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MedicarePlus: more money, but missing the main debate

By Paul Gross - posted Monday, 24 November 2003


The Australian health care system, not just Medicare, is tired and needs rejigging after nearly 30 years of complacency and disjointed policy making by governments of all ideologies.

The MedicarePlus proposals, if passed by the Senate, will mean that a government listened to the critics of its original solutions in the May 2003 Budget, negotiated with the minor parties, and left the ALP Opposition with little room to move. This is the closest we have come to muted tripartism in Australian health policy.

Funded by the Medicare levy, federal and state government budgets, health insurance contributions and out-of-pocket payments that are not insurable, total health care expenditures in Australia will be about $70 billion (or $3,500 per person) in 2003/04.

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The proposals for MedicarePlus, at first glance, add an extra $2.4 billion over the next four years (or about 1 per cent of total expenditures in 2003/04), and $1 billion extra in each year after 2006/07.

It might be a political winner. This one per cent injection is not big bikkies (applause, though the Treasurer might demur), the new money comes from tax revenue and not from a new private health insurance gap cover scheme (applause if I listen to the Democrats and the ALP), the subsidies are targeted towards the chronically ill family with large medical bills (resounding applause here), there are new incentives to provide GP care in aged care homes (tumultuous applause here), and the proposals are not overly preoccupied with the need to force-feed GP bulkbilling (it’s heresy to applaud this feature but the proposal does look after the low income family in other ways).

MedicarePlus has some flaws. The subsidies seem to bypass low-income single persons with chronic disorders, it is not clear what how the proposals affect pensioners, the extra $5 payment for bulkbilling cardholders and the young will not have a large take-up by GPs in rural and outer metropolitan areas, we can expect to see higher GP charges, and some listed corporate entities will be salivating at the thought that pathology and radiology are in the safety net when bulk-billing is likely to decrease. The safety net does not cut in until the $500 and $1,000 annual thresholds have been reached, so the claimant must retain all paperwork and then submit after the costs have been incurred. And the current out-of-pocket costs for all care are $2,000 million, this proposal offers $90 million back., so we missed the chance to merge the PBS safety net with the new safety net for doctor services out of hospitals.

Beyond its affirmation of the user-pays principle, does MedicarePlus redress some obvious gaps in care, and does it educate the public about desirable future changes in Medicare, private health insurance and personal responsibility?

Care gaps

The proposals render general practice more financially viable, create new cadres of GPs and practice nurses, and subsidise GP care in aged-care homes. The last reform will reduce the tendency to admit nursing-home patients to hospitals, and it may also reduce adverse drug reactions caused by polypharmacy that is poorly monitored.

But MedicarePlus payments will not cause better management of chronic illnesses, educate the public about their role in risk factor reduction, or pay GPs enough to be effective change agents in risk factor reduction.

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Our levels of obesity and overweight are implicated as risk factors in diabetes, heart disease, stroke, mental disorder, some cancers, gall bladder disease and other diseases that fill up our hospitals. MedicarePlus pays more money to GPs and specialists but those risk factors are not specifically targeted, only alleviation of the bills once we have the chronic conditions.

GPs should be paid more for reducing these risks, not for bulkbilling that has no education component that increases the insights needed for astute self-care for the 85 per cent of the adult population for whom self-care is feasible.

Public expectations about affordability and responsibility

In the past 30 years, we have achieved some impressive gains in life expectancy, but we now have the highest hospital use rates in the western world, we have 12 doctor encounters per person per year, and our PBS scheme outlays are rising at annual rates that cause Budget angst. We pay $2 billion out of pocket for all care.

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This article was first published in Sydney Morning Herald on 19 November 2003.



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About the Author

Paul Gross is Director, Institute of Health Economics and Technology Assessment in Australia and Greater China, He was Commissioner of the National Hospitals and Health Services Commission under the Whitlam (ALP) and Fraser (Coalition) governments.

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