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Health care on the frontline of painful budget cuts

13 May 2014

The AMA has warned that plans to radically overhaul health funding arrangements such as imposing a GP co-payment and allowing insurers to charge the less healthy with higher premiums would push health care out of the reach of families and undermine the principle of universal access.

AMA President Dr Steve Hambleton said changes recommended by the National Commission of Audit, including a $15 upfront charge for GP visits and an extra $5 for each prescription, would push more of the responsibility and cost of health care on to individuals and families, raising the risk that many would defer or decline to seek the treatment they needed, undermining health and leading to a higher national medical bill later on.

“It is clear that the Commission’s recommendations have been put forward by business leaders and bureaucrats with no input from people with health and medical expertise,” Dr Hambleton said. “It is a health system designed by bean counters for bean counters. It puts saving money ahead of saving lives.”

While the Abbott Government has said it will not adopt all of the Commission’s recommendations, tonight’s Federal Budget is expected to include a raft of its proposed measures.

GP co-payment

The Government has all but confirmed it will introduce a patient co-payment. Both Mr Hockey and Health Minister Peter Dutton have talked approvingly of the need to get those with the capacity to make a greater contribution to the cost of their health care.

The Commission has recommended patients be charged a $15 co-payment for their first 15 visits to a GP each year ($5 for concession card holders), and $7.50 ($2.50 for concession card holders) for every visit after that.

In addition, the co-payment for PBS medicines should be raised by $5 to $41.90, and the general patient safety net should be lifted by almost $200 to $1613.77, the Commission said. Concession card holders would be liable to a $2 co-payment once the safety net threshold of $360 was reached.

Speaking in justification of the co-payment, Commission of Audit Chair Tony Shepherd implied that many people were going to the doctor unnecessarily: “All Australians, on average, go to the doctor now 11 times per year. I just don’t think we’re that crook”.

But the AMA and other health experts have taken issue with the claim, which they argue is a gross exaggeration. The Royal Australian College of General Practitioners said a recent report by the Family Medicine Research Centre found an average of 5.3 visits per capita, while a crude calculation dividing the annual number of GP consultations (129 million) by the population (23.4 million) yielded an average of 5.5.  

Dr Hambleton said the proposed changes would shift “more and more health costs on to patients, including the most vulnerable – working families, the elderly, and the chronically ill.”

“The new high co-payment proposal for GP visits would see sick people abandon or delay visits to the doctor, which would ultimately cost the health system more, as these patients would eventually require much more expensive hospital treatment,” he said.

The AMA President said there was particular concern about how it would affect the vulnerable, including Indigenous people, the elderly, those on very low incomes and people with mental illness.

“Whatever the Government comes through with, we need to make sure that we do not increase the barrier to primary health care for these four groups,” he said. “We have great concerns that if the bar is raised, it could actually cost us more, not less, in the long term.”

Dr Hambleton also voiced concern that the co-payment would create even more red tape for GPs, constraining them from spending more time with their patients and undermining preventive care.

Since the idea of GP co-payments was most recently revived late last year, there has been mounting speculation that private health funds might offer policies to cover the extra cost, but the Commission explicitly called for such a move to be prohibited.

The AMA and other health policy experts have also warned of the risk that a GP co-payment might force more patients to seek treatment in public hospital emergency departments.

To address this, the Commission suggested that the States be “encouraged” to introduce a system of emergency department co-payments for “less urgent conditions”.

In addition, the Commission has recommended that GPs who want to bulk bill patients be prevented from waiving the co-payment.

In measures that would specifically hit higher income households, the Commission proposed that the better off be blocked from Medicare subsidy for “basic” health services, be precluded from access to the private health insurance rebate, and that the General Extended Medicare Safety Net threshold be raised to $4000.

Community rating

In a radical break with the principle of not allowing health insurers to cherry pick members, the Commission said community rating should be relaxed to allow health funds to charge higher premiums for members who are smokers or have some other lifestyle-related health risk factors.

“The community rating of health insurance products means unhealthy lifestyle choices made by some force up premiums for all,” the Commission said. “Consideration should be given to relaxing rules relating to ‘improper discrimination’ that prevent health funds from charging different prices based on a person’s individual characteristics.”

But Dr Hambleton said community rating was an important principle, and weakening it to allow insurers to charge bigger premiums for people with lifestyle-related issues such as obesity was a “slippery slope”.

He said obesity could be due to a whole range of factors out of a person’s control, including the nutrition of the mother during pregnancy, low birth weight and other epigenetic factors, health and nutrition literacy, education and family stability.

“It’s too simplistic to say that if we charge people more, all of a sudden the problem will go away,” Dr Hambleton said. “We support community rating. It’s the fairest way to deal with these issues and there are other things we should do to decrease the impact of obesity on health care costs.”

Increased competition between professions

Just as controversial, the Commission has recommended a series of measures that would intensify competition within and between health professions, as well as merging or axing a string of health agencies.

It has called for greater competition in pharmacy by scrapping the industry’s ownership and location rules, and has urged that the scope of practice for occupations such as nurses and pharmacists be extended – both recommendations which are highly controversial and likely to trigger a strong backlash.

Dr Hambleton said the extension of nurse and pharmacist practice was a serious concern for the AMA, as were a number of other proposed measures including:

  • a merger of Health Workforce Australia and GPET with the Department of Health and Ageing, which would undermine the capacity to undertake essential medical workforce planning to ensure the community has access to the right number of doctors in the right places;
  • winding back changes to the medical indemnity insurance industry that were implemented by Prime Minister Tony Abbott when he was Health Minister; and
  • scaling down and delaying the National Disability Insurance Scheme.

Other recommendations include giving the Health Minister the authority to add and remove medicines from the PBS schedule and allowing drugs approved by “certain overseas agencies” to be added to the PBS without obtaining separate TGA approval.

Dr Hambleton urged the Government to reject the Commission’s recommendations and instead talk with the medical profession about reforms that would make the best use of available health funds.

“The only good thing about the Commission’s health recommendations is that they will be easy for the Government to reject them – and the AMA will be urging the Government to do so,” the AMA President said.


Adrian Rollins

Published: 13 May 2014