tag:theconversation.com,2011:/uk/topics/co-payment-14029/articlesco-payment – The Conversation2016-10-19T10:51:38Ztag:theconversation.com,2011:article/672652016-10-19T10:51:38Z2016-10-19T10:51:38ZIs the government pushing for private health insurance over comprehensive care in the NHS?<figure><img src="https://images.theconversation.com/files/142237/original/image-20161018-15092-1o2zd1q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Theresa May: not in favour of increasing NHS funding.</span> <span class="attribution"><a class="source" href="http://www.epa.eu/politics-photos/diplomacy-photos/croatian-president-kolinda-grabar-kitarovic-visit-photos-53063444">Andy Rain/EPA</a></span></figcaption></figure><p>Theresa May has <a href="https://www.theguardian.com/politics/2016/oct/14/no-extra-money-for-nhs-theresa-may-tells-health-chief">little time</a> for those arguing for NHS funding increases. After all, <a href="http://www.bbc.co.uk/news/uk-politics-34790102">unlike most government departments</a>, NHS funding has increased over recent years, offering protection against inflation at least. Other departments have not been afforded such luxury, and have had to seek efficiency improvements in order to live within their means. The prime minister believes this is possible from her previous experience as <a href="http://www.bbc.co.uk/news/uk-politics-36767844">home secretary</a>.</p>
<p>But the NHS differs from the Home Office in one important respect. Demand for services is fairly constant year-on-year. In contrast, the NHS faces rising demand every year, primarily because more of us are living longer with more long-term health problems. Consequently, funding increases are needed to provide the services to meet this rising demand. </p>
<p>But the NHS is not receiving the funding it needs, the department’s <a href="http://www.publications.parliament.uk/pa/cm201617/cmselect/cmhealth/139/13906.htm#_idTextAnchor031">budget</a> is set to increase by 0.7% in 2017-18, 0.2% in 2018-19 and just 0.1% in 2019-20. These are among the <a href="http://www.kingsfund.org.uk/blog/2016/05/how-does-this-years-nhs-budget-compare-historically">lowest annual increases</a> since the mid-1970s, and do not even match <a href="http://www.bankofengland.co.uk/publications/Pages/inflationreport/2016/aug.aspx">forecast inflation</a>, let alone <a href="https://www.england.nhs.uk/wp-content/uploads/2013/12/cta-tech-Annex.pdf">projected</a> annual increases in NHS demand.</p>
<p>The funding increases are significantly less than the government keeps telling us. Before the last election, all political parties promised that they would raise the NHS budget by £10 billion by the end of the parliamentary term. But the Conservatives have <a href="http://www.parliament.uk/business/committees/committees-a-z/commons-select/health-committee/news-parliament-20151/spending-review-health-social-care-report-published-16-17/">reneged on this promise</a>, committing only £4.5 billion. The government continues to <a href="https://www.theguardian.com/society/2016/may/11/jeremy-hunt-misleading-voters-over-nhs-budget-increase-says-thinktank">mislead the public</a> by saying it is providing the promised amount, with even <a href="https://twitter.com/sarahwollaston/status/787256085761712128">some Conservative MPs</a> growing exasperated by the deceit.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"787256085761712128"}"></div></p>
<p>Funding shortfalls are already having adverse consequences. We’re seeing reductions in the quality of care, with <a href="http://qmr.kingsfund.org.uk/2016/20/data?gclid=CPGan5-l4s8CFdYK0wod5iwHHQ#3-waiting-times">increased waiting times</a> for elective treatment and outpatient appointments and almost all hospitals missing <a href="http://www.bbc.co.uk/news/health-36854557">four-hour targets</a> to see people in A&E departments. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/142239/original/image-20161018-15108-46f2gd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/142239/original/image-20161018-15108-46f2gd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/142239/original/image-20161018-15108-46f2gd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/142239/original/image-20161018-15108-46f2gd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/142239/original/image-20161018-15108-46f2gd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/142239/original/image-20161018-15108-46f2gd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/142239/original/image-20161018-15108-46f2gd.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">Waiting times are getting longer.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-148769519/stock-photo-different-people-sitting-in-a-waiting-room-of-a-hospital.html?src=mybFBh3GFCpqgo9fJw9PWw-1-11">Robert Kneschke/Shutterstock.com</a></span>
</figcaption>
</figure>
<h2>Hidden agenda?</h2>
<p>The government might have a hidden agenda, perhaps simply setting up the NHS for failure in order to encourage people to take out <a href="http://www.bmj.com/content/355/bmj.i5424">health insurance</a>. The Conservatives have tried this before, offering <a href="http://www.york.ac.uk/media/che/documents/papers/occasionalpapers/NHS_white_paper_OP6.pdf">tax relief</a> to encourage purchase of health insurance as part of <a href="http://www.margaretthatcher.org/document/107565">Margaret Thatcher’s</a> 1989 NHS reforms.</p>
<p>If people face long <a href="http://www.sciencedirect.com/science/article/pii/S004727279800108X">waiting times</a>, some might well be encouraged to take out private health insurance, allowing them to jump the queue. Instead of providing comprehensive healthcare, NHS funding might also be restricted to a <a href="http://onlinelibrary.wiley.com/doi/10.1002/hec.2774/full">core set of services</a>, with individuals paying out-of-pocket or taking out supplementary insurance for non-core services, <a href="http://onlinelibrary.wiley.com/doi/10.1002/hec.879/abstract">as in France</a>. Or perhaps the long-term plan is to switch from tax-based funding to a <a href="https://books.google.co.uk/books?hl=en&lr=&id=dQpewBbXn8oC&oi=fnd&pg=PP1&dq=social+health+insurance+system&ots=9ko25jwXlW&sig=RXV_iILpzUySdUk0U9-NFuInzfU#v=onepage&q=social%20health%20insurance%20system&f=false">social insurance model</a>, such as in Germany, the Netherlands and Switzerland. </p>
<p>A move to any of these models would help overcome a fundamental drawback of tax-based funding of the NHS, this being that the amount made available to the health system reflects political preferences. Political choices may not align with popular preferences, which are expressed occasionally and imperfectly through the ballot box. And, as we’ve seen with the <a href="https://theconversation.com/if-you-think-the-nhs-is-going-to-receive-an-extra-8-4-billion-think-again-58333">supposed extra £10 billion</a> promised for the NHS in the Conservative’s 2015 manifesto, electoral promises are not always kept. </p>
