time we had a health care manifesto. </p>
<p><strong>This article is part five of The Conversation’s <a href="https://theconversation.com/uk/topics/international-health-systems">International Health Systems</a> series. Click on the links below to read the other instalments.</strong></p>
<ul>
<li><a href="https://theconversation.com/what-can-we-learn-from-other-countries-health-systems-30885">What can we learn from other countries’ health systems?</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-netherlands-30270">Creating a better health system: lessons from the Netherlands</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-england-30144">Creating a better health system: lessons from England</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-norway-and-sweden-30366">Creating a better health system: lessons from Norway and Sweden</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-united-states-30266">Creating a better health system: lessons from America</a></li>
<li><a href="https://theconversation.com/infographic-comparing-international-health-systems-30784">Infographic: comparing international health systems</a></li>
<li><a href="https://theconversation.com/australian-health-care-where-do-we-stand-internationally-30886">Australian health care: where do we stand internationally?</a></li>
</ul><img src="https://counter.theconversation.com/content/30607/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Glenn Salkeld does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia has a relatively strong health system by international standards, but it needs a makeover. To generate fresh ideas, The Conversation is profiling five international health systems that have important…Glenn Salkeld, Head of School and Professor of Health Economics, School of Public Health, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/303662014-09-01T20:29:22Z2014-09-01T20:29:22ZCreating a better health system: lessons from Norway and Sweden<figure><img src="https://images.theconversation.com/files/57791/original/bp9crdvy-1409532939.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Most hospitals in Norway and Sweden are government-owned.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-73648138/stock-photo-patient-in-hospital-room.html?src=FsiDsykpLx7FQELEaY0PCw-3-73">Ariadna De Raadt/Shutterstock</a></span></figcaption></figure><p><em>Australia has a relatively strong health system by international standards, but it needs a makeover. To generate fresh ideas, The Conversation is <a href="https://theconversation.com/uk/topics/international-health-systems">profiling five international health systems</a> that have important lessons – good and bad – to pull Australia out of its health reform black hole.</em></p>
<hr>
<p>Norway and Sweden remind us of a vision we have lost: the economic benefit of a strong, single national health insurer.</p>
<p>The economic case for a single payer health insurer is <a href="http://www.healthcare-now.org/whats-single-payer">strong</a>, but among prosperous countries there are few guiding examples. Many countries with strong public insurers have compromised that ideal by allowing or even encouraging (as is the case in Australia) private insurance to displace public funding.</p>
<p>Private insurance, however, is an expensive way to fund health care. When we look at the relationship between private insurance and a nation’s total health-care costs, we find a strong positive relationship: the more a country relies on private insurance the more it pays for health care, without any extra benefit. </p>
<p>It’s not just the bureaucratic cost of private insurance; it’s also the distortions it introduces, for when there is a private insurer in the market, able to pay premium prices for priority access to care, prices throughout the health system rise, both for the public insurer and for those who pay for health care from their own <a href="http://www.ianmcauley.com/academic/cpd/phijan2012.pdf">pockets</a>.</p>
<p>The graph below shows the relationship between countries’ health-care costs (as a proportion of GDP) and reliance on private insurance. These are all countries with only minor differences in their health outcomes. (For the statisticians, R Squared = 0.66.)</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/57798/original/nk49ngqg-1409534091.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/57798/original/nk49ngqg-1409534091.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57798/original/nk49ngqg-1409534091.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=424&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57798/original/nk49ngqg-1409534091.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=424&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57798/original/nk49ngqg-1409534091.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=424&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57798/original/nk49ngqg-1409534091.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=533&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57798/original/nk49ngqg-1409534091.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=533&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57798/original/nk49ngqg-1409534091.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=533&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Ian McAuley</span></span>
</figcaption>
</figure>
<p>At one end of the scale, the United States stands out. At the other end are three countries – Sweden, Norway and Iceland, where private insurance is either absent or plays a minuscule role in funding health care. And these countries contain their total health-care costs (as does Australia for now), to around 9% of GDP. This is in spite of the fact that Sweden, the largest of these countries, has a significantly <a href="http://www.indexmundi.com/facts/visualizations/age-distribution/#country=au:is:no:se">older population</a> than Australia.</p>
<hr>
<blockquote>
<p><a href="https://theconversation.com/Infographic-comparing-international-health-systems-30784">Click here to view our international health systems infographic</a></p>
</blockquote>
<hr>
<p>It is easy to conflate the notion of a single national insurer with that of “socialised medicine”, in which the state owns and controls all health-care resources, but that is not the case in these countries. </p>
<p>In Norway, almost all primary care is delivered by private doctors, while in Sweden there is mixed provision. In both countries patients can choose their doctor (Norwegians are encouraged financially to register with one GP of their choice), and there is a mix of salaried and <a href="https://theconversation.com/phase-out-gp-consultation-fees-for-a-better-medicare-13690">fee-for-service payments</a> for doctors. </p>
<p>Sweden’s primary care system makes good use of nurses, and its clinics generally include a range of specialist services. They are much closer to a “one-stop shop” than Australia’s suburban practices and <a href="https://theconversation.com/gp-clinics-arent-so-super-but-its-too-early-to-pull-the-plug-25448">GP superclinics</a>, and more like the <a href="http://books.google.com.au/books?id=zKdIwTUn1ccC&dq=community+health+centres+1970s&source=gbs_navlinks_s">community health centres</a> that thrived briefly in Victoria and the ACT in the 1970s. </p>
<p>In both <a href="http://www.commonwealthfund.org/topics/international-health-policy">Norway and Sweden</a>, while most hospitals are government-owned, there are also private hospitals. But all hospitals, public and private, provide services to what we in Australia would call “public” patients. Unlike the situation in Australia, there is no social differentiation between private and public hospitals.</p>
<p>Another characteristic of both Norway and Sweden is subsidiarity. That is, the devolution of decision-making to local authorities. In Norway, the organisation of primary health care is the responsibility of its 428 municipalities, while in Sweden health care is devolved to 21 county councils. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/57793/original/7j9ncqzj-1409533358.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57793/original/7j9ncqzj-1409533358.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57793/original/7j9ncqzj-1409533358.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57793/original/7j9ncqzj-1409533358.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57793/original/7j9ncqzj-1409533358.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57793/original/7j9ncqzj-1409533358.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57793/original/7j9ncqzj-1409533358.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Swedes and Danes contribute to some of their health-care costs from their own pockets.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-155082974/stock-photo-bikes-in-crowd.html?src=DzaReKlFbzFxElrY22-f6A-1-110">connel/Shutterstock</a></span>
</figcaption>
</figure>
<p>In both countries, particularly Sweden, sub-national governments play a significant role in collecting taxes and funding health services. National funding provides compensation for regions with low means or high needs. But standards of care, negotiation with powerful providers (including pharmaceutical firms), approval of drugs, and levels of patient contributions are set by national governments.</p>
<p>In both Norway and Sweden, most patients contribute, from their own pockets, to the cost of health services. In Sweden, primary care visits involve out-of-pocket charges of <a href="http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/health-care-lessons-from-sweden.pdf">SEK 100 to 320</a> (A$15 to $50). But there are exemptions for those with low means and total annual payments are capped at around SEK 4400 ($A700) for all services other than dental. </p>
<p>Norway has slightly higher co-payments, but a lower total safety net of <a href="http://www.commonwealthfund.org/topics/international-health-policy">NOK 2620</a> (A$460). </p>
<p>These figures may seem high to Australians, particularly when our political debate is focused on a possible <a href="https://theconversation.com/au/topics/gp-co-payment">A$7 co-payment</a>, but they are in the context of prosperous countries with a much more egalitarian distribution of income, and much fairer tax systems. In fact, nationally, out-of-pocket costs are a little lower than in Australia – 15% of GDP in Norway and 17% in Sweden, compared with 20% in <a href="http://www.oecd.org/health/health-systems/health-at-a-glance.htm">Australia</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/57822/original/vkp98mfk-1409540170.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/57822/original/vkp98mfk-1409540170.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57822/original/vkp98mfk-1409540170.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=479&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57822/original/vkp98mfk-1409540170.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=479&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57822/original/vkp98mfk-1409540170.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=479&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57822/original/vkp98mfk-1409540170.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=602&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57822/original/vkp98mfk-1409540170.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=602&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57822/original/vkp98mfk-1409540170.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=602&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
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<p>An important difference with Australia is that in these Nordic countries, providers’ charges and out-of-pocket payments are set by government — a situation applying here only to prescription pharmaceuticals. This is in contrast to the <a href="http://cpd.org.au/2009/07/out-of-pocket-rethinking-health-copayments/">haphazard and often inequitable</a> imposition of out-of-pocket payments in our arrangements. </p>
<p>A <a href="http://www.commonwealthfund.org/publications/in-the-literature/2013/nov/access-affordability-and-insurance">survey in 2013</a> found that only 6% of Swedes and 10% of Norwegians reported cost-related access problems, compared with 16% of Australians. The same survey found that 25% of Australians spent more than US$1,000 on out-of-pocket costs, compared with 17% of Norwegians and just 2% of Swedes. </p>
<p>These figures contain a lesson for a government trying to insert a co-payment into Medicare, while ignoring overall efficiency and fairness in health funding and failing to engage with the community on health funding.</p>
<p>The main characteristic of these Nordic systems is a judicious mix of the single-payer national insurance and market signals through well-structured co-payments, without the distortion of private insurance. </p>
<p>Sweden’s centre-right Coalition Government, elected in 2010, has allowed firms to provide private insurance as part of employee benefits, with an aim to getting priority treatment. About <a href="http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/health-care-lessons-from-sweden.pdf">4% of Swedes are covered</a> by these schemes but their contribution to spending is very small, because they cover a young and fit segment of the population.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/57799/original/hhbx5xqd-1409534207.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57799/original/hhbx5xqd-1409534207.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57799/original/hhbx5xqd-1409534207.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57799/original/hhbx5xqd-1409534207.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57799/original/hhbx5xqd-1409534207.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57799/original/hhbx5xqd-1409534207.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57799/original/hhbx5xqd-1409534207.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Standards of care in Norway and Sweden are set by national governments.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/kongharald/2628309745">Harald Groven/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>If they do start to have an influence on health costs and accessibility Swedes will soon realise, as Australians do, that shifting some people to the front of the queue shifts others further back, while the cost of the distortion is widespread. </p>
<p>Whether this scheme survives may depend on the outcome of the Swedish election on 14 September. <a href="http://www.scb.se/en_/Finding-statistics/Statistics-by-subject-area/Democracy/Political-party-preferences/Party-Preference-Survey-PSU-/Aktuell-Pong/12443/Party-Preferences-PSU/66309/">Opinion polls</a> are pointing strongly towards Swedes’ rejection of the current government’s policies in health and education, and a return to a government dominated by the Social Democrats. </p>
<p>It is hard to imagine these countries, held together by strong norms of egalitarianism and decency, heading down the path of social exclusion that Australia has taken in health care.</p>
<hr>
<p><strong>This article is part four of The Conversation’s <a href="https://theconversation.com/au/topics/international-health-systems">International Health Systems</a> series. Click on the links below to read the other instalments.</strong></p>
<ul>
<li><a href="https://theconversation.com/what-can-we-learn-from-other-countries-health-systems-30885">What can we learn from other countries’ health systems?</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-netherlands-30270">Creating a better health system: lessons from the Netherlands</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-england-30144">Creating a better health system: lessons from England</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-singapore-30607">Creating a better health system: lessons from Singapore</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-united-states-30266">Creating a better health system: lessons from America</a></li>
<li><a href="https://theconversation.com/infographic-comparing-international-health-systems-30784">Infographic: comparing international health systems</a></li>
<li><a href="https://theconversation.com/australian-health-care-where-do-we-stand-internationally-30886">Australian health care: where do we stand internationally?</a></li>
