Transcript of Doorstop - Dr Kerryn Phelps, AMA President, Sydney. AMA's response to the Government's Medicare reforms

PHELPS: The reason that we're here today is because the Prime Minister this morning has made an announcement of what amounts to a seismic shift in the philosophy of Medicare. For the first time in some decades we have seen a fundamental change in the philosophy of Medicare and that is that people who are health care card holders who are deemed by the government to be disadvantaged will be treated somewhat differently in some practices compared to patients who do not hold health care cards.

Now, at the end of the day, it's going to really be up to doctors to do their sums in their own practices to see whether it is financially viable for them to take up the government's package or not. If they decide that it is worth their while to do that, that they can cover their practice costs, that they can offer this service to their health care card holders then they will choose to do that.

Some doctors, of course, will continue to bulk bill all of their patients, if they can afford to do so. Other practices will, I think, move to bulk billing only to health care card holders but not bulk billing, in other words, privately billing their non-health care card holders.

Other practices, of course, will move completely to private billing. I think time will tell.

QUESTION: Is this the death of bulk billing?

PHELPS: I think bulk billing has been in a serious decline for the last three years and the concern that the AMA has expressed all along has been what happens to the people who fall between the cracks, the people who can't afford to pay the gaps for health care?

Up until now, GPs have been propping up Medicare by discounting their fees. GPs have been trying to recognise the patients who are going to have trouble paying their medical bills and they've been subsidising Medicare. So what we're seeing now is not what the AMA would like to have seen, which was the full funding of the Medicare benefit schedule, what we're seeing here is a partial extra funding of the rebate and what this will mean is that some practices will be able to afford to take up this package, other practices will not be able to afford it.

QUESTION: So has the system been corrected or is there now an even deeper flaw in it?

PHELPS: The system hasn't been corrected and you only just need to look at the numbers to see why.

This amounts to $260 million a year over four years. We know that the shortfall for general practice for the Medicare benefit schedule is about a billion dollars a year. So this is really what amounts to a small extra payment and, of course, the $260 million doesn't all go into rebates either. About $100 million of that goes into rebates so on average about a dollar per consultation.

When you consider that the shortfall in the Medicare benefit schedule for a standard consultation for a GP is about $25 the one dollar on average extra per consultation really doesn't add up to a solution to the problems for Medicare and the reasons why GPs have had to be giving up bulk billing. I think it may hold the line for some patients for a period of time.

QUESTION: Dr Phelps, did you not say that patients who can afford to pay more will be more out of pocket because of these reforms? Is that still the case?

PHELPS: There's no question that, as bulk billing has been declining, more patients have been paying private fees. There are two ways that this will go. You have practices who will opt in and those practices will be able to go online and they will get the patient's rebate directly into the doctor's account and be able to charge the patient a gap on top of that.

The other alternative is the doctors who don't opt into this system, who don't go online, who will continue to privately bill their patients, they may need to, as time goes by, privately bill more patients and what this will mean is that those patients will obviously be paying more in upfront costs.

For the patients who would otherwise have been paying a private fee, they will have less in upfront costs. So some winners, some won't be winners.

QUESTION: Are there implementation costs for doctors?

PHELPS: There are large implementation costs for doctors and, in fact, we're still doing the final analysis of that cost but it could well amount to almost as much as the incentive payments.

QUESTION: This is going to make little difference. Is the government either incompetent or is there another agenda behind doing this today?

PHELPS: What we've been saying for quite some time is that Medicare is underfunded. Now, the choice faced by the government was whether the taxpayer paid the shortfall or whether some patients paid the shortfall and they've gone for the latter. For too long, GPs have expected to fund the shortfall by bulkbilling at a very low rate.

There was a choice to either say we are going to fully fund the RVS, the relative value study, at the figure it should be, or we're not. And that has not happened so the AMA has been consulted along the way with this but we were presented with a framework initially and we've had an opportunity to propose some amendments along the way but it's certainly not the way we would have reformed Medicare.

QUESTION: What wouldn't all doctors now move to a two-tier system?

PHELPS: You have to remember that a lot of practices only privately bill and they would go backwards if they went to this system. There are some practices who have high numbers of bulkbilled patients and one dollar extra for urban doctors in a consultation may not be enough to stop them from going out of business and so they will have to make a decision based on their own practice finances as to whether they can afford to take up this package or not.

QUESTION: So you think that practices who exclusively bulk bill will go out of business unless they take up this system?

PHELPS: They have to do their own sums. I mean, if they only have 5% or 10% of patients who are health care card holders, they may be able to afford to do this. If they have 90% of the patients in their practice who are health care card holders then one dollar extra for a consultation is really not going to help them out very much. The other concern is that practices who opt into this scheme are going to get the lion's share of health care card holders, quite likely, and so we have to see what that means to the economics of practices as well, if they take on greater percentages of health care card holders, given that there are about seven or eight million Australians with access to a health care card and we believe that between 50% and 60% of general practice consultations are for health care card holders because many of those people have higher burdens of disease.