<p>In contrast, under insurance-based funding, people have to make regular decisions about how much to spend on their healthcare. They do this every year when it comes to renewing their insurance policies or every time they have to make a co-payment towards the cost of their care. Taken together, these spending decisions give an indication of how much people value the health system. </p>
<p>But insurance has drawbacks of its own. The NHS’s founding principle of universal access to comprehensive care will be undermined. And we’ll likely end up paying more for healthcare not just because we want to, but because insurers find it easier to pass rising costs onto the public rather than challenging providers to control their costs and seek efficiencies. Rising annual insurance premiums partly explain the <a href="http://www.commonwealthfund.org/publications/fund-reports/2016/jan/international-profiles-2015">higher levels of dissatisfaction</a> with the health system in France, Germany, the Netherlands and Switzerland than the UK. Compared to tax-based funding, social insurance raises per capita health spending <a href="https://core.ac.uk/download/pdf/6616004.pdf?repositoryId=153">by 3-4%</a>, but there is no evidence that it delivers superior health outcomes.</p>
<p>So insurance, of whatever form, is unlikely to solve the problems facing the NHS, but merely transfer some of the funding responsibility from government to individuals. Ultimately the NHS is struggling because of the government’s continued failure to meet its election promise to address NHS funding requirements. It needs to be held to account.</p><img src="https://counter.theconversation.com/content/67265/count.gif" alt="The Conversation" width="1" height="1" />
<h4 class="border">Disclosure</h4><p class="fine-print"><em><span>Andrew Street has received project funding from the National Institute of Health Research, the Department of Health's Policy Research Programme, and the European Union. The views expressed are his own.</span></em></p>Theresa May shouldn’t look to France, Germany or Switzerland for alternative healthcare models. They have problems of their own.Andrew Street, Professor, Centre for Health Economics, University of YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/590802016-06-06T04:31:47Z2016-06-06T04:31:47ZRebate freeze will set GPs back $11 per general patient consultation, but they’re likely to charge them more<figure><img src="https://images.theconversation.com/files/125271/original/image-20160606-11611-3nvdyg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The amount doctors are paid for each consultation has traditionally increased year to year to account for the increased cost of care.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-284516555/stock-photo-female-consultant-working-at-desk-in-office.html?src=giW4oKnhqEXqIHFOUyd47A-1-60">Shutterstock</a></span></figcaption></figure><p>Health is shaping up to be one of the major election issues, with proposed changes to Medicare rebates and the Pharmaceutical Benefits Scheme (PBS) potentially costing patients more to receive health care.</p>
<p>Our new research shows that, by the end of June 2020, an average full-time GP will have lost A$109,000 in total income due to the freeze since July 2015. </p>
<p>By July 2019, this GP would need to charge their general patients an A$11.40 co-payment per consultation to make up for their lost income (relative to 2014-15). </p>
<p>Our modelling also shows the Coalition’s proposed increase to the PBS co-payment will most affect pensioners.</p>
<h2>What is the ‘freeze’?</h2>
<p>When GPs bulk-bill their patients, they directly charge the government for the service provided. What GPs are paid for each consultation depends on the <a href="http://www.mbsonline.gov.au/internet/mbsonline/publishing.nsf/Content/Home">Medicare Benefits Schedule</a> (MBS) item charged, with longer and more complex consultations earning them more. A “standard” consultation rebate is A$37.05, while a “long” consultation rebate is A$71.70.</p>
<p>Traditionally, the amount for each item increases year to year to account for the increased cost of care. This is called indexation. Since July 2014, the government has paused or “frozen” this indexation. The government initially planned this freeze to last until 2017-18. </p>
<p>At the time, <a href="https://theconversation.com/high-cost-of-gp-rebate-freeze-may-see-co-payments-rise-from-the-dead-38786">we modelled the effect of this initial freeze</a>. We found that by 2017-18, a bulk-billing GP would have a relative income loss of 7.1% (5.8%-8.5%) compared with their 2014-15 level of Medicare income. </p>
<p>We concluded that if GPs wished to keep bulk-billing their concessional patients (those with a government health care card), they would need to charge their non-concessional patients an A$8.43 (A$6.71-A$10.16) co-payment for each consultation to make up this loss. </p>
<p>The <a href="http://www.health.gov.au/internet/budget/publishing.nsf/Content/budget2016-glance.htm">2016 federal budget</a> extended the freeze until 2020. </p>
<p>Using the same assumptions we used in our previous modelling, we found that by 2019-20, a bulk-billing GP will have had a relative Medicare income loss of 11.6% compared to their 2014-15 income level (assuming a CPI of 2.5% a year). </p>
<p>However, CPI has been lower than earlier projected. The CPI projections in the <a href="http://budget.gov.au/2016-17/content/bp1/download/bp1.pdf">federal budget</a> were 1.25% in 2015-16, 2.0% in 2016-17 and 2.25% in 2017-18. Using these figures and assuming CPI of 2.25% per year in 2018-20, we estimate a relative income loss of 9.4%.</p>
<iframe src="https://datawrapper.dwcdn.net/QYNnp/3/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="430"></iframe>
<p>For an “average” GP (who bills <a href="http://ses.library.usyd.edu.au/bitstream/2123/13765/4/9781743324530_ONLINE.pdf">5,050 consultations a year</a>), this 9.4% income loss will equate to approximately A$26,300 in 2019-20 alone. For an average full-time GP (7,680 consultations a year, assuming 160 consultations per 40-hour week, 48 weeks a year) the loss of relative income will be A$40,000 in 2019-20. </p>
<p>By June 30 2020, a full-time GP will have lost a total of A$109,000 since 2014-15 due to the freeze.</p>
<h2>What does this mean for patients?</h2>
<p>The 9.4% reduction in income may force GPs who bulk-bill to cover their loss by charging general patients (who make up 45.6% of encounters) a co-payment. This co-payment would need to be A$11.40 to maintain 2014-15 levels of income.</p>
<p>Our estimates are conservative as they would be the minimum charge needed to make up for the GP’s lost income. We did not account for: </p>
<ul>
<li>administrative costs in implementing new billing systems</li>
<li>increased bad debt from patients who are charged, but never pay</li>
<li>the previous freeze of fees</li>
<li>lost income when a GP chooses to bulk-bill general patients facing financial hardship.</li>
</ul>
<p>It’s therefore likely that GPs who opt to charge a co-payment will charge more than our estimates. Further, after abandoning bulk-billing, some GPs may take the opportunity to charge more than required to merely recoup their rebate loss.</p>