</ul><img src="https://counter.theconversation.com/content/30366/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ian McAuley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia has a relatively strong health system by international standards, but it needs a makeover. To generate fresh ideas, The Conversation is profiling five international health systems that have important…Ian McAuley, Lecturer, Public Sector Finance , University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/308862014-08-31T20:08:12Z2014-08-31T20:08:12ZAustralian health care: where do we stand internationally?<figure><img src="https://images.theconversation.com/files/57695/original/m2ntdxwc-1409278179.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Our life expectancy improvements essentially mirrored other comparable countries. </span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-162933494/stock-photo-two-hand-of-senior-woman-sitting-in-chair-holding-walking-stick.html?src=1zSF3_2juihrYp4nzxZJKA-1-4">Kristo-Gothard Hunor/Shutterstock</a></span></figcaption></figure><p>There is an old joke about one fish asking another about the state of the water and the other answering “what’s water?” When you’re immersed in something and that is your daily experience, you are not able to step outside it – all you see is what you know. </p>
<p>But with all the talk about Australia’s health system being <a href="http://www.smh.com.au/federal-politics/political-news/health-minister-peter-dutton-says-medicare-spending-unsustainable-20140103-309o9.html">unsustainable</a>, it’s useful to step back and look at the Australian health system in an international context. </p>
<p>So, how do we perform against our peers? The short answer is pretty well.</p>
<h2>Comparing inputs and outcomes</h2>
<p>Much of the sustainability talk is about <a href="http://www.smh.com.au/federal-politics/political-news/health-minister-peter-dutton-says-medicare-spending-unsustainable-20140103-309o9.html">costs</a>, and only about costs. Costs are important, but any reasonable comparison of Australia’s standing also takes into account what we get for the spending. Measuring costs is (relatively) easy. We can compare cost per head spent on health care (standardised across countries into a common monetary unit) or costs as a share of gross domestic product (GDP). </p>
<hr>
<blockquote>
<p><a href="https://theconversation.com/Infographic-comparing-international-health-systems-30784">Click here to view our international health systems infographic</a></p>
</blockquote>
<hr>
<p>Measuring the benefit side is a bit trickier. The most common comparisons of outcomes are mortality-based measures, partly because measurement is definitive. There are choices here too. Life expectancy and a measure of “early deaths” (deaths before age 70) known as “potential years of life lost” are the two most common. </p>
<p>Using these mortality-based measures to compare health systems has a number of weaknesses. It assumes that the most important contribution of the health system is delaying death, ignoring quality of life. They also assume that the health system is the most important contributor to life expectancy, ignoring broader socioeconomic and environmental factors such as clean water, employment and good nutrition. </p>
<p>Despite these weaknesses, the measures are commonly used, <a href="http://www.oecd.org/els/health-systems/health-data.htm">readily available</a> for comparable countries and they’re the best we’ve got.</p>
<h2>Better than average</h2>
<p>The graph below shows where Australia sits compared to similar OECD countries (countries within 25% of Australian GDP). Countries which are better than the OECD average on life expectancy are on the right hand side. Countries that spend a smaller share of GDP on health care are on the lower part of the graph.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=424&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=424&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=424&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=533&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=533&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=533&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Life expectancy and health expenditure of selected countries, latest year (2011-2013)</span>
<span class="attribution"><span class="source">Grattan Institute/OECD</span></span>
</figcaption>
</figure>
<p>Australia is in the good quadrant: better than average life expectancy, lower than average share of GDP. The stand-out poor-performing country is the United States, with high costs and poor outcomes.</p>
<p>So we’re OK now, but are we going downhill?</p>
<p>The graph above shows data for the most recent year available. Australia’s historic trends are also good. In 2001, <a href="http://www.oecd-ilibrary.org/economics/national-accounts-at-a-glance-2014/total-general-government-expenditure_na_glance-2014-graph68-en">Australia spent</a> 8.2% of GDP on health; ten years later GDP share had increased to 9.1%. Over the same period, the comparable country average had increased faster – from 8.8% to 10.3%. </p>
<p>Our life expectancy improvements essentially mirrored other comparable countries. </p>
<p>This suggests that in addition to being in a good position now, the trend in both inputs and outcomes over the past decade has been a healthy one, comparably.</p>
<h2>No cause to be complacent</h2>
<p>Australia is performing well against our peers, and has done so over the past few decades. But current life expectancy is the product of past policies. And past good performance doesn’t guarantee we are well positioned for changing health-care needs. </p>
<p><strong>Equity concerns</strong></p>
<p>It’s important to remember that the data above are country averages. In Australia’s case, the average masks very poor performance for our Indigenous populations whose average life expectancy is around <a href="https://theconversation.com/australias-health-2014-report-card-experts-respond-28397">ten years shorter</a> than non-Indigenous Australians. Poorer Australians also have <a href="https://theconversation.com/australias-health-2014-report-card-experts-respond-28397">worse health outcomes</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/57698/original/v9mgg5z8-1409278743.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57698/original/v9mgg5z8-1409278743.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=390&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57698/original/v9mgg5z8-1409278743.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=390&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57698/original/v9mgg5z8-1409278743.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=390&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57698/original/v9mgg5z8-1409278743.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=490&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57698/original/v9mgg5z8-1409278743.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=490&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57698/original/v9mgg5z8-1409278743.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=490&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Indigenous Australians are still being left behind.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/rustystewart/409554574">Rusty Stewart/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>There are other equity issues as well. A <a href="https://theconversation.com/higher-health-co-payments-will-hit-the-most-vulnerable-29590">Grattan Institute submission</a> to a recent Senate Committee inquiry showed that some households face very high levels of out-of-pocket costs. <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/6530.0/">Australian Bureau of Statistics surveys</a> show people are already deferring care because of high out-of-pocket costs. </p>
<p>Access to care for people in rural and remote Australia is <a href="https://theconversation.com/australias-health-2014-report-card-experts-respond-28397">much worse</a> than in metropolitan areas, causing problems not only in term of health status but also in increased cost of care.</p>
<p><strong>Future care needs</strong></p>
<p>Repositioning the health system to address the challenges of chronic disease is hard. It seems obvious that a system that pays doctors for seeing patients again and again is <a href="https://theconversation.com/phase-out-gp-consultation-fees-for-a-better-medicare-13690">probably not suitable</a> to encourage continuity of care and looking after a person for an ongoing illness. </p>
<p>Unfortunately, getting beyond that simplistic statement is complex. The evidence on the best way to pay doctors is <a href="http://summaries.cochrane.org/CD008451/EPOC_the-effect-of-financial-incentives-on-the-quality-of-health-care-provided-by-primary-care-physicians">quite weak</a> and so moving forward on better payment systems will require experimentation to identify what works in the Australian context. </p>
<p>Structural changes, to improve seamlessness of care to ensure that a person with chronic illnesses has access to all the professional skills needed, will also be required.</p>
<p><strong>Prune waste</strong></p>
<p>Science advances, and with it come new treatments and new demands for funding. The increasing prevalence of chronic illness creates another set of pressures on health spending. </p>
<p>There are a number of potential responses to the challenge of increased costs. The worst is to panic and adopt draconian “quick fixes” which aren’t fixes at all. The <a href="https://theconversation.com/au/topics/gp-co-payment">$7 co-payment proposal</a>, which shifts costs rather than saves them, is an example of this approach. </p>
<p>The alternate pathway is to attack waste in the health system: there are <a href="https://theconversation.com/hospital-workforce-reform-better-jobs-and-more-care-25488">inefficiencies in hospitals</a>, in the way we use our highly skilled health professionals and in <a href="https://theconversation.com/tough-choices-how-to-rein-in-australias-rising-health-bill-13658">how we pay</a> for pharmaceuticals. Billions of dollars can be freed up in these areas. </p>
<p>Pruning waste is hard as every dollar of health spending is a dollar of someone’s income, profits or revenue. Rent seekers will be out in force to defend the status quo. Paraphrasing another famous saying, political leadership was never meant to be easy but nevertheless, Operation Eliminate Healthcare Waste should surely be a political priority.</p>
<h2>Where to from here?</h2>
<p>Australia is not alone in facing these challenges: the changing health-care profile is a universal phenomenon. Other countries are addressing these issues and we can potentially learn from those experiences. The Conversation will be publishing five “country studies” over the next week to explore these international lessons. </p>
<hr>
<p><strong>This is the first article in our International Health Systems series. Click on the links below for other instalments</strong>:</p>
<ul>
<li><a href="https://theconversation.com/what-can-we-learn-from-other-countries-health-systems-30885">What can we learn from other countries’ health systems?</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-netherlands-30270">Creating a better health system: lessons from the Netherlands</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-england-30144">Creating a better health system: lessons from England</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-singapore-30607">Creating a better health system: lessons from Singapore</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-norway-and-sweden-30366">Creating a better health system: lessons from Norway and Sweden</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-united-states-30266">Creating a better health system: lessons from America</a></li>
<li><a href="https://theconversation.com/infographic-comparing-international-health-systems-30784">Infographic: comparing international health systems</a></li>
</ul><img src="https://counter.theconversation.com/content/30886/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Duckett does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There is an old joke about one fish asking another about the state of the water and the other answering “what’s water?” When you’re immersed in something and that is your daily experience, you are not…Stephen Duckett, Director, Health Program, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/307842014-08-31T20:08:05Z2014-08-31T20:08:05ZInfographic: comparing international health systems<p>Australia’s health system isn’t perfect but it <a href="https://theconversation.com/australian-health-care-where-do-we-stand-internationally-30886">performs well internationally</a>. This infographic shows how Australia’s health expenditure, access to care and health outcomes compare with seven other OECD countries. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/58005/original/63mcjb65-1409643610.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/58005/original/63mcjb65-1409643610.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=5277&fit=crop&dpr=1 600w, https://images.theconversation.com/files/58005/original/63mcjb65-1409643610.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=5277&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/58005/original/63mcjb65-1409643610.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=5277&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/58005/original/63mcjb65-1409643610.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=6631&fit=crop&dpr=1 754w, https://images.theconversation.com/files/58005/original/63mcjb65-1409643610.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=6631&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/58005/original/63mcjb65-1409643610.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=6631&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
</figcaption>
</figure><img src="https://counter.theconversation.com/content/30784/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Duckett does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia’s health system isn’t perfect but it performs well internationally. This infographic shows how Australia’s health expenditure, access to care and health outcomes compare with seven other OECD…Fron Jackson-Webb, Deputy Editor and Senior Health EditorEmil Jeyaratnam, Data + Interactives Editor, The ConversationLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/302662014-08-31T20:08:02Z2014-08-31T20:08:02ZCreating a better health system: lessons from the United States<figure><img src="https://images.theconversation.com/files/57703/original/vp7hvzky-1409280639.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The US is the international outlier on returns on investments in health care.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-196817147/stock-photo-stethoscope-with-american-flag-reflection-on-wooden-table.html?src=778QBpRjgpBlM-GmQxXYWQ-3-30">Andy Dean Photography/Shutterstock</a></span></figcaption></figure><p><em>Australia has a relatively strong health system by international standards, but it needs a makeover. To generate fresh ideas, The Conversation is <a href="https://theconversation.com/au/topics/international-health-systems">profiling five international health systems</a> that have important lessons – good and bad – to pull Australia out of its health reform black hole.</em></p>
<hr>
<p>For decades Australians have seen health care in the United States as the archetypal example of how not to do it. So it’s ironic we now find ourselves looking with admiration at <a href="https://theconversation.com/explainer-what-is-obamacare-18642">major, holistic reform efforts</a> under the Affordable Care Act (otherwise known as Obamacare) even as the Abbott government seems hell bent on adopting the very approaches the US has abandoned.</p>
<p>Clearly there are lessons to draw from this situation. Among developed countries, the US is the outlier in terms of returns on its investment in health care – no other country spends more as a percentage of gross domestic product (GDP) or per head of population for a mediocre return as <a href="http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirror-mirror">measured by</a> infant mortality, life expectancy and disability-adjusted life years. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=424&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=424&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=424&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=533&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=533&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57739/original/nqhhbjtj-1409296828.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=533&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Life expectancy and health expenditure of selected countries, latest year (2011-2013)</span>
<span class="attribution"><span class="source">Grattan Institute/OECD</span></span>
</figcaption>
</figure>
<p>America’s health care is funded and delivered through a variety of mechanisms. These range from the epitome of socialised medicine (Veterans’ Affairs), to the commercial market where health funds have been allowed to set their own rates and determine who they will cover and the extent of that coverage, using rulings based on profit margins rather than patients’ needs. </p>
<p>A growing number (more than 40%) of Americans have health cover funded by the federal government through <a href="http://www.medicare.gov/">Medicare</a> (health insurance for those aged over 65) and <a href="http://www.medicaid.gov/">Medicaid</a> (health insurance for the poor, jointly funded with the states).</p>
