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Medicare under threat

By Beth Mohle - posted Tuesday, 7 March 2006


Health has certainly been in the news in recent times - and generally for all the wrong reasons. Crisis management and “blame shifting” have become the norm rather than the exception. Rational and well thought out responses to our current predicament are rare. Community confidence in our health system has been shaken and this is not likely to improve if we cannot move out of crisis mode. A subtle shift in health policy, from public health provision to public health payments, has been occurring nationally.

It is difficult to achieve a sustained focus on the source of our problems in health and the reforms needed to address them. The issues are complex and inter-related and there will be no quick fix or simple solutions. A co-ordinated and concerted effort is required from state and federal governments, “consumers” of health services, private health service providers, and a myriad of other key stakeholders, if we are to implement sustainable solutions.

Since 1998 the Public Hospitals Health and Medicare Alliance of Queensland (PHHAMAQ) has been actively lobbying all levels of government for a co-ordinated response to health reform. PHHAMAQ is a community based coalition that shares common concerns about the future of the Australian health system, with membership drawn form health consumer organisations, health provider organisations, community organisations and trade unions.

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The purpose of PHHAMAQ is to:

  • share information about issues of concern to PHHAMAQ members; and
  • raise awareness within the community and with all political parties about health matters.

Members of PHHAMAQ subscribe to a basic set of principles in their lobbying and community engagement activities:

  • health care is a right that should be based on need and not on ability to pay;
  • healthy citizens are the most valuable resource of any society;
  • the best and fairest way of achieving health care is through Medicare, Australia’s universal tax-funded health insurance system;
  • Medicare is the fairest way of meeting people’s needs while containing costs and compares favourably with health systems in other OECD countries; and
  • Medicare provides a common good for the benefit of all Australians.

The provision of private health services is and should only ever be complementary to the maintenance of a viable and effective public health system. PHHAMAQ is a member of the Australian Health Care Reform Alliance (AHCRA). The Queensland Nurses’ Union (QNU) provides secretariat support for PHHAMAQ and PHHAMAQ resources can be accessed from the QNU website.

By 1998 it became apparent that at federal government level a significant shift in health policy was quietly taking place, that is, a shift in emphasis from a universal model of health care (as exemplified by Medicare) towards a US-style user pays model.

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Foundation members of PHHAMAQ were concerned that history may be repeating itself - just as Medibank (Medicare’s predecessor) had been undermined by stealth under the Fraser Government the same fate appeared to be in store for Medicare. Although the rhetoric of the Howard Government is that they are “Medicare’s best friend” actions speak louder than words.

Under the Howard Government out of pocket health expenses have skyrocketed and universal rates of bulk billing by GPs have declined. Medicare is increasingly becoming a “safety net” arrangement. Specifically targeted, rather than universal, initiatives are favoured. Those who can “afford to” are encouraged to take responsibility for their own health. On the surface the rhetoric sounds logical and fair, but the outcomes from adopting such an approach are neither.

Unfortunately, state governments appear to be increasingly falling for this “user pays” ideology as the pressure of increased healthcare costs is felt.

It is important to reflect upon the nature of the changes that have been occurring in health over the last decade and the impact of these changes.

Increase in health expenditure by government and individuals

The latest health expenditure data from the Australian Institute of Health and Welfare (AIHW) highlights our increasing health costs. According to Health Expenditure Australia 2003-2004, health expenditure in Australia in 2003-04 was $78.4 billion or $3,919 per person. This means that health expenditure as a proportion of Gross Domestic Product (GDP) now stands at 9.7 per cent for 2003-04 up from 8.3 per cent a decade ago. The current OECD country average health expenditure to GDP ratio is 8.8 per cent.

At the same time out-of-pocket spending on health by Australians grew, in real terms, by 6.2 per cent in 2003-04 compared to 5.0 per cent the previous year. Real growth in expenditure by individuals between 1993-94 and 2003-04 was 5.4 per cent per year, 0.8 percentage points above the real growth in health expenditure of 4.6 per cent per year over the period.

The “backflip” of the Howard Government last year on the Medicare Safety Net thresholds will also put upward pressure on out-of-pocket health expenses. Before the last federal election the government gave a “rock solid, iron clad” guarantee that the safety net thresholds would continue to trigger at $300 for low income earners and $700 for others. After the election the threshold triggers were increased to $500 for low-income earners and $1,000 for others.

Unfortunately the writing was always on the wall - the "rock solid, iron clad" guaranteed Medicare Safety Net was bound to be under threat once the federal election had passed. The primary objective was to neutralise health as an election issue, not engage in rational and sustainable health policy formulation.

The promotion of strategies such as means testing access to public hospitals and the introduction of co-payments for public health services are also of concern to PHHAMAQ. Such arrangements punish the sick, are inflationary and unfair. A basic tenet of Medicare - that of ensuring universal access to health care based on need and not ability to pay - is undermined by such policies. Such policies seek to shift responsibility for payment from a collective responsibility (through taxation) to the individual. They will not stop ever increasing medical costs. The only thing that changes is who will pay. The government is merely transferring some of their liability for its failed policy on to the sick.