<p>A poll by <a href="http://www.australiandoctor.com.au/news/latest-news/most-gps-think-rise-in-gap-fees-likely-survey-rev">Australian Doctor</a>, a newspaper for GPs, found that over the next 12 months, almost one-third of the responding GPs said they would charge A$35 or more. More than half the sample said they would charge their general patients A$25 or more for a standard consultation. </p>
<p>In 2013, the Australian Medical Association (AMA) recommended a fee of <a href="https://ama.com.au/ausmed/medicare-lags-further-behind-doctors-forced-increase-fees">A$73</a> for a standard GP consultation. That equates to a co-payment of over A$35 if GPs chose to charge this amount, and even this would only be at 2013 AMA rates.</p>
<p>The freeze is likely to have a greater impact on practices that serve socioeconomically disadvantaged people, as the practices would have to absorb the reduction in gross income, which may not be viable.</p>
<h2>Labor’s alternative</h2>
<p>Isn’t Labor proposing to reverse the freeze? </p>
<p>Well, yes and no. Labor announced it will reintroduce indexation from January 1, 2017. This means the freeze will remain until then. </p>
<p>Prime Minister Malcom Turnbull has dismissed the potential impact of Labor’s proposed increase, <a href="https://www.liberal.org.au/latest-news/2016/05/23/doorstop-premier-new-south-wales-merimbula-new-south-wales">saying</a>:</p>
<blockquote>
<p>If the indexation were to be restored from 1 July, the increase in the benefit paid to doctors would be around 60 cents. 60 cents. And by 2019-20, it would be A$2.50. </p>
</blockquote>
<p>This is true only if you are talking about the rebate for a single “Level B” item (which is below the average rebate per consultation) and if indexation was set at only 1.65% a year, well below the CPI projections in the 2016 federal budget.</p>
<p>A more accurate estimate would be to use the average rebate claimed per consultation (A$50) and use the CPI projections in the budget. This would mean an average increase per consultation of A$1 in 2016-17 and A$4.50 in 2019-20. </p>
<p>Compared with continuing the freeze, the indexation would mean an additional A$34,700 in earnings in 2019-20 alone for an average full-time GP and an additional A$84,400 combined to 2020.</p>
<h2>Changes to the cost of medication</h2>
<p>The government subsidises the cost of important medications through the PBS. General patients currently pay a maximum of <a href="http://www.pbs.gov.au/info/news/2016/01/2016-pbs-co-payment-safety-net-amounts">A$38.30</a> for a PBS-subsided medication and concessional patients pay a maximum of <a href="http://www.pbs.gov.au/info/news/2016/01/2016-pbs-co-payment-safety-net-amounts">A$6.20</a>. These thresholds are indexed yearly, usually in line with CPI.</p>
<p>In the <a href="http://www.budget.gov.au/2014-15/content/glossy/health/html/index.htm">2014 federal budget</a>, the Coalition proposed that these co-payments increase by A$5.00 and A$0.80 respectively – additional to the regular indexation. So far, this proposal has been blocked in the Senate, but associated savings are included in the May 2016 budget. </p>
<p>While it would seem that the A$0.80 increase for concessional patients is small, our <a href="http://sydney.edu.au/medicine/fmrc/beach/bytes/BEACH-Byte-2014-003.pdf">modelling from 2014</a> shows this increase would be larger in dollar terms for concessional patients. Nearly all medications prescribed for concessional patients face this increase, whereas only a fraction of medications prescribed to general patients cost more than the current threshold, so far fewer medications would incur an additional cost. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/125268/original/image-20160606-11611-ri0cts.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/125268/original/image-20160606-11611-ri0cts.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/125268/original/image-20160606-11611-ri0cts.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=263&fit=crop&dpr=1 600w, https://images.theconversation.com/files/125268/original/image-20160606-11611-ri0cts.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=263&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/125268/original/image-20160606-11611-ri0cts.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=263&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/125268/original/image-20160606-11611-ri0cts.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=331&fit=crop&dpr=1 754w, https://images.theconversation.com/files/125268/original/image-20160606-11611-ri0cts.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=331&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/125268/original/image-20160606-11611-ri0cts.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=331&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>An average 45- to 64-year-old would pay an additional A$12.99 a year if they were a general patient and A$16.59 if a concessional patient. </p>
<p>The patients most impacted by the PBS co-payment increase will be aged pensioners, who on average would see their co-payment for medications increase by A$29.65 a year.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/125263/original/image-20160606-11600-15ap30y.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/125263/original/image-20160606-11600-15ap30y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/125263/original/image-20160606-11600-15ap30y.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=276&fit=crop&dpr=1 600w, https://images.theconversation.com/files/125263/original/image-20160606-11600-15ap30y.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=276&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/125263/original/image-20160606-11600-15ap30y.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=276&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/125263/original/image-20160606-11600-15ap30y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=347&fit=crop&dpr=1 754w, https://images.theconversation.com/files/125263/original/image-20160606-11600-15ap30y.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=347&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/125263/original/image-20160606-11600-15ap30y.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=347&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>These estimates are conservative as they only include the number of instances where a script is written and do not include any repeats scripts provided on these occasions.</p>
<p>Labor has announced <a href="http://www.abc.net.au/news/2016-05-22/election-2016-shorten-to-make-pbs-promise-in-sydney-seat-of-reid/7435076">it will not introduce this increase</a>, but will allow the regular threshold indexation (which both parties support).</p><img src="https://counter.theconversation.com/content/59080/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Christopher Harrison has volunteered for the Greens.</span></em></p><p class="fine-print"><em><span>Helena Britt receives funding from DoH, multiple pharmaceuitical companies and Government instrumentalilites, all with research contracts with the University of Sydney, which allow complete intellectual freedom in publication of results from the BEACH program.