<p>A major reason for the high cost of health care in the US is the failure of the competitive marketplace. As many economists have <a href="http://theconversation.com/private-insurance-reliance-means-countries-pay-more-for-health-care-24486">pointed out</a>, private health insurance is a high-cost mechanism for achieving what taxes and national insurers do much more efficiently and equitably. </p>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/57706/original/6c4htc2z-1409281910.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/57706/original/6c4htc2z-1409281910.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57706/original/6c4htc2z-1409281910.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57706/original/6c4htc2z-1409281910.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57706/original/6c4htc2z-1409281910.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1130&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57706/original/6c4htc2z-1409281910.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1130&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57706/original/6c4htc2z-1409281910.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1130&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Health cover for over-65s is funded through Medicare.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-79425457/stock-photo-senior-woman-filling-out-forms-at-the-doctor-s-office.html?src=PnL3hYPcUArUyg0UqGWzOQ-1-23">Paul Vasarhelyi/Shutterstock</a></span>
</figcaption>
</figure>
<p>In the US, multiple players in a supposedly competitive marketplace have conspicuously failed to deliver affordable access to services, an appropriate price for these services and superior quality. Significant redundancies and inefficiencies arise from the complexity of health care administration and there is evidence of an <a href="http://www.ncbi.nlm.nih.gov/books/NBK53942/">inverse relationship</a> between administrative complexity and quality of care. </p>
<p>There are also <a href="http://virtualmentor.ama-assn.org/2014/02/pfor1-1402.html">huge variations in costs</a> for services, not just nationally but even within the same hospital, depending on who is paying and who is negotiating. This leads to <a href="http://www.vox.com/2014/8/15/6005953/a-10169-blood-test-is-everything-wrong-with-american-health-care">mind-boggling situations</a> where a simple blood test can cost over US$10,000 and hospitals charge anywhere between US$1,529 and US$186,955 for an uncomplicated appendectomy. </p>
<p>The <a href="http://www.dartmouthatlas.org/keyissues/issue.aspx?con=1338">Dartmouth Atlas of Health Care</a> has documented significant variation in health care spending and quality across geographic regions in the US for similar patients. </p>
<p>US author and surgeon Atul Gawande described this situation with great clarity in a <a href="http://www.newyorker.com/magazine/2009/06/01/the-cost-conundrum">New Yorker article</a> where he outlined how high-cost care was associated with fewer preventive services, less primary care, poorer survival and functional ability, and reduced satisfaction with care. In 2009, as he worked to deliver his landmark health reforms, US president Barack Obama said everyone should read this article. </p>
<p>In Australia, the <a href="http://www.aihw.gov.au/media-release-detail/?id=60129547264">Australian Institute of Health and Welfare</a> has reported that the management of common health conditions varies considerably depending on where people live. Australian researchers <a href="https://www.mja.com.au/journal/2012/197/10/over-150-potentially-low-value-health-care-practices-australian-study">have highlighted</a> how the over-utilisation of less-than-effective clinical practices results in inefficient, unsustainable resource allocation and have <a href="https://www.mja.com.au/journal/2012/197/10/over-150-potentially-low-value-health-care-practices-australian-study">drawn up a list</a> of 150 such practices. But there has been no national action to implement this. </p>
<p>Obamacare is acting to tackle these issues. Under the law there are provisions to limit out-of-pocket costs and restrain the marketing and administrative costs of health funds which are now required to return 85 cents in benefits for every dollar collected. </p>
<p>Reference pricing, bundled payment mechanisms, strong reporting requirements and widespread transparency of both public and private data collections are helping to drive down prices, reward quality, and increase public awareness of inappropriate variations. And it’s working: growth in both <a href="http://www.reuters.com/article/2013/07/18/us-usa-healthcare-costs-idUSBRE96H0UM20130718">health insurance</a> and in <a href="http://angrybearblog.com/2014/07/medicare-report-shows-obamacare-is-bending-the-cost-curve.html">overall health care costs</a> is slowing. </p>
<p>In contrast, the Australian government has shown no appetite for the hard policy work of health reform, taking a sledgehammer approach with co-payments that <a href="https://theconversation.com/higher-health-co-payments-will-hit-the-most-vulnerable-29590">evidence shows</a> will drive adverse outcomes.</p>
<p>The Abbott government has also signalled its intentions to push well-to-do Australians into a <a href="http://www.afr.com/p/business/healthcare2-0/health_minister_peter_dutton_health_xKcADgIZG6QbXK1FZaQJDL">greater reliance</a> on private health insurance, leaving Medicare as an increasingly ragged safety net for the poor. We are headed inexorably down a path that will see current health disparities widen, even as the <a href="http://www.anderson.ucla.edu/faculty_pages/romain.wacziarg/demogworkshop/Bloom%20and%20Canning.pdf">evidence from the US</a> shows the impact this will have on national productivity and prosperity. </p>
<p>The most egregious back-step by the Australian government is in the area of prevention, despite international recognition that the only way to make a sustainable impact on health outcomes and health-care costs is through major investments in prevention and public health. The <a href="http://www.budget.gov.au/2014-15/index.htm">2014-15 budget</a> has seen the dismantling of the <a href="http://www.anpha.gov.au/internet/anpha/publishing.nsf">Australian National Preventive Health Agency</a> and the scrapping of the <a href="http://www.anpha.gov.au/internet/anpha/publishing.nsf/Content/npaph">National Partnership Agreement on Preventive Health</a>, ripping A$377 million from programs that were addressing alcohol, tobacco and obesity.</p>
<p>In contrast, Obamacare is making substantial investments in this area. The <a href="http://healthinsurance.about.com/od/reform/f/Public-Health-Reform-And-The-Affordable-Care-Act.htm">law ensures</a> that there are no co-payments or deductibles for preventive services, boosts the public health workforce, establishes a $15 billion <a href="http://www.hhs.gov/open/recordsandreports/prevention/">Prevention and Public Health Fund</a>, and – most innovatively – establishes the <a href="http://www.surgeongeneral.gov/initiatives/prevention/about/">National Prevention Council</a> to make health and well-being a whole-of-government responsibility. The federal government is leading in these efforts with financial incentives to encourage communities and the private sector to get engaged.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/57704/original/qhw9n2nt-1409281006.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57704/original/qhw9n2nt-1409281006.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57704/original/qhw9n2nt-1409281006.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57704/original/qhw9n2nt-1409281006.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57704/original/qhw9n2nt-1409281006.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57704/original/qhw9n2nt-1409281006.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57704/original/qhw9n2nt-1409281006.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The US is making inroads tackling obesity.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-107403563/stock-photo-new-york-july-people-enjoying-outdoor-activities-in-central-park-on-july-in-new-york.html?src=778QBpRjgpBlM-GmQxXYWQ-3-37">pio3/Shutterstock</a></span>
</figcaption>
</figure>
<p>The success of this concerted approach is demonstrated by data showing that slowly but surely the US is <a href="http://www.nytimes.com/2014/02/26/health/obesity-rate-for-young-children-plummets-43-in-a-decade.html">making inroads</a> in tackling the obesity epidemic, while obesity rates in Australia <a href="http://www.abc.net.au/news/2014-05-29/australian-obesity-rates-climbing-fastest-in-the-world/5485724">continue to climb</a>. The consequence is that Australian health care costs will continue to grow along with Australians’ waistlines. Also, <a href="http://www.hhs.gov/open/recordsandreports/prevention/">US data highlights</a> how investments in workplace wellness reduce sick leave, workers’ compensation and medical costs. </p>
<p>Australia has a health care system that, despite its problems, delivers excellent value for taxpayers. But it is in need of serious reforms – based on evidence not ideology – to reduce fragmentation, address inequalities, and provide the services we need for the health problems of the 21st century. </p>
<p>We hover unnervingly on the verge of the Americanisation of our health care system. We know where that will lead, and we know how difficult it will be to pull back from that scenario if it eventuates. </p>
<hr>
<p><strong>This is the second article in our International Health Systems series. Click on the links below for other instalments:</strong> </p>
<ul>
<li><a href="https://theconversation.com/what-can-we-learn-from-other-countries-health-systems-30885">What can we learn from other countries’ health systems?</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-the-netherlands-30270">Creating a better health system: lessons from the Netherlands</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-england-30144">Creating a better health system: lessons from England</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-singapore-30607">Creating a better health system: lessons from Singapore</a></li>
<li><a href="https://theconversation.com/creating-a-better-health-system-lessons-from-norway-and-sweden-30366">Creating a better health system: lessons from Norway and Sweden</a></li>
<li><a href="https://theconversation.com/infographic-comparing-international-health-systems-30784">Infographic: comparing international health systems</a></li>
<li><a href="https://theconversation.com/australian-health-care-where-do-we-stand-internationally-30886">Australian health care: where do we stand internationally?</a></li>
</ul><img src="https://counter.theconversation.com/content/30266/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lesley Russell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia has a relatively strong health system by international standards, but it needs a makeover. To generate fresh ideas, The Conversation is profiling five international health systems that have important…Lesley Russell, Senior Research Fellow, Australian Primary Health care Research Institute, Australian National University & Research Associate, Menzies Centre for Health Policy, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/305102014-08-28T20:48:54Z2014-08-28T20:48:54ZAbbott government health policy needs a sharper focus<p>The Coalition entered the 2013 federal election without a <a href="https://theconversation.com/coalition-health-policy-is-all-barbs-and-no-risks-17364">health policy</a>. After a year in government, it remains without one. While there has been activity in the health arena, there’s been little coherent direction.</p>
<p>The government’s first month was spent on an ideological campaign against agencies identified with the “nanny state”. The Alcohol and Other Drugs Council of Australia (established by the Holt government in 1966), for instance, was axed. </p>
<p>The Australian National Preventive Health Agency, which had long been a target for <a href="http://ipa.org.au/publications/2080/be-like-gough-75-radical-ideas-to-transform-australia">conservative critics,</a> was a more expected casualty. It lost its funding in the Abbott government’s first budget, its functions disappearing within the Department of Health. </p>
<p>The National Partnership Agreement on Prevention with the states was also <a href="http://www.budget.gov.au/2014-15/content/bp2/html/bp2_expense-14.htm">discarded</a>.</p>
<p>Abbott’s small-target election strategy left health with few promises other than the assurance that his would be a “<a href="http://www.smh.com.au/federal-politics/federal-election-2013/tony-abbotts-campaign-launch-speech-full-transcript-20130825-2sjhc.htmlsurprise">no surprises, no excuses government</a>”. In practice, health has become the largest arena for apparent broken promises and unexpected surprises. </p>
<p>In a debate nine days before the election, Abbott <a href="http://www.abc.net.au/news/2013-08-28/abbott-promises-not-to-shut-down-labors-healthcare-hubs/4919576">declared</a>:</p>
<blockquote>
<p>We are not shutting any Medicare Locals.</p>
</blockquote>
<p>A review of Medicare Locals straight after the election, led by the former Commonwealth chief medical officer, Dr John Horvath, found little more than teething problems in the very new program. Yet despite limited and vaguely stated criticisms, Horvath recommended the abolition of the program. And the budget duly announced the end of the Medicare Locals from July 2015.</p>
<h2>Enter the budget</h2>
<p>The largest changes came with the budget, although the main measure – the $7 co-payment for visits to general practitioners – hasn’t made it through parliament yet (and, indeed, may not). </p>
<p>The ground for the measure had been prepared by the <a href="http://www.ncoa.gov.au/report/phase-one/part-b/7-3-a-pathway-to-reforming-health-care.html">Commission of Audit’s</a> proposal for a $15 GP co-payment for general patients, with reductions for concession card holders and those who fell into a safety net. </p>
<p>The <a href="http://www.budget.gov.au/2014-15/content/bp2/html/bp2_expense-14.htm">budget</a> halved this amount, and coupled it with a hastily cobbled together and ill-explained Medical Research Future Fund. Two of the budget’s larger savings measures – the GP co-payment and savings from changes to hospital funding – were steered towards this fund. </p>
<p>The defence of the measures hasn’t been helped by the confusion the Fund spawned – are they for ameliorating the budget emergency or expanding expenditure on medical research? Especially since promised medical discoveries could increase future health costs.</p>
<p>The presentation of the co-payments has been equally confused. The Commission of Audit had justified co-payments as price signals that would make consumers hesitate before demanding unnecessary services. </p>
<p>But they’re being added to a health system already <a href="https://www.mja.com.au/journal/2013/199/7/can-t-escape-it-out-pocket-cost-health-care-australia?0=ip_login_no_cache%3D9303e232a71a3e2193613081fb9e9e0f">littered</a> with co-payments and out-of-pocket costs. And existing co-payments show few signs of the efficiency and health-seeking behaviour that treasury and finance department economists apparently believe follow from price signals. </p>
<p>Other changes are purely cost saving – but with an eye to repudiating the key policies of the previous government. </p>
<p>Labor’s hospital funding agreement with the states had promised the commonwealth would increase its share to 50% of growth in the cost of running public hospitals. These costs were to be restrained through a new “efficient” price set by the national Independent Hospital Pricing Authority. </p>
<p>The Abbott government withdrew from the agreement, keeping its payments at the existing level of 45% until mid-2017. The National Partnership Agreement (with the states) on Improving Hospital Services was also repudiated in the budget.</p>
<p>This shrinking of the Commonwealth’s hospital role is in stark contrast with <a href="https://theconversation.com/medicares-best-friend-lessons-from-abbotts-days-as-health-minister-17893">Abbott’s declaration</a> when he was health minister: </p>
<blockquote>
<p>… the only big reform worth considering is giving one level of government – inevitably the federal government – responsibility for the entire health system.</p>
</blockquote>
<h2>A foggy future</h2>
<p>Many of these cuts, especially the axing of the former government’s programs, could be seen as a new government clearing the way for a bold reform agenda. If this <em>is</em> the case, the shape of the new direction remains shrouded in mystery. </p>