QUESTION: Are GPs going to be any better off?

PHELPS: GPs will have to do their sums. They will have to look at whether their practice, under their circumstances, can afford this, whether it is attractive to them or not. There are some aspects of the package that we do welcome. The safety net, I think, is very important because I think that particularly for people who are not health care card holders and who are on fixed incomes which are not low incomes but they're sort of low middle incomes, that can be a problem for those people and it may well be a problem.

What we don't want to see is people having to make decisions about whether they see the doctor or not based on affordability.

QUESTION: We are going to see that, aren't we?

PHELPS: We certainly don't want to see that and traditionally general practitioners have supported those people by discounting their fees. Now, I have no doubt that in many practices that will continue, that tradition, but in order to do that doctors are having to charge patients with higher incomes more to cross-subsidise the patients who can't afford to pay the full fees.

QUESTION: So will there be patients still falling through the cracks?

PHELPS: We'll have to wait and see. I mean, I hope not. I know the compassion of my colleagues is such that they wouldn't like to see that happen and I know that many GPs will continue to provide discounted services to people who can't afford full fees and I just don't think it's necessary or appropriate for GPs to have to be the ones to be the providers of welfare and that that is what Medicare is supposed to be, the universal health insurer for all Australians.

What we are now seeing is that some patients, their rebates will be higher than for other patients.

QUESTION: Should this have come along with an overhaul of the health care card system?

PHELPS: I think we still need to see an overhaul of the health care card system. We also need to see an overhaul of red tape because red tape costs practices a great deal of time and money to administer and that's something that we'd certainly like to see for the future.

The other aspect of this package that the AMA welcomes is the recognition that there is an access workforce crisis, that we have too few GPs, that GPs are participating less and less and that the participation rate has actually fallen to about 64% and that this is an issue that needs to be dealt with.

Now, one way of dealing with this is to have more medical students so we're producing more doctors. The other thing is to ensure that general practice is more attractive.

Now, I don't know that general practice through this package will be more attractive but we'll just have to wait and see. Certainly there are some advantages to people who may not have to go to a Medicare office if their doctor opts in and goes online, then they won't have to go to a Medicare office to get their rebate.

QUESTION: How much would the rebate actually have to go up by in order to make it a more balanced package, one that might work?

PHELPS: Our first choice was always going to be proper funding of the Medicare benefit schedule. We know that it falls way short of where it ought to be and I think any alternative proposal would have to address that fundamental issue, which is the shortfall of the Medicare benefit schedule.

QUESTION: How short is it? Ten dollars?

PHELPS: It's short $25 per standard consultation. The relative value study was completed a couple of years ago and if you use that modelling instead of being currently at $25.05 it should be 85% of $50 and it's a long way short of that now.

QUESTION: When patients start paying and patients are paying that now, $15 to $20 even $25 now, surely we'll start seeing families, at least, make a choice about whether to go to the doctor or not go to the doctor.

PHELPS: Unfortunately there may be some patients who feel that they have to make a decision about whether they see the doctor or not and I think that we have to wait and see what the fallout from this change is going to be. Certainly, as I said, my colleagues traditionally have provided discounted services for patients who they felt couldn't afford to pay the full fee and I believe that that tradition will continue and GPs have always been free to charge whatever they wanted and the patient's rebate was the patient's rebate.

And it's really only because of the compassion of the medical profession that we've seen bulk billing rates stay as high as they have for as long as they have but it really reached a point where we were at a crossroads, where GPs either had to go out of business or start charging a private fee. Now, the practice economics of this package will depend on where the practice is located and on a whole lot of other factors about the practice's economics.

QUESTION: The Consumers' Association says this package means the government essentially does not support the continuation of Medicare. Do you agree with that?

PHELPS: I think that we really have reached a crossroads on the ideology of Medicare as to whether it is the substantial funder of medical services out of hospital or whether it is a partial contributor and the household budgets pay the rest. And clearly what has been happening - and it's not just in the life of this government but it's previous governments as well - the Medicare benefits schedule has in real terms been eroded and eroded so that it had less and less meaning and was of less value in terms of establishing fees and rebates. And so GPs were left in a dreadful situation where they were forced to subsidise Medicare and now we are seeing a partial subsidy for some patients of the shortfall in the Medicare benefits schedule but it's by no means Medicare paying the cost of health services.

When people say, "I pay my Medicare levy, that means I should get free care at the point of service," that really is a misconception because the Medicare levy is 1.5% of incomes and yet the health system costs us 8.5% of GDP and so even the Medicare levy is just a downpayment on having a health system and so we need to say where does this extra money come from?

It had to come either from taxpayers or it had to come from the household budgets of the people who go to see their doctors so this is where we now see an ideological difference between the major parties.

QUESTION: Is the Federal Labor Party offering you anything that you like better?

PHELPS: We haven't seen an alternative policy from the ALP at this stage and I think it's high time that they did come up with one.

Ends