I am an Honorary Member of the RACGP.</span></em></p><p class="fine-print"><em><span>Clare Bayram 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>By 2020, the average GP will have lost A$109,000 in income due to the rebate freeze. To make up for this lost income, GPs will need to charge an A$11.40 co-payment per consultation.Christopher 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 SydneyHelena Britt, Associate professor, Director of the Family Medicine Research Centre, Sydney School of Public Health, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/596612016-05-20T02:01:17Z2016-05-20T02:01:17ZConfused about the Medicare rebate freeze? Here’s what you need to know<p>The Australian Labor Party <a href="http://www.abc.net.au/news/2016-05-19/labor-to-unveil-$12b-medicare-rebate-freeze-rollback/7426958">announced</a> yesterday that it will lift the Medicare rebate freeze if elected to office in the July federal election. We know health issues feature strongly in <a href="http://www.abc.net.au/news/2016-05-13/election-2016-policy-big-issues/7387588">election debates</a>, but what does this proposal actually mean for most of us? </p>
<h2>How Medicare works</h2>
<p>Medicare is our public health insurance system and funds a range of services such GP visits, blood tests, x-rays and consultations with other medical specialists. </p>
<p>The <a href="http://www.mbsonline.gov.au/internet/mbsonline/publishing.nsf/Content/Home">Medicare Benefits Schedule</a> (MBS) lists the services the Australian government will provide a Medicare rebate for. Medicare rebates do not cover the full cost of medical services and are typically paid as a percentage of the Medicare schedule fee. </p>
<p>GPs who bulk bill agree to charge the Medicare schedule fee and are directly reimbursed by government. </p>
<p>Those who don’t bulk bill are free to set their own prices for services. Patients pay for their treatment and receive a rebate from Medicare. There is often a gap between what patients pay for services and the amount that Medicare reimburses (A$37 for a GP consultation, for example). This gap is known as an out-of-pocket expense, as the patient is required to make up the difference out of his or her own pocket. </p>
<p>Under an indexing process, the Medicare Benefits Schedule fees are raised according to the Department of Finance’s <a href="http://www.healthandlife.com.au/wp-content/uploads/2015/10/Out-in-the-cold_-MBS-freeze-hits-today.pdf">Wage Cost Index</a>, a combination of indices relating to wage levels and the <a href="http://www.treasury.nt.gov.au/Economy/EconomicBriefs/Pages/ConsumerPriceIndex.aspx">Consumer Price Index</a>. </p>
<p>Organisations such as the Australian Medical Association (AMA) have long argued this process is insufficient and Medicare schedule fees have not kept up with <a href="https://ama.com.au/system/tdf/documents/Guide%20for%20Patients%20on%20How%20the%20Health%20Care%20System%20Funds%20Medical%20Care_7.pdf?file=1&type=node&id=40914">“real”</a> increases in costs to medical practitioners of delivering services. The rebate freeze compounds this financial challenge by continuing to keep prices at what the AMA and others argue are <a href="https://ama.com.au/system/tdf/documents/Guide%20for%20Patients%20on%20How%20the%20Health%20Care%20System%20Funds%20Medical%20Care_7.pdf?file=1&type=node&id=40914">“unsustainable levels”</a>. </p>
<h2>Where did the freeze come from?</h2>
<p>Although the Coalition is largely associated with this issue, Labor first introduced the Medicare rebate freeze in 2013 as a “temporary” measure, as part of a A$664 million budget savings plan. The AMA, the Coalition and others <a href="http://www.abc.net.au/news/2013-10-16/medicare-rebate-freeze-row-as-patients-face-increasing-costs/5026996">loudly criticised</a> the then government for the freeze. </p>
<p>On being elected to office, the Coalition put forward a number of proposals to reform the payment of health services and deal with rapidly rising health costs. Health expenditure had grown <a href="https://theconversation.com/tough-choices-how-to-rein-in-australias-rising-health-bill-13658">74% over the past decade</a> and was considered unsustainable in the long term. Primary care and medical services costs (including Medicare) had grown by more than 60%, representing an <a href="https://theconversation.com/tough-choices-how-to-rein-in-australias-rising-health-bill-13658">A$11 billion increase</a>.</p>
<p>The Coalition government proposed a number of ill-fated reforms including: </p>
<ul>
<li>a A$7 co-payment for GP, pathology and imaging services that would offset a A$5 reduction in Medicare rebates</li>
<li>a ten-minute minimum for standard GP consultations</li>
<li>a A$5 reduction in the Medicare rebate for “common GP consultations”.<br></li>
</ul>
<p>The retraction of all these proposals led Prime Minister Tony Abbott to declare co-payments <a href="http://www.abc.net.au/news/2015-03-03/tony-abbott-declares-gp-co-payment-dead,-buried-and-cremated/6275912">“dead, buried and cremated”</a>.</p>
<p>What did manage to stick was a continuation of the indexation freeze, initially for four years starting in July 2014 and further extended in the <a href="https://theconversation.com/federal-budget-2016-health-experts-react-58638">recent federal budget</a> to 2020. It has been estimated this will save <a href="https://ama.com.au/nomedicarefreeze">A$2.8 billion</a> from the health bill over the six years. </p>
<h2>Impact of the freeze</h2>
<p>The extended freeze means GPs and other medical specialists will be reimbursed the same amount for delivering health services in 2020 as they were in 2014. Doctors will pay more for their practices, staff, medical products, utilities and just about anything else that goes into running a medical practice. But the amount paid for medical services will remain static.</p>
<p>At the time the Coalition extended the freeze in 2014, <a href="https://theconversation.com/high-cost-of-gp-rebate-freeze-may-see-co-payments-rise-from-the-dead-38786">research</a> showed this move would have a greater impact on GP income over the initial four-year freeze than the proposed $A5 reduction in the GP rebate would have produced. In other words, failing to lift the reimbursement amount would ultimately prove more detrimental to GP funding than actually reducing the rebate amount. </p>
<p>Opponents to these changes argue this leaves medical services underfunded and may ultimately mean that additional payments will be passed on to patients. AMA president Brian Owler estimates the extended freeze will lead to each GP visit costing <a href="https://theconversation.com/shorten-government-would-end-freeze-on-medicare-rebates-59655">A$20 more</a> for patients. Some commentators referred to this as the introduction of the co-payment by the <a>“back door”</a>. </p>
<p>Some argued it could reduce the number of bulk-billing practices. Yet levels have risen steadily since 2013 to an all-time high of <a href="http://www.australiandoctor.com.au/news/news-review/why-are-gps-still-bulk-billing-at-record-levels">84.3%</a>. </p>
<p>What about costs passed on to patients? The AMA estimates suggest that at present the Medicare rebate (A$37) covers only about 50% of the <a href="http://www.afr.com/news/politics/election/federal-election-2016-bill-shorten-attacks-medicare-freeze-as-backdoor-tax-20160515-govfi2">recommended consulting fee</a>. This means that either medical practitioners cover the remainder of the costs themselves or pass this on to patients.</p>
<p>The impact of the extended freeze goes beyond simply reducing the gross income of GPs, or patients having to pay more for their health services. There are profound implications for equity. The effects of these types of policies are typically regressive in that the impact is often greatest on the <a>most disadvantaged</a> within our community. </p>
<p>Australia already has a large gap between the quality and timeliness of the public and private health systems. Changes such as this could potentially exacerbate this gap, by reducing the number of bulk-billing practices. This has the potential to create a two-tier system, where those who can pay receive the best care and those who can’t pay delay or avoid treatment, which ultimately exacerbates their condition. </p>