<p>Still, policy need not be spelt out. Government action often enables new funding and service arrangements to emerge, leaving markets to shape the details. The Howard government’s expansion of private health insurance, for instance, opened the way for a vast market of for-profit hospitals services.</p>
<p>We may now be seeing a similar shift as the government turns a blind eye to private health insurers moving into primary health care. Coalition as well as Labor governments have previously supported a ban on private insurance for GP services, mainly because of fears this would lead to a cost explosion.</p>
<p>The funds, led by Medibank Private, have chafed at this ban. They argue that members with chronic illnesses are ill-served by health-care funding that only allows them to pay for treatment when it’s serious enough to require hospitalisation. </p>
<p>The audit commission had argued for a relaxation, and now
<a href="http://www.smh.com.au/national/fears-of-usstyle-health-system-by-stealth-20140607-39q1i.html">Medibank Private has entered into contracts</a> with GP clinics to pay an administration fee to exempt its members from gap payments. The Abbott government has stood by silently. </p>
<p>Tony Abbott is the first Australian prime minister to have previously served as minister for health. So it’s strange that his government’s forays in this complex and politically dangerous area have been so badly managed and poorly explained. Whatever the final results of the GP co-payment battle, this political failing will make make the government’s future attempts at health reform far more difficult than necessary.</p>
<hr>
<p><em>Read the other articles in The Conversation’s Remaking Australia series <a href="https://theconversation.com/au/topics/remaking-australia">here</a>.</em></p><img src="https://counter.theconversation.com/content/30510/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jim Gillespie receives research funding from the NHMRC and the Western Sydney Partners in Recovery program</span></em></p>The Coalition entered the 2013 federal election without a health policy. After a year in government, it remains without one. While there has been activity in the health arena, there’s been little coherent…Jim Gillespie, Deputy Director, Menzies Centre for Health Policy & Associate Professor in Health Policy, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/307572014-08-21T07:30:27Z2014-08-21T07:30:27ZAMA co-pay plan: protecting the poor and GPs’ bottom line<figure><img src="https://images.theconversation.com/files/57027/original/jc5f5rzf-1408598934.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The AMA proposal would wipe out 97% of the government's $3.5bn savings.</span> <span class="attribution"><a class="source" href="http://one.aap.com.au/#/search/GP?q=%7B%22pageSize%22:25,%22pageNumber%22:2,%22Categories%22:%5B%22australian%20news%22%5D%7D">Newzulu/AAP</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Bulk billing without restrictions has been a feature of the Australian health system since the <a href="https://theconversation.com/medicare-turns-30-and-begins-to-show-signs-of-ageing-22390">introduction of Medicare</a> in 1984. It is particularly important in general practice, as it means any Australian can see a primary care doctor without having to pay out-of-pocket costs. In 2012/13, 81% of GP consultations were <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/Medicare+Statistics-1">bulk billed</a>.</p>
<p>The <a href="https://theconversation.com/federal-budget-2014-health-experts-react-26577">2014 budget</a> introduced the notion of a co-payment to apply to the first ten GP visits. This has been one of the more unpopular budget measures, largely on the basis of the effect on the disadvantaged. The AMA <a href="https://theconversation.com/government-dismisses-ama-co-payment-plan-as-windfall-to-doctors-30769">today released</a> its awaited alternative. </p>
<p>So how does the Australian Medical Association (AMA) plan compare with the government’s? </p>
<p>As the table shows, it retains the notion of a co-payment, but only for general patients and only as long they are not receiving chronic disease management, services of a preventive nature, or mental health care. In other respects, it sticks with the status quo.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/57218/original/j237fzwc-1408920193.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57218/original/j237fzwc-1408920193.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=940&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57218/original/j237fzwc-1408920193.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=940&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57218/original/j237fzwc-1408920193.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=940&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57218/original/j237fzwc-1408920193.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1182&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57218/original/j237fzwc-1408920193.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1182&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57218/original/j237fzwc-1408920193.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1182&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p><a href="http://ses.library.usyd.edu.au/handle/2123/9365">Around half</a> of all GP visits result in further treatments such as pathology and imaging services, which will incur further co-payments under both the AMA and Government proposals; although the AMA has recommended deferring the introduction of these by two years.</p>
<p>So, does the AMA plan protect the disadvantaged while sending a price signal to the people with the means to contribute more to the costs of their health care? And is it an alternative way for the government to reach its objectives?</p>
<p>Around 5.5 million Australians <a href="http://www.humanservices.gov.au/corporate/publications-and-resources/statistical-information-and-data/electorate-data/">hold some type</a> of concession-card. Eligibility largely depends on age, income and circumstances. These people will be protected from any new co-payments (not all card holders are bulk billed now). </p>
<p>But differences in eligibility criteria suggest that there are plenty of relatively poor families who do not qualify for a card, whereas many relatively wealthy retirees do. </p>
<p>In order to <a href="http://www.humanservices.gov.au/customer/services/centrelink/low-income-health-care-card">qualify</a> for the low-income health care card, for example, a single parent with one child can earn a maximum of around $47,000 per year, whereas a couple of retirement age can earn a maximum of $80,000 per year, face no asset test, and still qualify for the seniors health care card. </p>
<p>This shows the concession card is a very blunt instrument to determine the ability for patients to pay for their health care, and without the option of bulk billing, more low-income people will fall through the safety net cracks. </p>
<p><a href="https://www.medicareaustralia.gov.au/statistics/mbs_item.shtml">Over 72%</a> of all bulk-billed items <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/Annual-Medicare-Statistics">are provided</a> to children aged under 16 or concession-card holders. The vast majority of those without a concession card are not bulk-billed and already face co-payments to visit their GP. When they do, <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/Annual-Medicare-Statistics">they pay</a>, on average, $28.58 after the Medicare rebate, or over $60 at the visit for most consultations. </p>
<p>For the vast majority of these people, the proposal will have no effect as they already incur a co-payment well in excess of the minimum co-payment of $6.15 that has been proposed by the AMA. </p>
<p>Indeed, the AMA’s proposed price signal for GP visits is only likely to affect those Australians who do not have a concession card and who currently visit a bulk-billing GP (or one who charges less than the proposed minimum co-payment). </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/57017/original/tsptkxwp-1408594688.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/57017/original/tsptkxwp-1408594688.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=394&fit=crop&dpr=1 600w, https://images.theconversation.com/files/57017/original/tsptkxwp-1408594688.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=394&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/57017/original/tsptkxwp-1408594688.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=394&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/57017/original/tsptkxwp-1408594688.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=496&fit=crop&dpr=1 754w, https://images.theconversation.com/files/57017/original/tsptkxwp-1408594688.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=496&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/57017/original/tsptkxwp-1408594688.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=496&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Medicare expenditure can be reduced by reducing rebates or reducing use.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/63288989@N05/6996699248/in/photolist-bEgUVE-e3vXtG-4rhCSh-5QKaCE-bTbDy2-6Pas3A-bTbDp6-f4ozF8-2PHQou-cc59Sw-6y5h3e-5BMJWL-dx9hXw-9zPHvt-bq7jUk-9866ZQ-6qYWQw-5kJDE5-xXe7P-fv5ura-fvjFfy-fvjKKS-fvjLEQ-fv5pca-fv5oFt-fvjHyy-fv5pWH-fvjJam-fv5uWa-fvjLA5-fv5qKg-fv5qCt-fvjMA7-fv5sxc-fv5pe6-fv5uLD-hNrgog-hNsevL-6tsmre-hNrNTS-hNraTP-hNsisd-hNrxBD-hNrjfi-hNru1k-hNso5Z-hNsbXj-hNsdsy-hNrn3H-hNstE6-hjj2fD">Mercy Health/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>The rationale for the introduction of a $7 co-payment has been confused, and three reasons have been advanced: the need to reduce Medicare expenditure; the need to contribute to the budget bottom line; and the need to establish a price signal which will increase the efficiency of health care service delivery.</p>
<p>Medicare expenditure can be reduced by reducing rebates or reducing use. The government proposal aimed to do both. </p>
<p><a href="https://theconversation.com/gp-co-payments-why-price-signals-for-health-dont-work-28857">Evidence shows</a> that price signals discourage use by the disadvantaged, but also that reducing primary care use has not resulted in long-term cost savings to the system. </p>
<p>Under the government proposal, increased revenue from co-payments was not directed to the budget deficit but to a medical research fund. This would reduce government debt as it only the interest was to be returned to research. </p>
<p>The AMA proposal, while providing additional protection to children and concession-card holders, seems to contribute to the general practice bottom line rather than the government budget position. Doctors would be better off and according to Health Minister Peter Dutton, the AMA plan would <a href="http://www.smh.com.au/federal-politics/political-news/gp-7-fee-plan-ama-push-to-exempt-concession-holders-and-children-20140821-106nim.html">wipe out 97%</a> of the government’s $3.5bn savings. </p>
<p>The efficiency of the health system and its long-term sustainability is worth attention. But Australia does not have an immediate fiscal crisis due to health expenditure. It’s time to design a system of delivering health care that addresses 21st century health problems with 21st century technologies and knowledge. </p>
<p><em>This article originally said the government’s plan would charge a $7 co-payment for Medicare benefits for chronic disease management. This has now been corrected.</em></p><img src="https://counter.theconversation.com/content/30757/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jane Hall receives funding from the NHMRC and APHCRI.</span></em></p><p class="fine-print"><em><span>Kees Van Gool receives funding from the Australian Primary Health Care Institute (APHCRI).</span></em></p>Bulk billing without restrictions has been a feature of the Australian health system since the introduction of Medicare in 1984. It is particularly important in general practice, as it means any Australian…Jane Hall, Professor of Health Economics and Director, Centre for Health Economics Research and Evaluation, University of Technology SydneyKees Van Gool, Health economist, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/305232014-08-18T20:22:06Z2014-08-18T20:22:06ZForget the co-payment… Seven tips for an affordable, quality health system<figure><img src="https://images.theconversation.com/files/56584/original/43jhswh9-1408077527.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Cut waste before cuttings access or quality.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/phalinn/8116068318">Phalinn Ooi/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Health policy debate over the past few months has been held to a $7 ransom. It’s as if the Medicare co-payment has been deified as the solution to all the health system’s ills. </p>
<p>Of course, the <a href="https://theconversation.com/topics/gp-co-payment">$7 co-payment</a> was not the only policy initiative in <a href="https://theconversation.com/federal-budget-2014-health-experts-react-26577">the budget</a>: there were also proposals to shift other costs to consumers – by increasing the pharmaceutical benefits scheme co-payment – or <a href="https://theconversation.com/federal-state-health-relations-can-anything-be-salvaged-27259">onto states</a>, by reducing Commonwealth grants. Shifting costs to consumers has got a bad press, and the proposals to do so may not pass the Senate. </p>
<p>But there are other options. Here are seven tips policymakers can follow for better health reform.</p>
<h2>1. Don’t panic</h2>
<p>Health systems change slowly. Even the bogeyman of an ageing population is occurring slowly. People age by a day every day, so the so-called ageing effect is more like a grey glacier than a silver tsunami. </p>
<p><a href="https://theconversation.com/rationing-care-vs-increasing-taxes-the-health-system-sustainability-myth-24774">Sustainability panic</a> will almost inevitably lead to wrong solutions – quick fixes that aren’t fixes at all. Shifting costs is easier than fixing system fundamentals and so it is, unfortunately, what is often advocated and pursued.</p>
<h2>2. Change behaviour through incentives</h2>
<p>Financial incentives are a powerful way to change health provider behaviour. The introduction of <a href="http://www.ihpa.gov.au/internet/ihpa/publishing.nsf/Content/funding">activity-based funding</a> is the stand-out success in making the public hospital system more efficient. Instead of paying hospitals on what they say they do, or on their historic budget, they are now paid on what they actually do: their activity. </p>
<p>Activity-based funding gave hospitals incentives to improve their efficiency. One result was that they started to own the problems of their performance, rather than shifting responsibility back to governments and taxpayers.</p>
<p>But more needs to be done in other areas. For example, fee-for-service payments to medical practitioners <a href="https://theconversation.com/phase-out-gp-consultation-fees-for-a-better-medicare-13690">may no longer be</a> the best way to reward them to look after someone with a chronic condition. They, too, should be rewarded on their results. </p>
<h2>3. Don’t reduce equity</h2>
<p>Financial disincentives for consumers may have perverse effects and can reduce equity. This has been the focus of much of the recent debate about the $7 co-payment. We know the co-payment will impact more on the poor, who already pay <a href="https://theconversation.com/higher-health-co-payments-will-hit-the-most-vulnerable-29590">a larger share</a> of their income on health care. </p>
<p>The introduction of a co-payment may also increase total health system costs, if <a href="https://theconversation.com/over-and-under-servicing-further-reasons-to-scrap-the-gp-co-payment-30199">consumers delay seeing doctors</a> for health conditions that are more expensive to treat later. </p>
<h2>4. Use a range of policy instruments</h2>
<p>Public policy is about using policy instruments to change the behaviour of individuals, professionals, communities and organisations. </p>
<p>Top-down instruments include provision of new services; financial levers (taxes, incentives, setting up markets); rules, laws, organisational changes and system targets; information provision; rhetoric; and changing values and culture (usually by a combination of the previous five and through education). </p>
<p>Bottom-up approaches focus on consumer empowerment, engagement and choice.</p>
