**For every complex problem, there is an answer which is clear, simple and wrong
HL Mencken**
The latest resurrection of the Medicare co-payment debate has resulted in storms of criticism and vituperation against the idea of a $5 co-payment for bulk-billed services.
The arguments on both sides are well-rehearsed and go something like this:
In favour (economists, many bureaucrats and practice managers)
In economic theory, lack of a “price signal” means that a good or service is likely to be overused because human psychology dictates that free services are less valued than costly ones.
Getting paid exclusively by the Government means lots of paperwork and audits as well as having to develop a business model that optimises fee-for-service types of care and razor-sharp time-effectiveness.
Medicare rebates have never been even close to following CPI indexation, so the current rebates reflect the cost of providing the service in about 1991, not 2014.
Ideologically speaking, a modest co-payment would encourage more individual responsibility to be taken by those who use a lot of services.
The potential for saving money is important to consider, given the stratospheric levels of Government debt.
We are happy to pay for other not-as-essential services like rubbish collection, pet registration, fishing licenses, pokies and so on, so why should people not be happy to pay for essential health services?
Against (most of the population, welfare and disability organisations and the AMA)
Universal health care which is free at the point of care is a proven model in most first-world stable democracies, excepting the USA
Adding a modest cost at the point of care is still a burden for those on limited incomes, given that there are co-payments for PBS drugs and little coverage of allied health care.
In a rich country like Australia, we should have a safety net at all costs where nobody is ever too poor to get essential health services.
Taxpayers already contribute to the cost of Medicare via the levy, so they shouldn’t have to pay any additional costs
My take
In practice, there is some validity to almost all these arguments, and they very much depend on what view you have of the whole Medicare elephant. For my own part, I am against the current proposal, though I have previously felt that a small co-payment would be a positive thing, largely because of the impossibility of running a high-quality bulk-billing practice without cutting significant corners.
At the end of the day, the fundamental issue behind much of the debate is a misunderstanding in the community of what exactly Medicare is. It is a national INSURANCE SYSTEM. It’s not the health-care system, but the mechanism by which the health-care system is largely funded. Insurance systems pay for care, they don’t provide it. In the USA, insurance companies actually DO own the hospitals and pay the staff of those health care systems, but not here.
It is up to individual health professionals to decide what they need to charge to keep their practices running. This is always significantly more than the Medicare rebate. The only way large bulk-billing clinics can be financially viable is to have business (and therefore clinical) practices which enable them to harvest enough item numbers to pay their bills. This has long since ceased being a viable financial option for individual doctor-owned general practices. In my opinion, the reason for the current high level of bulk-billed services is not because GPs love Medicare. It’s because the companies that run bulk-billing clinics have gotten much smarter at providing their services in a way that pays.
There are many GP practices who charge what they believe their time is worth, and charge a gap. That gap tends to reflect the costs of a small business setup rather than a corporate franchise with economies of scale. It is way more than $5, so the proposed co-payment is not going to do anything to improve the business case for bulk-billing.
My main concern, however, is the principle of having a Government-mandated co-payment which is not set by the health professional. In return for potentially boosting the revenue of bulk-billers, the Government is also planning to freeze the indexation of the rebates. So if practices don’t want to charge the fee up-front, they have to absorb the cost. Those opponents of the proposal who have called it a “tax on GP services”are exactly right. Instead of tackling more politically and technically difficult reforms to save substantially greater sums of money, this co-payment proposal will effectively be asking GP practices to fund the next couple of CPI indexations of the Medicare rebate out of their own pockets, or to pass it on to patients. The Government clearly doesn’t care which as long as they don’t have to budget for it.
Funding health services is extraordinarily complicated in this country. We have done it so far without descending into the chaotic regional lottery of the UK NHS, where the quality of your care depends very much on what patchwork of services your local provider has stitched together. We have also avoided the basket case system of the USA, which pays way above the odds for third-world population outcomes. We don’t have fully socialised health care funded by crippling income tax like the Scandinavian countries. We actually do fairly well with regard to accessibility and affordability and cost-effectiveness by OECD standards.
What success we have had has rested on all parties involved sticking largely to the principles which underpin Medicare. Forcing GP practices to charge an inadequate co-payment to meet their costs while effectively using that tax as an excuse to avoid indexing the rebates will likely have the worst of all outcomes. Practices which already charge a gap will have to increase their gap. Bulk-billing practices will have to start charging so affordability at the point of care suffers. The funds supposedly raised by this exercise will go straight to the Budget bottom line and do nothing to increase the overall effectiveness of Medicare. The supposed ‘problem’ of people attending GPs for trivial reasons is far from the biggest waste of money in our health system. This is just a heavily disguised cash grab.
Having previously seen the economic point regarding co-payments, I believe the moment for implementing them has passed. GP practices have adapted by either abandoning bulk-billing (like virtually all specialists) or developing economically efficient bulk-billing practice models. This new tax on GP services will be effectively asking GPs and their patients to fund the next couple of CPI indexations of the Medicare rebates out of their own pockets. That’s why I won’t be supporting it. We can and should try harder to reform Medicare.