<p>The Coalition expects GPs and medical professionals to pass on costs to the patient, thereby sending <a href="https://theconversation.com/gp-co-payments-why-price-signals-for-health-dont-work-28857">“price signals”</a> about health services, with the aim of reducing the numbers of “unnecessary” consultations. However, the international evidence shows that increased co-payments for patients may <a href="https://www.mja.com.au/journal/2014/200/7/copayments-general-practice-visits">save a little money</a> in the short term, but can ultimately increase <a href="http://www.abc.net.au/am/content/2016/s4465085.htm">the number of people accessing hospitals</a> and other acute services, which are more expensive to run. </p>
<h2>Labor’s bid to end the freeze</h2>
<p>Labor’s announcement that it will end the freeze and restore indexation from January 1, 2017, has been costed at A$2.4 billion by 2019-20 and A$12.2 billion over a decade. </p>
<p>The AMA and other medical professional groups that have argued against these measures have welcomed this announcement. And Labor will no doubt be pleased to have such powerful interest groups on side (for now at least). But critics will ask where this money will be found in the budget and what will need to give in return. </p>
<p>Ultimately, just unfreezing the Medicare rebate will not make Australian health services more sustainable in the long term. There is an urgent need to reconsider how we incentivise and reimburse medical practitioners for the services they deliver and how we invest in preventive measures to avoid people becoming sick in the first place. </p>
<p>At a time when we see significant increases in levels of chronic and complex diseases, we need a health system that is designed to serve these issues and not simply episodic periods of illness. Without a broader mandate for change within the health system it is unlikely that this promise alone will lead to better health services for all of our community.</p><img src="https://counter.theconversation.com/content/59661/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Helen Dickinson receives funding from Federal Department of Health </span></em></p>Labor will lift the rebate freeze from 2017, while under the Coalition, GPs will be paid the same amount for delivering health services in 2020 as they were in 2014. So what does this mean for patients?Helen Dickinson, Associate Professor, Public Governance, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/383112015-03-03T12:01:55Z2015-03-03T12:01:55ZMedicare co-payment: a case study in policy implosion<figure><img src="https://images.theconversation.com/files/73599/original/image-20150303-31852-1u0iz33.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The trouble is that when Prime Minister Tony Abbott periodically seeks absolution he doesn't necessarily improve.</span> <span class="attribution"><span class="source">AAP/Lukas Coch</span></span></figcaption></figure><p>Tony Abbott was in full confessional mode after Tuesday’s formal interment of the Medicare co-payment.</p>
<p>As a former health minister, “I should have known better than to attempt health reform without the strong co-operation and support of the medical profession”, Abbott told parliament.</p>
<p>“I accept chastisement,” Abbott said. “But it is much better to learn than to be obstinate.”</p>
<p>Indeed. That should have applied to a lot of what the prime minister has done since the election. But the trouble is that when he periodically seeks absolution he doesn’t necessarily improve. Does he really grasp the need for good process?</p>
<p>The Medicare co-payment has been a spectacular case study in bad policymaking, marked for a long time by breathtaking arrogance and hubris on the government’s part.</p>
<p>And while the co-payment might be, as Abbott said, using his own recycled phrase, “dead, buried and cremated”, the government’s policy on Medicare is still a work in progress, with negotiations ongoing with the Australian Medical Association and the government preparing for a fresh search for savings through a forensic review of the Medicare schedule.</p>
<p>The co-payment, announced in the budget, was driven by a combination of ideology and budget needs. The government was convinced that people capriciously overused doctors’ services.</p>
<p>Abbott and his office, including chief of staff Peta Credlin, had a major hand in the design, including the level, of the co-payment. Credlin did not think A$7 was unreasonable. The Medicare package, which also included a freeze on the indexation of rebates, was to save $3.5 billion over the budget years.</p>
<p>A modest, properly targeted co-payment would have been a reasonable idea. A $7 charge (potentially adding up to a substantial amount for a patient needing multiple tests) without exemptions for the needy, ignored political realities such as a hostile Senate, an inevitable public backlash, and the power of the medical profession to mobilise opposition.</p>
<p>But the government dug in for months, until its December rethink, which reduced the co-payment to $5, restructured the rebate for short GP consultations, and extended the rebate freeze until 2018.</p>
<p>Only weeks later, with all hell breaking loose ahead of the Queensland election, Abbott summoned his new health minister Sussan Ley from her holiday. The change for short visits was aborted, and Ley embarked on intensive consultations with the doctors.</p>
<p>That’s the brief history. Well before its December-January changes, the government asked the Australian Medical Association (AMA) to prepare an alternative plan, then snorted in derision at what it produced. Later on, the Prime Minister’s Office had a PR disaster when it tried to brief out proposed alterations.</p>
<p>Abbott absolutely should have known better all the way through. His first big dealings as health minister with the AMA were with its then-president Bill Glasson (who ran in 2013 for the Liberals against Kevin Rudd in Griffith, and contested the subsequent by-election). Glasson extracted a good deal on medical indemnity.</p>
<p>The government was a touch unlucky that at the start of the the co-payment row, the AMA – often seen as one of the most powerful trade unions in the country – got a new president.</p>
<p>Brian Owler, whose day job involves using the scalpel on patients’ heads, takes up blunter instruments when dealing with politicians. In the medical trade, they claim decisiveness is a surgeon’s trait. He is a capable and indefatigable media performer, had something to prove to his members and was more than a match for a government on the ropes.</p>
<p>As Owler said on Tuesday, the co-payment “has been dead for some time” – it was only a matter of pronouncing its passing.</p>
<p>Abbott did not attend the burial. He was more comfortable flanked by eight flags and the chief of the Australian Defence Force, Air Chief Marshal Mark Binskin and Defence Minister Kevin Andrews, announcing more Australian troops for Iraq. Ley’s news conference followed immediately. She was alone.</p>
<p>Dropping the co-payment plan has lost another $900 million from the budget.</p>
<p>All that’s left now the government has abandoned the $5 cut in the Medicare rebate and the $5 co-payment is the freeze on the indexation of the rebate, which is worth $1.3 billion if it runs through to 2018. But its length is up for grabs in further negotiations about ways to make savings that Ley will have.</p>
<p>Owler – who meets Abbott on Thursday – was already warning on Tuesday that a freeze until 2018 would mean increased costs for patients.</p>
<p>Ley has an uphill battle in keeping up with the doctors. Not only is she new to the area, but so is her departmental head Martin Bowles, who has recently arrived from Immigration.</p>
<p>Ley struggled on Tuesday with trying to hang on to the idea that a price signal was needed while she was abandoning the specific signal represented by the co-payment.</p>
<p>“It’s definitely good policy to put the right price and value signals in health to make sure that, number one, people value the service they get from doctors … and also that they make that modest contribution according to their capacity to pay, and those who can pay a bit more are asked to pay a bit more. It’s really that simple,” Ley told her news conference.</p>
<p>It’s not really that simple however, as was obvious when on Sky Abbott’s dead-and-buried line was stacked up against her declaration that the policy intent remained a good one. “So which is it?” Ley was asked.</p>