<p>The previous federal government played with organisational changes, creating an alphabet soup of agencies in the health portfolio. The budget has begun a <a href="https://theconversation.com/federal-budget-2014-health-experts-react-26577">welcome rationalisation</a> of those. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/56580/original/3ph2d63n-1408075854.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/56580/original/3ph2d63n-1408075854.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=337&fit=crop&dpr=1 600w, https://images.theconversation.com/files/56580/original/3ph2d63n-1408075854.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=337&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/56580/original/3ph2d63n-1408075854.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=337&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/56580/original/3ph2d63n-1408075854.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=423&fit=crop&dpr=1 754w, https://images.theconversation.com/files/56580/original/3ph2d63n-1408075854.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=423&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/56580/original/3ph2d63n-1408075854.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=423&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Australia’s system is one of the world’s best on objective criteria.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/taedc/7226247220">Flickr/Ted Eytan</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>On the other hand, the Rudd-Gillard <a href="https://theconversation.com/will-the-buck-stop-with-rudd-on-fixing-the-hospital-system-15571">improved financial incentives</a> when it introduced activity-based funding of hospitals nationally in order to drive efficiency. Because the Commonwealth was to share in the costs as hospital spending grew, this aligned the incentives of the Commonwealth and states to be efficient. </p>
<p>But the budget <a href="https://theconversation.com/budget-takes-hospital-funding-arrangement-back-to-the-future-26701">abolishes that change</a> from 2017 and returns to a formula based on state population and CPI changes, not hospital activity. </p>
<p>Change is more effective if the full range of policy instruments are used, provided they all work in the same direction. New structures and performance indicators should, for example, be reinforced by financial incentives.</p>
<h2>5. Cut waste before cutting access or quality</h2>
<p>Bob Brook, a doyen of American health policy, and Kathy Lohr famously <a href="http://www.rand.org/content/dam/rand/pubs/notes/2009/N3375.pdf">questioned 30 years ago</a> whether it will be necessary to ration effective care, and the rationing question is still being used as a scare tactic in the policy debate. </p>
<p>Not all care is based on evidence. There is also substantial waste in the health system. Previous Grattan Institute work <a href="http://grattan.edu.au/report/controlling-costly-care-a-billion-dollar-hospital-opportunity/">has showed</a> that a billion dollars could be saved by extracting efficiency savings from hospitals. Further savings could be made by <a href="http://grattan.edu.au/report/unlocking-skills-in-hospitals-better-jobs-more-care/">improving workforce utilisation</a> and <a href="http://grattan.edu.au/report/poor-pricing-progress-price-disclosure-isnt-the-answer-to-high-drug-prices/">reducing the excessive prices</a> we pay for pharmaceuticals.</p>
<p>While there is waste in the system, it is surely unethical and unfair to reduce people’s access to necessary services. Waste should be the first target.</p>
<h2>6. Use data, not anecdotes</h2>
<p>The health system is awash with data, even if much of it is unnecessarily <a href="http://cms.assa.edu.au/.pdf/submissions/assa_submission_health__data_2013(2).pdf">locked up</a> in government computers. Data should be used to inform policy development, and model the effects of new policies. Organisations need to invest in the mindset and skills to use data in policy, and have the mandate to do so.</p>
<p>Although anecdotes help to sell policies, they shouldn’t be the basis of policy development. If they are, they will almost certainly distort policymakers’ perceptions and start them down the wrong paths.</p>
<h2>7. Get real</h2>
<p>Policymakers need to be realistic about what needs to be done and how long change takes. Sustainability panic leads to a focus on short-term solutions. Health care accounts for <a href="http://www.aihw.gov.au/australias-health/2012/spending-on-health/">almost 10% of GDP</a> – it is a big system. Policy makers should take a long-term strategic approach, planning for the long haul. </p>
<p>This may mean experimenting with changes, piloting them to check that they work as intended. It certainly requires openness to new ways of doing things.</p>
<p>In planning and evaluating changes, though, we must build on what works in the health system. Australia’s system is <a href="http://www.oecd.org/australia/Health-at-a-Glance-2013-Press-Release-Australia.pdf">one of the world’s</a> best on objective criteria. It costs less than the OECD average and the outcomes, in terms of life expectancy, are better than the OECD average. </p>
<p>That doesn’t mean it can’t be improved (see tip six above). But it does mean we shouldn’t throw the baby out with the bath water as we change the system. </p>
<p><em>This article is based on a talk today to the <a href="https://www.chf.org.au/pdfs/chf/Health-in-a-Time-of-Change-Program.pdf">Consumers Health Forum symposium: Health in a Time of Change</a>.</em></p><img src="https://counter.theconversation.com/content/30523/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Duckett is a consultant to the Independent Hospital Pricing Authority and sits on a number of its committees.</span></em></p>Health policy debate over the past few months has been held to a $7 ransom. It’s as if the Medicare co-payment has been deified as the solution to all the health system’s ills. Of course, the $7 co-payment…Stephen Duckett, Director, Health Program, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/284482014-08-07T04:44:53Z2014-08-07T04:44:53ZHealth budget: GP care isn’t the problem, costly specialist care is<figure><img src="https://images.theconversation.com/files/55403/original/kmdmwcrg-1406788036.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Specialists in Australia earn almost twice as much as GPs.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/venndiagram/5257812897">Dave/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>The opening of [eight new medical schools](](http://www.medicaldeans.org.au/wp-content/uploads/Website-Stats-2013-Table-4.pdf) in Australia in the past decade has seen a <a href="http://www.theaustralian.com.au/national-affairs/policy/over-serviced-national-doctor-shortage-a-myth/story-fn59nokw-1226588021207">massive increase</a> in the number of new doctors entering the workforce. The number of new junior doctors graduating in Australia doubled between 2004 and 2011. But while fears of an overall shortage of doctors seem assuaged, we don’t have the right mix of doctors.</p>
<p>A recent trend is the increasing specialisation of the medical workforce. In 1999, 45% of Australian doctors were general practitioners (GPs) but this proportion <a href="http://www.aihw.gov.au/WorkArea/DownloadAsset.aspx?id=10737419967">had fallen</a> to 38% by 2009. Similar trends can be observed in the United States and United Kingdom. </p>
<p>This trend is concerning because primary care, provided by general practitioners, is the <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0009.2005.00409.x/full">most efficient and equitable</a> type of health care, particularly preventive care and the management of chronic disease. These components of GP-provided care have the potential to improve health outcomes, lower costs and reduce the need for future more costly interventions. </p>
<p>In contrast, specialists tend to be reactive and expensive, seeing patients only when a health condition has taken a turn for the worse, when surgery, expensive pharmaceuticals, or other intensive treatments are required. </p>
<p>Of course, a modern health-care system needs a high-quality specialist sector; specialists are the doctors patients rely on when they’re sickest. But workforce planners should strike the right balance between primary care and specialist physicians.</p>
<p>So what is causing the growing imbalance towards specialism in medical career decision making? </p>
<p>Our <a href="http://www.sciencedirect.com/science/article/pii/S0167629612000902">recent study</a> asked junior doctors in Australia about their job preferences. We did this using a discrete-choice experiment, where respondents made hypothetical but realistic choices about their future career. By analysing their responses statistically, we could tell what factors drove their choices. </p>
<p>Our results show a range of factors affect choice of speciality. Opportunity to practice procedural work and academic opportunities are some of the factors that drive junior doctors to specialise rather than choose general practice. But the elephant in the room is money.</p>
<p>Specialists in Australia earn <a href="http://www.racgp.org.au/afp/2014/april/does-remuneration-matter/">almost twice as much</a> as GPs. Survey data shows average earnings in 2012 of $194,000 for GPs and $360,000 for specialists. Even when adjusted for the longer hours that they work, specialists’ hourly wages are still 60% higher than GPs.</p>
<p>We found expected earnings have a large effect on choice of speciality. But lowering the income gap could redress the situation. Our modelling shows that increasing GPs’ earnings by A$50,000 per year (a 28% increase from 2008 levels) would increase the number of junior doctors choosing general practice by 11%, or 247 more trainee GPs per year.</p>
<p>So, how can policymakers increase GPs earnings relative to specialists? </p>
<p>The main policy tool available is Medicare. Medicare influences GPs’ earnings via rebates for the consultations they provide. Increasing Medicare rebates for GP services would therefore be a simple way of increasing their earnings. Of course, this is entirely the opposite of current government policies to introduce <a href="https://theconversation.com/gp-co-payments-why-price-signals-for-health-dont-work-28857">co-payments for bulk-billed consultations</a> and reduce rebates.</p>
<p>Innovative payment mechanisms may provide a more cost-effective way of increasing GPs’ relative earnings. Introducing <a href="http://theconversation.com/phase-out-gp-consultation-fees-for-a-better-medicare-13690">additional funding sources</a> using capitation (where doctors are paid for looking after enrolled patients for a whole year, not just per consultation) and pay-for-performance would allow earnings increases to be linked to higher quality of care, rather than just the number of consultations provided. </p>
<p>Increased earnings for GPs needn’t blow a hole in the budget either. Offsetting savings could come from targeted reductions to <a href="http://theconversation.com/want-medicare-savings-stop-paying-for-private-hospitals-23729">Medicare rebates for specialist services</a>, which would reduce the earning power of specialists, especially those working in private hospitals on privately-insured patients. </p>
<p>In 2012/13, the <a href="https://theconversation.com/want-medicare-savings-stop-paying-for-private-hospitals-23729">government spent</a> $3.9bn subsidising private specialist consultations. A proportion of these Medicare subsidies could be redirected to GP consultations. </p>
<p>Together, these measures could reduce the relative earnings advantages of specialists over GPs, encouraging more junior doctors into general practice.</p><img src="https://counter.theconversation.com/content/28448/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Sivey has received funding from the National Health and Medical Research Council, the Australian Research Council and Health Workforce Australia.</span></em></p>The opening of [eight new medical schools](](http://www.medicaldeans.org.au/wp-content/uploads/Website-Stats-2013-Table-4.pdf) in Australia in the past decade has seen a massive increase in the number…Peter Sivey, Senior Lecturer, School of Economics, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/301992014-08-06T20:55:35Z2014-08-06T20:55:35ZOver- and under-servicing: further reasons to scrap the GP co-payment<p>Treasurer Joe Hockey is <a href="http://www.smh.com.au/federal-politics/political-news/soften-blow-of-gp-fee-by-reducing-copayment-for-medicines-on-pbs-senator-david-leyonhjelm-to-joe-hockey-20140804-3d2xx.html">struggling to sell</a> his co-payment policy to the Senate and the Australian public – and it’s easy to see why. </p>
<p><a href="https://theconversation.com/topics/gp-co-payment">Charging patients</a> $7 for GP, pathology and diagnostic services that are currently bulk billed would not only reduce access to care for the <a href="https://theconversation.com/higher-health-co-payments-will-hit-the-most-vulnerable-29590">most vulnerable</a> patients, it’s likely to increase costs elsewhere in the health system and lead to poorer patient outcomes. </p>
<p>As I argue in the latest issue of the <a>Australian New Zealand Journal of Public Health</a>, while mandatory co-payments lead to under-servicing of those who can’t afford to pay, they also provide GPs with incentives to over-service those who can.</p>
<h2>Under-servicing</h2>
<p>Co-payments create a barrier to primary care for those in greatest need and those most reticent to visit their GP. This includes people avoiding vaccinations and treatment for infectious diseases, and those with lifestyle-related risks such as smoking, excess weight and alcohol problems. </p>
<p>These groups are the most <a href="http://www.australiandoctor.com.au/getmedia/e0dfb232-07b2-41d2-af20-59ef6e58591d/Decade_AusGPactivity_Nov2013_1.aspx">cost-effective populations</a> to treat in primary care settings. Reducing their access to primary care and early interventions will cause many to present later to hospitals and other more expensive health-care settings as more complex cases, with higher treatment costs and worse health outcomes. </p>
<p>While bulk billed GP visits currently cost the health system $36.30, the average hospital inpatient admission costs more than 100 times more, in the order of $5,000. Shifting health problems from primary care to hospitals also moves the cost burden from the Commonwealth to the states. </p>
<h2>Over-servicing</h2>
<p>In response to reduced use of GP services by these populations, GPs can be expected to discretionarily <a href="http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirror-mirror">over-service</a> those who can afford to pay to fill schedules and income targets. As seen in fee-paying sectors of the United States health system, over-servicing <a href="http://www.ifs.org.uk/docs/private_med.pdf">typically manifests</a> in over-prescribing medication and ordering unnecessary tests for unexpected or rare diseases or conditions. </p>
<p>Such tests are not perfect, with the chance of testing positive in patients who don’t have the disease often around 20%. Where the risk of a disease is small, use of such tests will lead to rates of false positives many times that of true positives and downstream costly and unnecessary treatment, often with health risks. </p>
<p>Over-servicing may also occur after conditions are correctly detected and aggressively managed. Take early stage <a href="http://www.cancer.org/cancer/news/expertvoices/post/2012/01/18/to-treat-or-not-to-treat-prostate-cancer-that-is-the-question.aspx">prostate cancer</a>, for instance. GPs may initiate invasive treatment where it is questionable or potentially detrimental, causing unnecessary health risks, anxiety and reduced quality of life. </p>
<h2>Impacts of cost shifting to states</h2>
<p>The budget proposes allowing state governments to charge $7 fees for primary care-type patients who present to hospital emergency departments, in an attempt to prevent patients who should be treated in primary care setting presenting to hospital. </p>
<p>However, given not treating these patients in primary care is expected to lead to their later presentation as acute cases, it should be no surprise that state governments have not welcomed the proposal for emergency department co-payments. </p>
<p>Such a policy would also undermine universal and equitable access to emergency department care and place additional administrative costs, stresses and burden on hospital staff charged with assessing those required to pay, and denying access to those who are unable to. </p>
<p>Never the less, treating primary care patients in emergency departments is generally more costly and takes considerably longer than in a GP setting. Any increase in primary care patients presenting to emergency departments to avoid GP fees will increase queues and waiting time, as <a href="http://www.buseco.monash.edu.au/centres/che/pubs/wp81.pdf">already stretched</a> emergency department resources strain beyond bursting point to deal with increased patient flows. </p>
<p>These strains on emergency departments and downstream hospital impacts on states are further reinforced by other <a href="http://www.budget.gov.au/2014-15/index.htm">budget proposals</a> to reduce hospital funding to states, scale back care co-ordination and prevention bodies and activities. </p>
<h2>Universal care</h2>
