Why Medicare Select is the best option for consumers

The National Federation of Parents, Families and Carers was one of just two organisations out of 319 which supported the model of competing health plans recommended by the National Health and Hospitals Reform Commission (NHHRC) in its landmark Final Report in June.

The other was Medibank Private.

Defying political orthodoxy, the Federation advocated a system of competing health plans, now badged as Medicare Select, as the only option compatible with a consumer empowerment agenda and consumer-centred transformation of the health system. As we said in our submission:

… the Commission should to be bold in advocating Option C as the only practical framework for health reform that is based on consumer choice, allowing consumers to choose a health plan of their preference. Options A and B are bureaucracy-centred, provider-driven frameworks.

A health plan is simply a voluntary aggregation of consumers who collectively pool their health care dollar entitlements, share the risk as in any insurance pool, and generate group purchasing leverage for mutual benefit. In Australia, a viable health plan needs to have about 250,000 consumer members or more to exercise sufficient group purchasing power. And they must be voluntary so that consumers can freely move from one to another, which in turn requires health plans to compete with each other in attracting consumer members.

We think a system of competing health plans which enrol populations of consumers, hold and aggregate funds on their behalf, appoint and fund personalised care co-ordinators for consumers, and assemble packages of integrated care, is better than a model of regional health organisations which “capture” consumers by locality without the accountability than comes from consumers having the power to exit one organisation and take our money and purchasing leverage somewhere else.

Why did we adopt this position?

The Federation was formed in 2007 by families and carers of people with disabilities, mental illnesses, aged frailty, and chronic illnesses, usually with two or more of these conditions simultaneously. The families share a common experience of terrible fragmentation and discontinuities of care in their various situations, and are people who have been very active in trying to change these situations. Because of this, they understand, more than most families, what an agenda of co-ordinated care and consumer choice is about. Many of them exercise consumer choice and self-management of support packages in disability, accident compensation, and increasingly in aged care.

As a pool of families and consumers who understand the agenda of co-ordinated care, our attention has inevitably turned to general health reform, and a desire to be able to “cash out” various health care payments and entitlements into services that support our loved ones in a pre-emptive, preventative fashion and without the usual service and disciplinary fragmentation. Hence the Federation's interest in the idea of a health plan that aggregates funds from various sources, and assembles these funds in individual packages of care.

Our view is that practical innovation in consumer empowerment is necessary to get the health reform debate out of the stagnant left-right dichotomy that has paralysed it for decades. The left opposes private sector interests in health and advocates public sector managerialism as an antidote. The right opposes public sector managerialism and advocates private sector managerialism, with heavy state subsidies, in return. The big losers here are consumers. Neither side begins with consumers or a commitment to a consumer-centred health system.

The Federation welcomes the current debate about Medicare Select because at long last the consumer has a chance to become the central player in health reform. We are inviting individuals and organisations to participate in the CIMID (Chronic Illness, Mental Illness, and Disability) Health Plan project, which will be developed as a demonstration project over the next two years to educate governments, health organisations and consumers in what a Health Plan actually is and how it might work.

The CIMID Health Plan will be a voluntary opt-in health plan for people with chronic illness, mental illness and disability. Individuals with these conditions, and their families/carers, will enrol with the Plan, and the Plan will negotiate with the Commonwealth (as a number of Indigenous health organisations currently do) for risk-rated capitation-based allocation of funds (from MBS, PBS, hospital funding, specialist disability, mental health and aged care funding streams, HACC, et al). With these funds, the Plan will put together packages of integrated care for its enrolled members, with a strong emphasis on co-ordinated care and preventative strategies.