<p>“Well, it is both because what we want to make sure is that to keep Medicare sustainable, we find ways for those who can contribute more to the cost of seeing a doctor to pay a modest contribution. And at the moment, bulk billing rates are too high, too many people who can afford to make that modest contribution are in fact paying nothing.”</p>
<p>How a price signal is sent to the patient while the co-payment remains in ashes is a mystery, and how much the government can get in its new hunt for savings is a question mark.</p>
<p>So at the end of it all, the government is left with no price signal, and until it finds further efficiencies, no Medicare savings policy at all except the rebate freeze that the AMA is determined to chip away at. Not a bad effort at policy implosion.</p><img src="https://counter.theconversation.com/content/38311/count.gif" alt="The Conversation" width="1" height="1" />
Tony Abbott was in full confessional mode after Tuesday’s formal interment of the Medicare co-payment.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/383022015-03-03T10:45:00Z2015-03-03T10:45:00ZMedicare co-payment timeline<p>After a couple of days of speculation and hints, Health Minister Sussan Ley has announced the government is dropping its plan to introduce a co-payment for visiting GPs. The policy, announced in last year’s budget, reflected the government’s determination to introduce a price signal for health care and went through several incarnations before its much-anticipated death.</p>
<p><em>To navigate the timeline below, hover your mouse on the right (and on the left to move back).</em></p>
<hr>
<iframe src="https://s3.amazonaws.com/cdn.knightlab.com/libs/timeline/latest/embed/index.html?source=1davYjDslyIrR1n-OyJLjQ9sDttGERien3gQH5mW59Mk&font=Bevan-PotanoSans&maptype=toner&lang=en&height=650" width="100%" height="650" frameborder="0"></iframe><img src="https://counter.theconversation.com/content/38302/count.gif" alt="The Conversation" width="1" height="1" />
Finally abandoned on March 3, 2015, the GP co-payment has been something of an albatross around the Coalition government’s neck. Here are some highlights from the 14-month old policy’s short life.Reema Rattan, Global Commissioning EditorFron 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/374822015-02-17T19:04:42Z2015-02-17T19:04:42ZHidden cost of increasing drug co-payment poses a high risk<figure><img src="https://images.theconversation.com/files/72228/original/image-20150217-18500-7fa16r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A rise in the co-payment for medicines may lead to an increase in the rates of discontinuation for some drugs.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/58725530@N07/5652875366/in/photolist-4iUhsN-4iUgZW-4iUgB9-3PeHtR-9BwsUo-5RWzu2-5HSZ9g">Michael Cheng</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>Apart from proposing a co-payment for visiting doctors, the last federal budget also contained a proposal to increase the level of co-payments for medications. The government seems to have given little attention to the effect this policy would have on the long-term health of the nation.</p>
<p>Australians buying medicines listed on the <a href="http://www.pbs.gov.au/pbs/home">Pharmaceutical Benefits Scheme</a> (PBS) have been required to make a contribution to their cost since the 1960s. Currently, many of us <a href="http://www.pbs.gov.au/info/healthpro/explanatory-notes/front/fee">pay the first A$37.70</a>. Pensioners, the unemployed and those receiving a range of disability benefits have access to a health-care concession card, which reduces this co-payment to A$6.10. </p>
<p>Following <a href="http://www.ncoa.gov.au/report/phase-one/part-b/7-4-the-pharmaceutical-benefits-scheme.html">recommendations of the National Commission of Audit</a>, the <a href="http://www.humanservices.gov.au/corporate/publications-and-resources/budget/1415/measures/health-matters-and-health-professionals/35-90114">2014 budget contained a A$5 increase</a> in the general level of co-payments, from A$37.70 to A$42.70. To date this budget measure has not been passed by the Senate. In early December 2014, <a href="http://www.sbs.com.au/news/article/2014/12/04/pbs-co-pay-delay-cost-millions-dutton">then-health minister Peter Dutton indicated</a> the government intended to legislate the change in 2015.</p>
<p>Our research suggests that, if implemented, this rise may lead to an increase in the rates of discontinuation for some medications. </p>
<h2>Unknown impact</h2>
<p>Australian studies on the impact of co-payments on the use of medications have been surprisingly rare. <a href="http://onlinelibrary.wiley.com/doi/10.1002/pds.1670/abstract;jsessionid=57D0CB1010A8DD3F7490D3CB21D7691C.f03t02">Research published in 2008</a>, which used Australia-wide PBS prescribing information, showed that co-payment increases a decade ago resulted in a “significant decrease in dispensing volumes” for many types of medications.</p>
<p>But there hasn’t been much direct research on the impact of the higher out-of-pocket costs on long-term use of common medicines by people who don’t have a concession card. This may be because this research requires data-linkage to track individual usage of medications over time. </p>
<p>In a <a href="http://www.healthpolicyjrnl.com/article/S0168-8510(15)00006-8/abstract">study to be published in the international journal Health Policy</a>, we focused on the impact of non-concessional co-payments on drug use using information collected for the Australian Hypertension and Absolute Risk Study
(<a href="https://www.mja.com.au/journal/2010/192/5/cardiovascular-risk-perception-and-evidence-practice-gaps-australian-general">AusHEART</a>). The research involved collecting clinical information on patients aged above 55 years when visiting a GP, in order to assess the perception and management of cardiovascular disease risk in Australian primary care.</p>
<p>Our study focused on a subset of 1,260 people who were taking cholesterol-lowering drugs known as statins, which are among the most commonly used in Australia. There’s <a href="http://www.cochrane.org/CD004816/VASC_statins-for-the-primary-prevention-of-cardiovascular-disease">compelling evidence that statins are effective</a> for preventing cardiovascular disease, and that non-adherence leads to <a href="http://journals.lww.com/lww-medicalcare/Abstract/2005/06000/Impact_of_Medication_Adherence_on_Hospitalization.2.aspx">increased hospitalisation rates and greater medical costs</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=540&fit=crop&dpr=1 600w, https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=540&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=540&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=679&fit=crop&dpr=1 754w, https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=679&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=679&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">Authors</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>We linked clinical information collected during GP consultation with PBS administrative records on long-term medication use in order to find out what caused these people to stop taking the pills. We found that those who didn’t have a concession card were around 60% more likely to stop taking the medication. Along with being a smoker and a new statin user, this was one of only three factors that had a significant impact on long-term use.</p>
<h2>Which way forward?</h2>
<p>Many types of statin medication have historically cost much more in Australia than other countries. For instance, a <a href="https://www.mja.com.au/journal/2010/193/3/expiry-patent-protection-statins-effects-pharmaceutical-expenditure-australia-0">2010 study</a> comparing the cost of Simvastatin in different places found Australia paid more than four times more for this drug than in England.</p>
<p>To address this discrepancy, the Rudd government introduced a policy of <a href="http://www.pbs.gov.au/info/news/2010/11/Expanded_and_Accelerated_Price_Disclosure">accelerated price disclosure</a> in 2010. The policy bases future drug prices on actual cost to pharmacists. As these are often much lower than official prices, the cost of many generic drugs has been falling. </p>
<p>While the cost of statins in Australia is still higher than in other countries such as England and New Zealand, many of these medications now cost less than the non-concessional level of co-payment; 40mg Simvastatin, for instance, is just under A$12. </p>