<p>The proposed $7 charges are supposed to do some of the “heavy lifting” of the budget. But with expected downstream impacts, <a href="http://onlinelibrary.wiley.com/doi/10.1111/1753-6405.12277/abstract">it’s more likely</a> to give the health system the equivalent of a hernia. The budget’s health policy proposals are ideologically driven and have been rightly criticised for further entrenching disadvantage.</p>
<p>It’s time for Treasurer Hockey to accept what Australians want – and don’t want – from their health system. Australians don’t want to trade Medicare and universal access for an <a href="http://www.sciencedirect.com/science/article/pii/S0167629608000787">American-style</a> private-paying health system. And for good reason: it is the least accessible and <a href="http://www.oecd.org/els/health-systems/Health-at-a-Glance-2013.pdf">highest-cost system</a> in the world and delivers <a href="http://www.commonwealthfund.org/%7E/media/files/publications/fund-report/2014/jun/1755_davis_mirror_mirror_2014.pdf">some of the worst</a> health outcomes both from under- and over-servicing.</p>
<p>The introduction of mandatory GP fees, and over-servicing patients those who can afford care and under-servicing those who can’t, moves us dangerously towards a US-style health care system. </p><img src="https://counter.theconversation.com/content/30199/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Simon Eckermann does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Treasurer Joe Hockey is struggling to sell his co-payment policy to the Senate and the Australian public – and it’s easy to see why. Charging patients $7 for GP, pathology and diagnostic services that…Simon Eckermann, Professor of Health Economics, University of WollongongLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/295902014-07-28T20:28:25Z2014-07-28T20:28:25ZHigher health co-payments will hit the most vulnerable<figure><img src="https://images.theconversation.com/files/54879/original/pxx4vz9t-1406266646.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The poorest households already spend more than a fifth of their disposable income on health care.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-158767172/stock-photo-woman-with-child-waits-to-doctor-receive-at-the-clinic.html?src=4RikfvepQ5VElrUCvD1W8A-3-3">Iakov Filimonov/Shutterstock</a></span></figcaption></figure><p>Many poor families already pay a significant proportion of their household income on health care co-payments and will face increasing financial pressure with a proposed additional A$7 charge, according to new <a href="http://grattan.edu.au/publications/news-and-opinion/post/new-out-of-pocket-costs-will-hit-people-with-empty-pockets/">Grattan Institute</a> research I’m presenting today to the <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/Australian_healthcare">Senate Inquiry</a> into out-of-pocket costs. </p>
<p>The Abbott government announced the A$7 charge for all visits to general practitioners and pathology tests and X-rays they order in the May budget, along with significant increases to co-payments for pharmaceuticals. But the legislation is yet to be considered by the Senate. </p>
<p>In the meantime, the <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/Australian_healthcare">Senate Inquiry</a> is investigating the impact of a co-payment on access to care and health outcomes and is due to report <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/Australian_healthcare">early next month</a>.</p>
<h2>Cost burden</h2>
<p>Australian Bureau of Statistics’ <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/6530.0/">household expenditure data</a> show that while households with a high disposable income spend more out of their own pocket on health care, low-income households spend a much higher proportion of their income on paying for care.</p>
<p>The chart below shows that the median low-income household (bottom decile of the income range) spends more than 3% of its income on health care out-of-pockets, while higher income households (top decile) spend less than 1%. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/54988/original/xrp2bvrn-1406515396.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/54988/original/xrp2bvrn-1406515396.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=363&fit=crop&dpr=1 600w, https://images.theconversation.com/files/54988/original/xrp2bvrn-1406515396.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=363&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/54988/original/xrp2bvrn-1406515396.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=363&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/54988/original/xrp2bvrn-1406515396.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=456&fit=crop&dpr=1 754w, https://images.theconversation.com/files/54988/original/xrp2bvrn-1406515396.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=456&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/54988/original/xrp2bvrn-1406515396.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=456&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Poorer households pay more as a proportion of their income for health services than richer households.</span>
<span class="attribution"><span class="source">Grattan Institute.</span></span>
</figcaption>
</figure>
<p>These figures are for the median household, so half the households in each group are spending more; some much more. The chart below shows that for 7% of the lowest-income households that pay out-of-pocket costs, these costs take up between 10% and 20% of their disposable income. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/54866/original/f9spkxj4-1406263895.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/54866/original/f9spkxj4-1406263895.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/54866/original/f9spkxj4-1406263895.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=275&fit=crop&dpr=1 600w, https://images.theconversation.com/files/54866/original/f9spkxj4-1406263895.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=275&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/54866/original/f9spkxj4-1406263895.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=275&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/54866/original/f9spkxj4-1406263895.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=345&fit=crop&dpr=1 754w, https://images.theconversation.com/files/54866/original/f9spkxj4-1406263895.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=345&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/54866/original/f9spkxj4-1406263895.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=345&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">When poorer households pay out-of-pocket costs, it is more likely to take up a very large share of their income.</span>
<span class="attribution"><span class="source">Grattan Institute</span></span>
</figcaption>
</figure>
<p>More than one in ten of the poorest households are under even more pressure, spending more than a fifth of their disposable income on health care. In contrast, the proportion of the highest income households that spend similar proportions is less than 1% in total.</p>
<p>Not surprisingly, households that used a greater range of services spent more on average. Households that paid out-of-pocket costs for six different kinds of health care (such as GPs, specialists, dentists or medical equipment) paid nearly ten times more than households that used only one.</p>
<h2>Long-term costs</h2>
<p>The implications of these figures are profound. An <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/4839.0">Australian Bureau of Statistics survey</a> found that more than one in 20 people who need to see a GP don’t go because of the cost. The proportion is 8% for specialists and 18% for dentists. An <a href="http://www.commonwealthfund.org/publications/surveys/2013/2013-commonwealth-fund-international-health-policy-survey">international survey</a> found even higher rates: one in ten Australians don’t see a doctor because of cost.</p>
<p>Health Minister Peter Dutton <a href="http://www.health.gov.au/internet/ministers/publishing.nsf/Content/health-mediarel-yr2014-dutton140528.htm">has estimated</a> that the increased medical co-payment will reduce visits to doctors by 1% – more than a million visits a year. But who will miss out? It will clearly be low-income people who are already hit hardest by out of pocket costs.</p>
<p>The underlying premise of a strategy designed to reduce visits is that not all visits are necessary, and <a href="http://www.theage.com.au/comment/long-overdue-debate-on-medicare-a-healthy-thing-20140113-30qma.html">people should</a> “question whether they need to visit a doctor.” But this raises the issue of collateral damage: what proportion of the visits that don’t occur will turn out to have been necessary? </p>
<p>The new co-payment rules will apply to X-rays and pathology tests general practitioners judge as necessary to complete a diagnosis. That means at least some of the savings will come by consumers not following through on services doctors think are necessary for this patient. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/54874/original/58s7658y-1406265634.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/54874/original/58s7658y-1406265634.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/54874/original/58s7658y-1406265634.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/54874/original/58s7658y-1406265634.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/54874/original/58s7658y-1406265634.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/54874/original/58s7658y-1406265634.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/54874/original/58s7658y-1406265634.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">One in 20 people who need to see a GP don’t go because of the cost.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/joriel/2581914575">Joriel "Joz" Jimenez/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>“Necessary visits” is a fraught concept, as consumers are not always good judges of which visits are necessary and which are not. The only recent visit I’ve made to a GP was because I thought marks on my face might be skin cancer. They turned out not to be. Was that visit necessary? If I had skin cancer, no one would have quibbled about necessity. </p>
<p>The job of general practitioners is to make a diagnosis, weigh up the physical symptoms and other factors and draw on their knowledge and experience to rule some things in and others out. The rule-out visits are necessary too.</p>
<p>Further, reducing “necessary” visits may perversely lead to greater costs in future, as conditions are not nipped in the bud and treated before they get worse. A <a href="http://grattan.edu.au/publications/reports/post/access-all-areas-new-solutions-for-gp-shortages-in-rural-australia/">previous Grattan Institute report</a> found that those parts of Australia with the fewest GP services per person had higher hospital costs per admission, even after a wide range of other factors were taken into account. </p>
<p>This suggests that if people can’t go to the GP and eventually need to go to hospital they go later in the progression of their disease and they ultimately cost more to treat. They also suffer poor health in the meantime.</p>
<p>Increasing co-payments may seem like a simple policy that will make the system more sustainable. But simple solutions almost invariably have downsides. Sure, visits will reduce. But the reduction will hit the most vulnerable hardest. </p><img src="https://counter.theconversation.com/content/29590/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Duckett does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Many poor families already pay a significant proportion of their household income on health care co-payments and will face increasing financial pressure with a proposed additional A$7 charge, according…Stephen Duckett, Director, Health Program, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/286582014-07-10T20:17:59Z2014-07-10T20:17:59ZGP co-payment would increase emergency department wait times<figure><img src="https://images.theconversation.com/files/53221/original/rdjchxx6-1404779921.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">As the queue grows, small increases in waiting times soon turn into dramatic spikes.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-85433242/stock-photo-elderly-year-old-woman-with-alzheimer-waiting-for-her-doctor-in-the-examination-room.html?src=Pr9g6lgec2rx2Ljiome2Eg-1-59">Fotoluminate LLC/Shutterstock</a></span></figcaption></figure><p>The introduction of a GP co-payment could see average emergency department visits increase by between six minutes and almost three hours, new modelling shows, as more patients opt for free hospital care rather than paying to see their local general practitioner.</p>
<p>Based on an average emergency department (ED) visit of 5.6 hours, one extra patient per hour would make the visit marginally longer – an average of 5.7 hours, which includes waiting times and treatment, or admission to a bed. An additional four patients per hour, however, would lengthen the queue and result an average visit of 8.5 hours.</p>
<p>The new Australian Senate will soon be asked to vote on legislation for the <a href="https://theconversation.com/medicare-co-payment-is-labors-first-target-on-the-budget-dart-board-26606">proposed A$7 GP co-payment</a> but the Department of Health hasn’t provided any modelling of its impact. </p>
<p>We’ve been working on a patient flow simulation model for a large Adelaide hospital with a busy emergency department for almost a year now. We therefore have a ready-developed tool to consider the possible consequences of a GP co-payment shifting activity from the community to hospitals.</p>
<p>While every hospital around Australia would be different, the pattern is likely to remain the same: as patient demand grows without additional resources, small increases soon turn into dramatic spikes in waiting times. </p>
<h2>Current waiting times</h2>
<p>Patients requiring emergency care are prioritised based on urgency and triaged into five categories. A triage score of one means the patient needs immediate treatment due to a life-threatening issue such as a heart attack, while a triage score of five means the patient requires non-urgent treatment and <a href="https://www.acem.org.au/getattachment/d19d5ad3-e1f4-4e4f-bf83-7e09cae27d76/G24-Implementation-of-the-Australasian-Triage-Scal.aspx">should be seen</a> within two hours. </p>
<p>People triaged to category five and four are sometimes referred to as GP-like patients. But these categories don’t mean the patients shouldn’t be there; the triage category is merely a means of prioritising the order in which patients should be treated. And some will require admission into hospital. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/53218/original/22mt33zw-1404778631.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/53218/original/22mt33zw-1404778631.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=863&fit=crop&dpr=1 600w, https://images.theconversation.com/files/53218/original/22mt33zw-1404778631.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=863&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/53218/original/22mt33zw-1404778631.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=863&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/53218/original/22mt33zw-1404778631.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1085&fit=crop&dpr=1 754w, https://images.theconversation.com/files/53218/original/22mt33zw-1404778631.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1085&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/53218/original/22mt33zw-1404778631.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1085&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Emergency patients are already waiting longer than the target times for care.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-190133306/stock-photo-hospital-emergency-department-sign-identifying-the-hospital-emergency-department.html?src=NgXWhJgAbF5G9qrwAo4aWQ-1-149">ThreeRivers11/Shutterstock</a></span>
</figcaption>
</figure>
<p>Our patient flow model takes triage and whether patients are admitted or discharged from the emergency department into account. </p>
<p>Under the <a href="http://www.nhpa.gov.au/internet/nhpa/publishing.nsf/Content/Media-Release-City-emergency-departments-show-big-improvements-regionals-remain-steady">National Emergency Access Target</a>, by 2015 hospitals should be admitting or discharging 90% of patients from the emergency department within four hours. This includes waiting time before treatment, assessment, tests and evaluation. </p>
<p>From October to December 2013, <a href="http://www.myhospitals.gov.au/Content/Reports/time-in-emergency-department/2014-05/pdf/MyHospitalsUpdate_TimeInEd_2012_13.pdf">66% of patients</a> in major metropolitan hospitals were either admitted or discharged within four hours; this compares with 53% of patients during the same period in 2012. So improvements have been made, but there’s still a long way to go to meet the target. </p>
