The Commonwealth’s government’s $4bn Dental Reform package, announced last week, promises to address many current inequities in access to dental care. It has been praised for its potential to reduce dental waiting lists and encourage early intervention. But it has also received criticism for separating dental health from other aspects of health care, and for the long lead time before the reforms will be introduced.
So how does the reform package fit into Australia’s existing dental health care system? And do we have right foundations from which to build a functional, equitable and financially responsible dental health system?
Australia’s patchwork dental system
Dental care has long been an orphan in government programs. While most health programs have a degree of universal support, such as free public hospitals, subsidised medicines under the Pharmaceutical Benefits Scheme and a schedule of payments for medical services, there is no such universal scheme for dental care.
Public funding for dental services is funnelled through three main channels: state-run public dental programs, the (soon-to-be-abolished) Commonwealth Chronic Disease Dental Scheme and the private health insurance rebate. These schemes target limited groups, with varying degrees of success, and leave many without support for dental care.
The final report of the National Advisory Council on Dental Health, published earlier this year, found that one-third of Australians were dependent on a market-based fee-for-service system because they didn’t have private health insurance and weren’t eligible for public dental care.
With limited support for public dental care, most Australians bear the open-ended costs of high-expense treatments such as crowns and dental implants. Even high-level private insurance caps dental benefits ($1,600 on Medibank Private’s top cover), and the government’s new scheme for children caps benefits at $1,000 per child over two years.
Does the current fee-for-service model work?
For most insurance policies, such as car and house insurance, we bear some initial cost ourselves, while the insurer covers large claims. But government support for dental services (apart from what is received in public clinics) operates in a diametrically opposite way. It’s better described as a limited form of subsidised bill payment, rather than as providing any significant safety net.
While this approach can be criticised from a social security or insurance perspective, it conforms to a logic of economic efficiency.
For most services, such as those provided by architects or plumbers, a fee-for-service model operates reasonably well. In health care, however, there are what economists call “information asymmetries”. In other words, your GP or dentist knows more about your needs than you do. Also, when a third-party payer picks up the tab, there’s a tendency for services to be over-used.
That incentive applies to both the provider and the patient, and is kept in check on the supply side when provider numbers are constrained. After all, there is little point in over-servicing if there are many patients in the queue. It’s also kept in check on the demand side if there are significant non-financial costs associated with treatment, such as waiting times, and, for many services, the pain or discomfort associated with therapy.
Getting dental patients through the door
Research tells us that in health care, price is a barrier to an initial consultation. But once consumers receive a diagnosis, they are more inclined to spend on recommended services, despite moderate costs. In policy terms, therefore, it’s important to ease the path to initial consultation. And dentistry has done well to remove the “fear of dentist” barrier to treatment, through improvements in anaesthetics and equipment.
This helps explain the government’s logic in encouraging early intervention. The costs of neglected dental treatment are high, with up to 50,000 annual hospital admissions resulting from preventable dental conditions. Neglected dental care imposes economy-wide costs, including lost productivity, of up to $2bn a year.
Will the new package deliver greater equity?
The new dental package should significantly reduce the costs of neglected treatment by funding all or a significant proportion of the dental care for three target groups: children, those living in rural areas, and low income groups.
But there will remain some in the target group whose costs will exceed the subsidy and some others, who are ineligible for the subsidies and do not have private health insurance, who face unaffordable dental expenses.
This group may be small (there is no hard data) but is likely to include those with multiple health and social problems, including chronic illnesses and homelessness. If the dental needs of these most vulnerable groups cannot be met through this package, it fails the equity test.
In short, the government’s dental initiatives have some immediate equity benefits but they stand up more on the basis of saving public and private costs in the broader economy. They are an attempt to make the best of a fee-for-service model while keeping a cap on the hazard of over-servicing.
Fee-for-service vs salaried providers
Interestingly, the government’s package provides a natural experiment in comparing fee-for-service care with salaried care. It includes a boost in funding for state public dental services for adults on low incomes, whose dentists and technicians already operate on a salaried basis.
Public dental clinics have long waiting lists (400,000 at last count) and waiting times of up to five years in some regions. These waiting lists should shorten with improved funding and a better supply of dental professionals; in fact they are already on a long-term decline. But waiting lists are an inevitable feature of a service provided free at the point of delivery. And, as long as there is discretion in use of services, can never be eliminated.
These state services offer a means to compare the fee-for-service model of dental care with a salaried system, and given the similarity of routine services in both systems, evaluation on the bases of therapeutic outcomes and patient satisfaction should be simple. Salaried services should reduce over-servicing incentives, provided there are not internal performance management systems which reward activity rather than outcomes.
Perhaps the “natural experiment” opportunity is the kindest defence of the Commonwealth’s patchy and incremental approach to health care. But unfortunately there remains a mess of payment systems, a lack of system integration, and little clarity in underlying principles.
This article was co-authored by Jennifer Doggett. Jennifer is a Fellow of the Centre for Policy Development and works as a consultant in the health sector.