<p>Falls in prices like this reduce the out-of-pocket costs for general users, which is likely to improve adherence to medications. Drugs like statins generally require long-term use to effectively reduce cardiovascular disease and prevent premature death. Our study shows increases in drug prices are likely to have the opposite effect. And <a href="http://onlinelibrary.wiley.com/doi/10.1002/pds.1670/abstract;jsessionid=57D0CB1010A8DD3F7490D3CB21D7691C.f03t02">the 2008 study</a> mentioned above shows this may hold true for other medications as well. </p>
<p>Such findings have implications for future government policies regarding co-payments. Clearly, when considering a policy that will increase drug costs, the government needs to consider more than just direct financial impact. Potential downstream costs, such as changes in number of hospitalisations, and health impacts, such as the policy’s effect on the risk of premature mortality, should also be considered.</p>
<p>Our results suggest that reducing the cost of statin medications may not only save taxpayers money, it may also save their lives.</p><img src="https://counter.theconversation.com/content/37482/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Philip Clarke receives funding from the National Health and Medical Research Council.</span></em></p><p class="fine-print"><em><span>Emma Heeley, John Chalmers, and Rachel Knott 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>Apart from proposing a co-payment for visiting doctors, the last federal budget also contained a proposal to increase the level of co-payments for medications. The government seems to have given little…Rachel Knott, Research Fellow in Health Economics, Monash UniversityEmma Heeley, Senior Research Fellow (Neurological), George Institute for Global HealthJohn Chalmers, Emeritus Professor at The University of Sydney & Senior Director, George Institute for Global HealthPhilip Clarke, Professor of Health Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/371112015-02-15T19:34:51Z2015-02-15T19:34:51ZFor real health reform, turn the spotlight on specialists’ fees<figure><img src="https://images.theconversation.com/files/71939/original/image-20150213-13215-1mnh5o4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">We need more transparency around specialist charges so referring GPs and patients can make informed decisions.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/theenmoy/9209914881">Theen Moy/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 impact of specialist fees on government and patient budgets has received little reform attention. This is despite the government’s push for controls in health-care spending and <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/Australian_healthcare/Report">growing evidence</a> of the affordability problems faced by sick Australians. </p>
<p>A high-quality specialist sector is an essential component of an effective health-care system; patients rely on specialist doctors when they are sickest and most vulnerable. And when their treatment inevitably involves expensive treatment options. But specialist care in the community is increasingly hard for many Australians to access, due to geography and cost.</p>
<p>In 2011-12, the number of people who <a href="http://www.nhpa.gov.au/internet/nhpa/publishing.nsf/Content/Report-Download-Healthy-Communities-Australians-experiences-with-access-to-health-care-in-2011%E2%80%9312/$FILE/NHPA_HC_Report_Patient_Exp_June_2013.pdf">reported</a> seeing a medical specialist in the preceding year varied nearly two-fold across Medicare Local populations nationally, from 22% to 42%. But there was no strong association between health status and seeing a specialist. And up to 14% of people <a href="http://www.nhpa.gov.au/internet/nhpa/publishing.nsf/Content/Report-Download-Healthy-Communities-Australians-experiences-with-access-to-health-care-in-2011%E2%80%9312/$FILE/NHPA_HC_Report_Patient_Exp_June_2013.pdf">reported</a> they had delayed seeing a specialist because of cost.</p>
<h2>Keeping track</h2>
<p>Many specialists work in both community and hospital settings, sometimes in both public and private hospitals. In private practice, they bill Medicare on a fee-for-service basis. They also negotiate with private health insurance funds to deliver no-gap or known-gap services to privately insured patients. </p>
<p>All this means that tracking specialists’ fees, practice costs, their time and how it’s integrated with that of the doctors-in-training they oversee, their reimbursements from Medicare and private health insurance, and the quality and outcomes from their services is just about impossible. </p>
<p><a href="http://www.medicareaustralia.gov.au/provider/medicare/mbs.jsp">Medicare Australia</a> provides some data on specialist services, with specific data for obstetrics, anaesthesiology, operations and assistance at operations. But this is data developed solely for administrative and reimbursement mechanisms. Out-of-pocket costs, once provided, are no longer included. </p>
<p>Theoretically, it’s possible to request linked Medicare data for analysis; in practice it’s expensive and time-consuming. There appears to be little interest from the federal bureaucracy in understanding what’s happening in this section and why.</p>
<h2>A suitable guide</h2>
<p>In 1969, the Gorton government introduced the notion of “<a href="http://www.aams.org.au/contents.php?subdir=library/history/funding_prof_med_au/&filename=index">the most common fee</a>” – a list based on the fees most commonly charged for over 1,000 medical services. This forerunner of the scheduled fee list was to serve as a guide for health insurance. And each benefit was set so the amount charged to patients should not exceed A$5 (A$1.20 for GP visits).</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/71943/original/image-20150213-13186-lrls0j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/71943/original/image-20150213-13186-lrls0j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/71943/original/image-20150213-13186-lrls0j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/71943/original/image-20150213-13186-lrls0j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/71943/original/image-20150213-13186-lrls0j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/71943/original/image-20150213-13186-lrls0j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/71943/original/image-20150213-13186-lrls0j.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">Many specialists work in both community and hospital settings.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/proimos/6870109454">Alex Proimos/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<p>It’s here the origins of higher pay for specialists over general practitioners, and for procedures over consultations, are found.</p>
<p>Under Medicare, the schedule fees for new and updated items are set by a tripartite tribunal comprising representatives from government, the profession and the community. But there’s never been a legal obligation on doctors to charge the set fee. And the <a href="https://ama.com.au/media/ama-speech-ama-president-aprof-brian-owler-private-healthcare-australia%20">Australian Medical Association</a> has maintained the right of doctors to set their own fees, taking account of their practice costs and earning a living that’s commensurate with their years of training. </p>
<p>The consequences have been predictable and inevitable. And they’ve been made worse by the failure of successive governments to update and modernise the fee schedule, and to index fees appropriately. </p>
<h2>Free for all</h2>
<p>As far back as 1971 the <a href="http://www.aams.org.au/contents.php?subdir=library/history/funding_prof_med_au/&filename=indexhttp://example.com/">media were reporting</a>:</p>
<blockquote>
<p>particularly in wealthier areas, fewer than a third of doctors are still charging the most common fee… Patients are again being forced to pay what the traffic will bear. </p>
</blockquote>