<h2>Our model</h2>
<p>Using our model we considered the question: what happens to the average queue length and average time spent in the emergency department as additional patients are added to the system? </p>
<p>Clearly, we didn’t know exactly how much demand would shift to hospitals, so we had to make some assumptions about what might happen. </p>
<p>For our initial exploration, we assumed an extra patient would arrive at the emergency department each hour between 8.00am and 6.00pm, Monday to Friday, and would be discharged home without admission. One extra patient per hour means ten extra patients per day. </p>
<p>This seemed a reasonable assumption, as the hospital’s catchment is large and there are an average of 20,000 regular and long GP consultations every day in South Australia. Around 80% of these consultations are currently <a href="https://theconversation.com/australias-health-2014-report-card-experts-respond-28397">bulk billed</a>. </p>
<p>One additional patient per hour represents just 0.036% of the total GP consultations, while four additional patients per hour represents 0.143% of consultations. </p>
<p>Finally, we assumed this rate of additional patient arrivals would be sustained. And we’ve assumed the hospital’s level of resourcing doesn’t change.</p>
<h2>What we found</h2>
<p>The following chart shows what happens to emergency department queues and the time patients spend in the ED as additional patients are added to the system. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/53374/original/nxftbgj5-1404877141.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/53374/original/nxftbgj5-1404877141.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/53374/original/nxftbgj5-1404877141.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=455&fit=crop&dpr=1 600w, https://images.theconversation.com/files/53374/original/nxftbgj5-1404877141.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=455&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/53374/original/nxftbgj5-1404877141.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=455&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/53374/original/nxftbgj5-1404877141.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=572&fit=crop&dpr=1 754w, https://images.theconversation.com/files/53374/original/nxftbgj5-1404877141.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=572&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/53374/original/nxftbgj5-1404877141.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=572&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>You can see the addition of extra patients per hour results in a larger increase in average queue length and the average time spent in the emergency department. Additional time spent in the emergency department means patients wait longer, be it for treatment to commence, or for things like x-rays, blood tests, specialist assessments, and so on. </p>
<p>In this scenario, the average time spent in the emergency department increases for those patients waiting to be admitted into a bed, even though all the additional patients were discharged. </p>
<p>Currently, patients who are admitted to a bed spend an average of 7.6 hours in the emergency department. With one extra patient per hour arriving per hour, this time rises to an average of 7.7 hours, but with four extra patients, this rises to an average of 10.7 hours.</p>
<p>It’s important to note that the figures won’t be the same for all hospitals. But the trend will be: at some point average waiting times and average queue lengths will spike. </p>
<h2>Flow-on effects</h2>
<p>While the federal government <a href="https://theconversation.com/federal-budget-2014-health-experts-react-26577">has suggested</a> hospitals could charge patients for “GP” attendances to reduce the likelihood of patients deciding to switch service options, such an approach is likely to cost more than it would generate in fees. </p>
<p>Add to this the practical difficulties of determining which patients <em>could</em> have seen a GP instead of visiting an emergency department and whether you’d want emergency department clinicians undertake this task, and it looks even less appealing. </p>
<p>So, what can hospitals do if GP co-payments are introduced and more patients arrive seeking care?</p>
<p>The hospital already deals with variation in patient arrivals and can respond by reallocating resources. But this is done for short bursts and not in a sustained manner, unless there’s a planned change to the way in which the emergency department is going to do business. </p>
<p>Clearly, if the introduction of the co-payment results in an additional stream of patients arriving at the hospital, there are two options for the hospital’s management: allow patients to wait longer, which may have implications for patient outcomes; or add resources, which invariably involves additional costs. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/53219/original/7qhvnv6c-1404778960.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/53219/original/7qhvnv6c-1404778960.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/53219/original/7qhvnv6c-1404778960.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/53219/original/7qhvnv6c-1404778960.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/53219/original/7qhvnv6c-1404778960.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/53219/original/7qhvnv6c-1404778960.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/53219/original/7qhvnv6c-1404778960.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Charging emergency department patients who could have been treated by a GP would cost more than it would generate.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-194235998/stock-photo-emergency-intake-area-in-a-hospital.html?src=aII-Xp-Ozblj9d9rHaM8bA-1-79">Tyler Olson/Shutterstock</a></span>
</figcaption>
</figure>
<p>The health system is complex. Decisions to change a complex system without first understanding both the intended and unintended ramifications creates unnecessary risk. This is precisely where modelling can be of assistance: to analyse various scenarios and understand the outcomes, all without the need to mess up the real system. </p>
<p>In the United Kingdom, the <a href="http://www.cumberland-initiative.org/">Cumberland Initiative</a> hopes to transform “the quality and cost of [National Health Service] care delivery through simulation, modelling and systems thinking”. This, it claims, could “cut NHS costs by 20% while raising capacity and quality”. </p>
<p>Our group has just started collaborating with the Cumberland Initiative, with the aim of achieving similar outcomes in Australia. </p>
<p><em><strong>This article was co-authored by Keith Stockman, Manager of Health Operations Research and Projects in the General Medicine Program at Monash Health.</strong></em> </p><img src="https://counter.theconversation.com/content/28658/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Mackay is a director of Complete the Picture Consulting Pty Ltd.</span></em></p><p class="fine-print"><em><span>Campbell Thompson works for SA Health. He receives funding from the Australian Research Council. </span></em></p><p class="fine-print"><em><span>Don Campbell has previously received funding from the Australian Research Council and the National Health and Medical Research Council of Australia.
He is President-Elect of the Internal Medicine Society of Australia and New Zealand.</span></em></p><p class="fine-print"><em><span>Geoff McDonnell is the director and owner of Adaptive Care Systems, a health-care modelling simulation company and consults for Any Logic. He is a simulation research fellow at the Australian Institute of Health Innovation at UNSW Australia. He has received funding from the NHMRC, ARC, CERF and the Pharmacy Guild of Australia. </span></em></p><p class="fine-print"><em><span>Leonid Churilov receives funding from NHMRC and previously received funding from ARC.</span></em></p><p class="fine-print"><em><span>Malgorzata O'Reilly receives funding from the Australian Research Council.</span></em></p><p class="fine-print"><em><span>Mark Fackrell received an ARC Discovery grant 2011-2013 and is the recipient of an ARC Linkage grant 2014-2016.</span></em></p><p class="fine-print"><em><span>Nigel Bean receives funding from the Australian Research Council. He is a a board member of the Australian Mathematical Science Institute (AMSI).</span></em></p><p class="fine-print"><em><span>Peter Taylor receives funding from the Australian Research Council and the Bushfire CRC.</span></em></p><p class="fine-print"><em><span>Shaowen Qin receives funding from the ARC to study hospital congestion relief.</span></em></p><p class="fine-print"><em><span>Dale Ward, David Green, and Robert Adams do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The introduction of a GP co-payment could see average emergency department visits increase by between six minutes and almost three hours, new modelling shows, as more patients opt for free hospital care…Mark Mackay, Senior Lecturer, Health Care Management, School of Medicine, Flinders UniversityCampbell Thompson, Professor of Medicine, University of AdelaideDale Ward, Researcher in Applied Mathematics, School of Computer Science, Engineering and Mathematics, Flinders UniversityDavid Green, Professor of Applied Mathematics, University of Adelaide, University of AdelaideDon Campbell, Professor of Medicine, Monash UniversityGeoff McDonnell, Director of Adaptive Care Systems, UNSW SydneyLeonid Churilov, Head, Statistics and Decision Analysis Academic Platform, Florey Institute of Neuroscience and Mental HealthMalgorzata O'Reilly, Lecturer, School of Physical Sciences, University of TasmaniaMark Fackrell, Lecturer, Department of Mathematics and Statistics, The University of MelbourneNigel Bean, Head of Applied Mathematics, University of AdelaidePeter Taylor, Australian Laureate Fellow, The University of MelbourneRobert Adams, Professor of Medicine, University of AdelaideShaowen Qin, Senior Lecturer School of Computer Science, Engineering and Mathematics, Flinders UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/288572014-07-09T20:13:58Z2014-07-09T20:13:58ZGP co-payments: why price signals for health don’t work<p>Arguments against health co-payments proposed in May’s federal budget will come to the fore again shortly as the Senate considers whether it will pass the necessary legislation. </p>
<p>The government’s attempt to introduce a $7 compulsory co-payment for visits to doctors and pathology services has attracted strong criticism. The measure is fundamentally flawed because it’s a crude attempt at fitting an economic concept to an industry for which it’s inappropriate. </p>
<p>The health co-payments have been described by the government (and its National Commission of Audit) as a price signal. Both have indicated that they feel it’s needed to reduce “unnecessary” visits to the doctor and use of pathology services. </p>
<p>Price signals work by encouraging consumers to think about whatever it is they are about to buy, and whether it’s worth the cost. They assume some consumer knowledge of the product, and its value. We rely on prices right through the economy to temper consumption. </p>
<p>But this economic common device is inappropriate for primary care because health care is not a commodity or luxury service; it is an essential service that can create much greater downstream costs if not used at the right time.</p>
<h2>Excluding from care</h2>
<p>The <a href="http://whqlibdoc.who.int/whr/2010/9789241564021_eng.pdf">aim of modern health funding</a> is twofold: to ensure people have universal protection against the potentially large financial risk posed by sudden illness and that even people who are poor and sick are not excluded from beneficial health care.</p>
<p>That means co-payments have to have at least some exceptions, otherwise they will do what price signals traditionally do and keep some people out of the market. In other words, without exceptions for people who cannot afford this new cost, they will be excluded from care.</p>
<p>This makes health inequitable; the same co-payment will have a larger deterrent effect on low-income groups than it does for high-income groups. </p>
<p><a href="http://www.ncbi.nlm.nih.gov/pubmed/18006176">Evidence from Australia</a> and <a href="http://www.ncbi.nlm.nih.gov/pubmed/15259043">other countries</a> shows that low-income groups are much more likely to rely on general practitioners than visit more expensive specialists. But it is this less expensive and more accessible (and accessed) service that’s being targeted by the government’s proposal.</p>
<h2>Information asymmetry</h2>
<p>The <a href="https://theconversation.com/factcheck-does-the-average-australian-go-to-the-doctor-11-times-a-year-26242">chairman of the National Commission of Audit</a>, <a href="https://theconversation.com/federal-budget-2014-health-experts-react-26577">the treasurer</a> and the <a href="http://www.couriermail.com.au/news/queensland/health-minister-peter-dutton-100-per-cent-confident-7-medicare-copayment-would-pass-the-new-senate/story-fnihsrf2-1226963070250">health minister</a> have all claimed that Australians go to the doctor too often. They suggest the introduction of a price signal for health in the form of co-payments will only reduce trivial visits. </p>
<p>This leads to the second problem with the measure: relying on patients to judge which doctor visits and treatments are valuable. </p>
<p>Doctors have a lot more training and knowledge than their patients and so patients rely on them for advice. Thus the aphorism, you need to see the doctor to tell you whether you need to see a doctor. </p>
<p>This is particularly the case with primary care, which often acts as the gate keeper to other health-care services. Patients go to their primary-care provider for many and varied reasons, but the value of those visits is only apparent after the fact. </p>
<p>Co-payments cannot operate as an effective price signal if people can’t judge the quality of what they’re buying. They will simply stop going if they cannot afford to pay.</p>
<p>The aim of introducing co-payments is to reduce costs to government but <a href="http://www.ncbi.nlm.nih.gov/pubmed/19756797">repeated studies have shown</a> that lower overall costs do not necessarily follow. </p>
<p>The combination of being highly price sensitive (or being unable to afford care) and the inability to judge when care is required means people who are less well-off are put off from seeking necessary care. And this just ends up being more expensive in the long run as illness is not prevented from getting worse. </p>
<h2>A better way</h2>
<p>One alternative is that people who can afford it should make the co-payment, while the needy are protected by safety nets and other special arrangements. But safety nets require various tests for eligibility, which introduce more “red tape” (or administrative) costs. </p>
<p>Maybe instead of creating new charging procedures and administrative costs, payments could be collected through the tax system, via general taxation or the Medicare Levy. </p>
<p>This levy was first introduced in 1984, and most recently increased to cover the National Disability Insurance Scheme. Perhaps now is the time to increase it or make it more strongly progressive than it is now (that is, have people on higher incomes contribute more) so it provides the health-care budget with greater surety.</p>
<p>Health services are not like other services; going to the doctor can’t be compared to a visit to the hairdresser or servicing your car. </p>
<p>What may seem like a simple price signal to some is a financial barrier to effective and timely care for others. The consequences of introducing co-payments are not just a loss of fairness but also a false economy. </p>
<p>Government budgets should be instruments of efficiency and equity. Australia is lauded for exactly these things in its health system, it would be a pity to lose our international reputation because of mistaken understanding of an economic concept. </p><img src="https://counter.theconversation.com/content/28857/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jane Hall receives funding from the NHMRC and APHCRI.</span></em></p><p class="fine-print"><em><span>Richard De Abreu Lourenco receives funding from the NHMRC.</span></em></p>Arguments against health co-payments proposed in May’s federal budget will come to the fore again shortly as the Senate considers whether it will pass the necessary legislation. The government’s attempt…Jane Hall, Professor of Health Economics and Director, Centre for Health Economics Research and Evaluation, University of Technology SydneyRichard De Abreu Lourenco, Research Fellow, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/279212014-06-12T04:55:23Z2014-06-12T04:55:23ZDid the health reform process fail? Now we’ll never know<p>Yesterday was a sorry day in the long history of health reform in Australia. The Council of Australian Governments (COAG) Reform Council issued its <a href="https://www.coagreformcouncil.gov.au/reports/healthcare/healthcare-australia-2012-13-five-years-performance">five year score-keeper’s report</a> on health reform progress. It will be the last such report, since the COAG Reform Council has been sacrificed on the altar of savings in the <a href="https://theconversation.com/federal-budget-2014-political-experts-react-26574">May budget</a>, and we will no longer know how our governments are performing.</p>