Promotion of private health insurance

According to Health Expenditure Australia 2003-2004, in 2003-04, $8.1 billion in funding was directed through private health insurance but $2.5 billion of that figure was funded by the Australian Government's health insurance rebates (up from $2.3 billion the previous year). The cost to taxpayers of the private health insurance subsidy is now anticipated to exceed $3 billion per annum. Premiums also increased from April 1, 2005 by an average of 8 per cent (premium increases take effect each year from April 1).
 
All taxpayers are subsidising a “benefit” that is received by less than 50 per cent of the population. Repeatedly research into the rebate has demonstrated that the benefits of it disproportionately flow to the more well off and the rebate has failed to meet one of primary objectives - to take pressure off the public hospital system. It is the case that treatments in the private sector have increased in recent years, but this has mostly been in the area of elective and lower cost procedures, some of which are “self funded” rather than covered by private health insurance.

According to Private Health Insurance Administration Council (PHIAC) data by December 31, 2005, 40.2 per cent of Queenslanders had private health insurance. This compares to 43.1 per cent nationally. These figures have been relatively stable for the last two to three years. The level of private health insurance in Queensland needs to be examined in the context of Queensland being the most decentralised state in Australia.

For many Queenslanders (especially those west of the Great Dividing Range) there are no local private hospitals - they are totally reliant on their local public hospital for health services. It is in all our interests - whether we are residents in metropolitan or regional areas, or in rural or remote areas of the state - to maintain a strong and viable public health system. For catastrophic or emergency events the richest person in Australia is likely to be taken to a public hospital for treatment.

A key issue for those with private health insurance is the magnitude of the gap between what the health fund pays and the out of pocket expenses. Not only do people have to find the funds to pay for the health insurance premiums they also have to fund the “gap” in many (if not most) instances. This uncertainty and lack of transparency regarding costs is a key barrier to maximising the take up of private health insurance. Until such time there is some certainty about these costs this will remain the case.

When public hospitals become a “safety net” for the financially disadvantaged then the better off in our community have little or no interest in ensuring that public health services are well resourced through the taxes that we all pay. Sixty per cent of Queenslanders do not have private health insurance. Many simply cannot afford it, or it is of no use to them because they have no local private hospitals.

Many of those who are better off consciously choose not to take out private health insurance because they are committed to the maintenance of a universal health system and the concept of access to care being determined by clinical need. They pay additional tax though the Medicare Surcharge because of this choice. Some (rich and poor alike) also see private health insurance as representing poor value for money and see the private system as being unsustainable.

Queensland’s problems and solutions are now being identified

In Queensland lately the major focus has been on the serious problems highlighted by the Davies Inquiry Report and the Queensland Health systems review (Foster Report). The Queensland Government must accept its share of responsibility for the issues identified by these inquiries. However, while the events took place in Queensland they could have happened anywhere in Australia.

While these reports focused on the public health system many of the issues are just as relevant to the private health sector. Factors that contributed to these problems include the historic under-funding of public health services in Queensland and the entrenched cultural dysfunction of our state’s health and political systems.

The Queensland government responded to the Forster report by issuing its Health Action Plan (pdf 234KB) in October 2005. This will see health expenditure increase significantly until 2010-11. The critical issue will be to ensure there is a process for monitoring the outcomes achieved from this significant additional funding. Real improvements in the quality and standard of health care delivery must be achieved.

The focus now must be on addressing the problems and rebuilding community confidence in our health system. Premier Beattie is correct to say this requires a national approach and PHHAMAQ supports his call for a national health summit.

As a member of the Australian Health Care Reform Alliance (AHCRA) PHHAMAQ participated in a summit in Adelaide late last year aimed at highlighting critical areas for reform and to promote debate. The key priorities identified at the AHCRA Summit were: health workforce; primary health care; rural and remote health; improving integration of health programs; and engagement with the community on health care reform. Reports on these issues and more information on AHCRA and its overarching principles for reform, can be accessed at AHCRA’s website.

AHCRA has worked hard to identify the problems but more importantly has also identified possible solutions. These are based on a clear statement of values that we believe must underpin health policy and practice. All that is needed now is the political will to reform our health system. AHCRA members want to work with government and the Australian community to achieve this end.

Similarly in Queensland the Forster and Davies inquiries have raised a number of serious issues about the provision of health services in this state and these require considered and inclusive deliberation on health reform at the national and local level. Fundamental to this is informed engagement with the Australian community about health needs and expectations and how health should be funded.

This is a prerequisite to health reform and until such engagement occurs we will continue along the path of health care cost blow outs and growing health inequalities - unsustainable trends, economically and ethically. In recent years other countries - Canada, New Zealand, the UK, France and Sweden, have consulted their communities about the health systems they want or are developing. Why can’t we do the same in Australia?

In the end it should be shared community values that underpin health policy and decision making. Unfortunately governments of all political persuasions at present seem reluctant to engage in genuine community consultative processes. Is this because they cannot be assured of an outcome? Demographic and funding pressures are such that governments will increasingly find it difficult to refuse to engage the community on such issues. There must be genuine and informed community consultation about the future of our health system and the way that this is best funded.

PHHAMAQ intends to continue to promote community consultation as a prerequisite for future health reform by producing materials to raise community awareness and encourage debate. This is a debate that is long overdue. The future of our health system depends on it.

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Article edited by Peter Coates.
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About the Author

Beth Mohle represents the Public Hospitals Health and Medicare Alliance of Queensland (PHHAMAQ).

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