<p>The constraint the Medicare Benefit Schedule (admittedly not always successfully) once imposed on specialists’ fees has long disappeared; even the more generous AMA fee schedule, which is indexed annually, is ignored by many. The Royal Australasian College of Surgeons <a href="http://newsstore.smh.com.au/apps/viewDocument.ac;jsessionid=4A86E295F9327675DFC1F79EB2C1C59C?sy=afr&pb=all_ffx&dt=selectRange&dr=1month&so=relevance&sf=text&sf=headline&rc=10&rm=200&sp=brs&cls=631&clsPage=1&docID=AGE1501242DL9N6KI89Q">acknowledges</a> some specialists charge as much as ten times the recommended fee. </p>
<p>Unlike general practice, specialists receive no incentives to bulk bill even the most needy of their patients. The result is that bulk billing rates are extremely low (around 27% of specialist services are bulk billed) and patients are paying increasingly large out-of-pocket sums. </p>
<p>In <a href="http://www.smh.com.au/national/health/bulkbill-increase-has-come-at-a-cost-20120523-1z5m0.html">2012</a>, the average out-of-pocket cost to see a specialist was A$58.20, but this hides a huge variation in cost by both speciality and geography. About <a href="http://www.smh.com.au/national/health/bulkbill-increase-has-come-at-a-cost-20120523-1z5m0.html">41% of obstetrics services</a> are bulked bill, for instance, but the average out-of-pocket cost is A$218. </p>
<h2>Not getting better</h2>
<p>The <a href="http://www.heraldsun.com.au/news/national/medicare-rebate-only-16-per-cent-of-amas-recommended-hospital-fee/story-fndo48ca-1226537468794?nk=62c97bde142c6ced2139dacfb1913545">Medicare rebate now covers</a> as little as 16% of the AMA-recommended fee for some common private hospital procedures. Patients with gap cover for specialist Medicare services delivered in private hospitals are largely protected thanks to the generosity of private health insurance fee schedules and the industry’s negotiating power. </p>
<p>But the amount the doctor receives varies tremendously depending on the private health insurance fund, and hospitals and the public are unaware of these differences. There are also <a href="http://www.news.com.au/lifestyle/health/specialists-accused-of-charging-different-rates-based-on-what-a-patient-looks-like/story-fneuz9ev-1226609529552">accusations</a> that some specialists charge people who have private health insurance more, based on their apparent ability to bear the additional cost. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/71944/original/image-20150213-13219-1dwdt88.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/71944/original/image-20150213-13219-1dwdt88.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/71944/original/image-20150213-13219-1dwdt88.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/71944/original/image-20150213-13219-1dwdt88.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/71944/original/image-20150213-13219-1dwdt88.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/71944/original/image-20150213-13219-1dwdt88.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/71944/original/image-20150213-13219-1dwdt88.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">The Royal Australasian College of Surgeons acknowledges some specialists charge as much as ten times the recommended fee.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/68751915@N05/6793817419">401(K) 2012/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>There’s a lot of anecdotal evidence about what this means for sick Australians and for GPs who struggle to find specialists to accept their patients. It has been <a href="http://www.abc.net.au/news/2014-05-13/annual-specialist-referrals-wasting-millions-say-gps/5447822">reported</a> that some specialists require regular patients to go back to their GPs for new referrals annually. This rejection of “indefinite referral” is not just an impost on busy GPs, it also facilitates the increased charge for a “new” visit. </p>
<p>The <a href="https://ama.com.au/ausmed/patients-face-hip-pocket-pain-specialist-care">AMA says</a> the situation will only get worse due to the freeze on fee indexation and the new safety net arrangements in the 2014-15 Budget. </p>
<p>The last time an Australian government moved to tackle out-of-pocket costs for specialist fees was when Tony Abbott was health minister and introduced the <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/Review_%20Extended_Medicare_Safety_Net/$File/ExtendedMedicareSafetyNetReview.pdf">Extended Medicare Safety Net</a>. This provides an additional rebate for people who have out-of-pocket costs for Medicare-eligible out-of-hospital services once an annual threshold in out-of-pocket costs has been reached. </p>
<p>Abbott’s approach was recognisably flawed from the beginning. And it quickly led to inappropriate fee increases by some specialists, forcing successive governments to tinker with the policy to limit cost blow-outs. The majority of safety net benefits now flow to well-off Australians; the policy serves as a salutary lesson on the pitfalls of ad-hoc policy-making. </p>
<h2>A sensible approach</h2>
<p>So what should be done? The list of issues to be tackled includes:</p>
<p>• More publicly available data and analyses to inform an expert, well-resourced and on-going <a href="http://www.msac.gov.au/internet/msac/publishing.nsf/content/reviews-lp">review</a> of the items and fees on the Medicare Benefits Schedule. To date only about 3% of these items has been reviewed since 2010. </p>
<p>• Investment in a <a href="http://www.nps.org.au/media-centre/media-releases/repository/choosing-wisely-australia-launching-in-2015">Choosing Wisely</a> focus to assess low- and high-value services and an education and awareness program to ensure that the findings are acted upon. The medical colleges can play a key role here.</p>
<p>• Incentives to address geographic need and affordability. The current situation has led to <a href="http://www.aihw.gov.au/WorkArea/DownloadAsset.aspx?id=10737422169">major inequities</a> in access to health-care services. </p>
<p>• A program to tackle <a href="http://www.safetyandquality.gov.au/our-work/variation-in-health-care/">inappropriate variations</a> in services. This will deliver not just cost savings but improved quality.</p>
<p>• More transparency around specialist charges so referring GPs and patients can make informed decisions. This might go so far as to <a href="http://newsstore.smh.com.au/apps/viewDocument.ac;jsessionid=4A86E295F9327675DFC1F79EB2C1C59C?sy=afr&pb=all_ffx&dt=selectRange&dr=1month&so=relevance&sf=text&sf=headline&rc=10&rm=200&sp=brs&cls=631&clsPage=1&docID=AGE1501242DL9N6KI89Q">name and shame</a> the extreme outliers. </p>
<p>As Jennifer Doggett and I have <a href="http://apo.org.au/research/tackling-out-pocket-health-care-costs-discussion-paper-0">previously proposed</a>, tackling these issues will require strong leadership, considerable discussion with all stakeholders and a multifaceted approach. Failure to boldly address these admittedly difficult issues will disadvantage patients, discourage doctors and leave Australia stuck with an inefficient specialist health-care system.</p><img src="https://counter.theconversation.com/content/37111/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>The impact of specialist fees on government and patient budgets has received little reform attention. This is despite the government’s push for controls in health-care spending and growing evidence of…Lesley Russell, Adjunct Associate Professor, Menzies Centre for Health Policy, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/354232014-12-12T00:18:03Z2014-12-12T00:18:03ZVIDEO: Michelle Grattan on Credlin and Bishop<figure><img src="https://images.theconversation.com/files/67043/original/image-20141212-6033-ml4exr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> </figcaption></figure><figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/vdW3AbFdTXg?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
</figure>
<p>University of Canberra Vice-Chancellor Stephen Parker and Michelle Grattan discuss the week in politics including the tension between Julie Bishop and Peta Credlin, the GP co-payment changes and Prime Minister Tony Abbott’s plans for Indigenous recognition in the Constitution.</p><img src="https://counter.theconversation.com/content/35423/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>University of Canberra Vice-Chancellor Stephen Parker and Michelle Grattan discuss the week in politics including the tension between Julie Bishop and Peta Credlin, the GP co-payment changes and Prime…Stephen Parker, Vice-Chancellor, University of CanberraMichelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.