<p>The COAG Reform Council paints some lipstick on the pig but overall reform results are poor in the health system. Compared to last year, Australians are waiting marginally longer for elective surgery, longer for community support in the home, and dramatically longer to get into residential aged care. </p>
<p>On the upside, we’re living slightly longer, having fewer heart attacks and the incidence of some cancers has reduced. The five-year trends for performance paint a similar picture to the year-on-year results.</p>
<p>It’s easy to conclude that the health reform process was a waste of time and money. But this is shortsighted. Many of the structural reforms focused on building the foundations of a health system that was on the verge of being able to deliver real improvements in patient care. </p>
<h2>Slow road to reform</h2>
<p>Kevin Rudd’s gab-fest of health reform talk in 2009 and early 2010 led to an alphabet soup of new health agencies, some investment in parts of the health system, more data in the public domain than we’ve ever seen but precious little in terms of real on-the-ground improvements.</p>
<p>But there were some important exceptions. The Rudd-appointed <a href="http://www.health.gov.au/internet/nhhrc/publishing.nsf/content/nhhrc-report">National Health and Hospitals Reform Commission</a> identified a gap in availability of rehabilitation beds in the system. Without adequate rehabilitation care people were ending up in nursing homes when they could have been at home. Reform money helped to address that gap, although that funding was abruptly terminated in the 2014 budget. </p>
<p>Funding was also provided for better prevention programs and to reward improvements in waiting times where they occurred. Medicare Locals were created to provide a platform for improvements in primary care such as better after-hours services.</p>
<p>Running a health system is hard, improving it is even harder. But we have to improve every day just to stand still. The new treatments that are introduced every week put pressure on the health dollar. These new treatments, though, mean we’re living longer – so we get something for the extra money.</p>
<p>A big issue for the health system in Australia is that no-one’s in charge. Not the Commonwealth, not the states, not the private health insurance funds. Most provision is private: general practitioners are increasingly employed by for-profit chains, and before that, small business people. They respond to incentives designed by the Commonwealth government. </p>
<p>The pathology and radiology markets are also highly concentrated corporatised businesses. Around <a href="http://www.aihw.gov.au/WorkArea/DownloadAsset.aspx?id=60129543146">one-third of hospital beds</a> are in private hospitals, and most of those are for-profit businesses as well.</p>
<h2>Abolishing the foundations</h2>
<p>The health reform process mainly concentrated on two aspects of the system: primary care and public hospitals. Primary care reform was mainly effected through the creation of <a href="https://theconversation.com/let-medicare-locals-find-their-feet-and-improve-primary-care-22008">Medicare Locals</a> and <a href="https://theconversation.com/gp-clinics-arent-so-super-but-its-too-early-to-pull-the-plug-25448">GP Super Clinics</a>. </p>
<p>Both were good ideas but flawed in implementation: some Super Clinics are still not open five years after the policy got underway. Medicare Locals were over-hyped by the previous government, wrapped up in red tape by the Commonwealth Health Department and as a result of the budget are being abolished and replaced by new organisations.</p>
<p>Public hospital reform had two elements. In most states it included increased local autonomy through introduction of local boards, and increased services with expanded rehab being the best example. At the national level it included a new alignment of Commonwealth and state interests in controlling hospital costs. </p>
<p>From June 1, 2014, the Commonwealth will meet <a href="https://theconversation.com/budget-takes-hospital-funding-arrangement-back-to-the-future-26701">45% of the costs of increased hospital activity</a>, but only up to an independently determined “efficient price”. This is a good reform, because could have ended the blame game between Commonwealth and states over money by locking the former into funding increased health state health spending. But these changes will be undone in 2017.</p>
<p>So come 2017, most evidence of health reform will have vanished. There will be some ongoing structures and services, but the big aspirations to address the big problems will have fizzled out.</p>
<p>The problems won’t go away, however. Innovation and system reform will still be required. If anyone is around to issue the next score-keeper’s report it will undoubtedly show worse performance, including longer waiting times, across the health system. There’ll then be more calls for reform and the whole cycle will start again, but with wasted years in the meantime.</p><img src="https://counter.theconversation.com/content/27921/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Duckett was a member of the National Health and Hospitals Reform Commission.</span></em></p>Yesterday was a sorry day in the long history of health reform in Australia. The Council of Australian Governments (COAG) Reform Council issued its five year score-keeper’s report on health reform progress…Stephen Duckett, Director, Health Program, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/272592014-06-05T20:40:16Z2014-06-05T20:40:16ZFederal-state health relations: can anything be salvaged?<figure><img src="https://images.theconversation.com/files/50083/original/wy669w8v-1401774950.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The chances of a single level of government taking charge of Australia's health system are slim.</span> <span class="attribution"><span class="source">AAP/Quentin Jones</span></span></figcaption></figure><p><em>The federal budget reignited debate over federal-state relations with a decision to cut $80 billion funding for the state responsibilities of schools and hospitals over the coming years. So how can federal-state co-operation in health make Australia a better country?</em></p>
<hr>
<p>Maybe there is a parallel universe where the Commonwealth and states work in harmony to improve the health and health care of Australians. But that is a vision unlikely to be realised in Australia for years to come, after the 2014 federal budget took a <a href="https://theconversation.com/abbott-draws-up-new-battlelines-in-the-fight-over-federalism-26743">wrecking ball</a> to trust in Commonwealth-state relations.</p>
<p>Instead, the <a href="http://www.aph.gov.au/parliamentary_business/committees/house_of_representatives_committees?url=haa/./healthfunding/report.htm">blame game</a> is back, and the states can now blame Commonwealth cuts for service shortfalls. But what if we could start again and redesign Australia’s system for delivering health care?</p>
<h2>What do health professionals want?</h2>
<p>Ask clinicians and they will give you a litany of Commonwealth-state disjunctions that they see in day-to-day practice. Their panacea is often that a single level of government should be responsible for the whole health care system. That is usually the Commonwealth because of its access to more secure revenue growth. The benefits of state responsibility in terms of <a href="http://www.caf.gov.au/Documents/AustraliasFederalFuture.pdf">potential for innovation</a> and local political accountability are forgotten. </p>
<p>Doctors often want the Commonwealth to take over responsibility for health care because they see how tight state budgets are. These budgets are a victim of the federation’s endemic problem of <a href="http://www.taxreview.treasury.gov.au/content/Paper.aspx?doc=html/publications/papers/report/section_10-06.htm">vertical fiscal imbalance</a>. </p>
<p>Transferring responsibility to the Commonwealth would better align revenue and expenses. The states opposed a greater Commonwealth role when the Rudd government <a href="https://theconversation.com/will-the-buck-stop-with-rudd-on-fixing-the-hospital-system-15571">suggested it</a>. The Abbott government, however, is pursuing the reverse direction.</p>
<p>So the chances of the single government option occurring in Australia are slim. A continuation of the current dual responsibility is inevitable. How, then, can it work better?</p>
<h2>Assessing the idea of ‘reciprocal interdependence’</h2>
<p>In countries with both single and multiple funders, the health system suffers from the most complex of co-ordination problems. It exhibits what organisational theorist James Thompson calls <a href="http://books.google.com.au/books?id=YhHo7aHmBGMC&printsec=frontcover&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false">“reciprocal interdependence”</a>: in other words, the outputs of one system are the inputs of another, and vice versa. </p>
<p>Australia has dozens of examples. One is that inadequate primary care – the Commonwealth’s responsibility – causes increased (and <a href="http://www.safetyandquality.gov.au/wp-content/uploads/2009/01/Potentially-preventable-hospitalisations-A-review-of-the-literature-and-Australian-policies-Final-Report.pdf">potentially avoidable</a>) public hospital admissions and increased emergency department presentations, for which the states pay. </p>
<p>Also, better rehabilitation and geriatric care in state public hospitals could reduce Commonwealth costs in residential aged care.</p>
<p>Budget night rhetoric suggested that a neat dividing line between the Commonwealth and the states could be established. Public hospitals would be on the state side. But even ignoring the issues of reciprocal interdependence, some public hospital services, such as specialist medical outpatient clinics in public hospitals, are direct substitutes for Commonwealth-funded activities.</p>
<p>Reciprocal interdependence requires effective co-ordination. This can occur in two complementary ways: government can ensure that health structures talk to each other, and that financial incentives are aligned. All the talk in the world will not lead to effective co-ordination if financial incentives pull in the wrong directions.</p>
<h2>Breaking promises and agreements</h2>
<p>Effective talk – such as joint decision-making - requires trust. Negotiations rely on agreements being adhered to. But decisions in the budget meant that an <a href="http://www.federalfinancialrelations.gov.au/content/npa/health_reform/national-agreement.pdf">existing signed agreement</a> – the National Health Reform Agreement – between the Commonwealth and the states was torn up. </p>
<p>The agreement, announced in 2011, was a good one. It introduced better alignment of financial incentives: the Commonwealth would share the costs of growth in demand on state public hospitals. So good was this policy that the Coalition made an <a href="http://lpaweb-static.s3.amazonaws.com/13-08-22%20The%20Coalition%E2%80%99s%20Policy%20to%20Support%20Australia%E2%80%99s%20Health%20System.pdf">explicit commitment</a> before the election to support it:</p>
<blockquote>
<p>A Coalition government will support the transition to the Commonwealth providing 50% growth funding of hospital services as proposed.</p>
</blockquote>
<p>Further, pre-election, the Coalition claimed that only they had “the economic record to deliver” on that promise. </p>
<p>However, the Coalition government’s first budget negated this commitment. It abolished the commitment to meet 50% of the cost of public hospital activity growth and replaced it by simply indexing in line with population growth and CPI from 2017-18. This resulted in a budget saving of <a href="http://www.budget.gov.au/2014-15/content/bp2/html/bp2_expense-14.htm">nearly A$1.2 billion</a> at the expense of the states collectively.</p>
<p>If both the Commonwealth and the states are sharing the cost of growth, then both have an interest in moderating growth. The Commonwealth could mount a business case to invest in prevention and primary care to reduce its costs from increased hospital admissions. States would be assisted to meet the future challenges of public hospital cost growth, but still have an incentive to control growth.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/50086/original/gccppt8q-1401778659.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/50086/original/gccppt8q-1401778659.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=397&fit=crop&dpr=1 600w, https://images.theconversation.com/files/50086/original/gccppt8q-1401778659.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=397&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/50086/original/gccppt8q-1401778659.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=397&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/50086/original/gccppt8q-1401778659.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=499&fit=crop&dpr=1 754w, https://images.theconversation.com/files/50086/original/gccppt8q-1401778659.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=499&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/50086/original/gccppt8q-1401778659.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=499&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The National Health Reform Agreement, signed by the Commonwealth and the states under the Gillard government, was torn up in the budget.</span>
<span class="attribution"><span class="source">AAP/Julian Smith</span></span>
</figcaption>
</figure>
<h2>Talk is cheap</h2>
<p>In order to turn talk into actions, the first step is to reduce the trust deficit. This would require the Commonwealth to restore its commitment to share in the cost of hospital growth. If 50% is too high, a slightly lower rate, say the current 45%, would still create an alignment of interests.</p>
<p>With more trust, joint decision-making and pooling of funds could have the potential to iron out the disjunctions caused by the overlapping boundaries of Commonwealth and state responsibilities. New governance structures and legally binding agreements might be required.</p>
<p>But a gabfest of talk and financial alignment won’t be enough if states don’t have adequate fiscal capacity to meet the needs for which they are responsible. The Commission of Audit <a href="http://ncoa.gov.au/report/phase-one/part-b/6-reforming-the-federation.html">proposed</a> a realignment of income tax. <a href="https://theconversation.com/raise-the-gst-the-conversation-we-have-to-have-25202">Increasing or broadening the GST</a> and <a href="http://www.smh.com.au/federal-politics/political-news/states-should-look-at-payroll-tax-rise-says-treasury-boss-20140520-38mlw.html">increasing payroll tax</a> have also been mooted. </p>
<p>States have other potential tax opportunities. The Commonwealth doesn’t tax superannuation fund earnings, and <a href="http://grattan.edu.au/publications/reports/post/budget-pressures-on-australian-governments-2014/">someone should</a>. </p>
<p>The more dramatic of these opportunities will be needed if we can’t get more co-operative arrangements, with shared responsibility, to work. All options need to be on the table to reduce state exposure to Commonwealth vicissitudes and to meet the state share of health care cost growth.</p>
<p>For taxpayers, an ideal system would mean an efficient system in terms of the cost of doing things and the choices about how we invest our health care dollars. For consumers, it would mean a system where necessary services are available and the Commonwealth and states work to ensure continuity of care. </p>
<p>More importantly, it would mean consumers are not used as the rope in a Commonwealth versus state tug-of-war. Sadly, the recent short-term budget fixes don’t provide a good ground for any of that.</p>
<hr>
<p><strong>Further reading:</strong> <a href="https://theconversation.com/topics/reforming-the-federation">The Reforming the federation series</a></p><img src="https://counter.theconversation.com/content/27259/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Duckett does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The federal budget reignited debate over federal-state relations with a decision to cut $80 billion funding for the state responsibilities of schools and hospitals over the coming years. So how can federal-state…Stephen Duckett, Director, Health Program, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.