AMA Federal President, Dr Kerryn Phelps - Speech to 2003 AMA Parliamentary Breakfast, Parliament House, Canberra. 'Health Policy - Here, There and Medicare'

Good morning Ministers, Shadow Ministers, MPs, Senators, AMA Federal Councillors, ladies and gentlemen.

Thank you for making the effort and taking the time out of a busy sitting day to join us this morning for the AMA Parliamentary Breakfast.

This function has become an annual opportunity for doctors and politicians to meet each other to discuss a vital shared interest - health policy.

The health system has more than a few trouble spots. It is here, there and Medicare - a badly neglected Medicare.

The number of doctors, the costs of seeing a doctor, the private health rebate, public hospital funding and medical indemnity, to name a few, are issues that affect all Australians.

Well, here's the rub.

There is a GP workforce problem. Those GPs we have do not feel valued by the system and they are reducing their face to face consulting time, retiring early, giving up procedural work, or finding other ways to earn a living.

Patients are paying more to see their doctor when they can find one.

The private health rebate is working to keep people in private health, but at what cost and for how long?

Our public hospitals are under-funded with their emergency departments under severe strain.

And medical indemnity is driving more doctors out of procedural medicine, many of them abandoning vital high litigation specialties - or taking their talents overseas - or even taking up careers as medico-legal consultants.

Indigenous Australians have health outcomes among the worst in the world.

Too many Australians are dying from smoking-related disease and illness.

The health system is feeling the strain of unmet need.

So what are we going to do about it? More importantly, what are you going to do about it?

We are the doctors. We provide the care and repair and the partnership with our patients.

You are the politicians, the decision-makers, the elected political representatives of our patients. You decide the shape and the size of the health system and how much money it gets and where it goes.

Health policy - health solutions - must start right here, right now, today, in this building.

On behalf of Australia's doctors and their patients, I can tell you what is broken, what needs to be fixed, and provide some suggestions about how it can be fixed.

We need to stop looking at the health system - especially preventive health measures and health promotion - as a drain on the economy and start to view it - along with education - as the best investment a nation can make in its future and its people.

You have to take this information to John Howard, Simon Crean, John Anderson, Andrew Bartlett and Bob Brown to get things happening.

The problems I have outlined are not imaginary.

I'm sure you are seeing the tangible evidence in your electorates every day.

At least this week we have witnessed some movement at the station on the bulk billing issue.

Both the Prime Minister and the Treasurer have declared that bulk billing was only ever intended for pensioners, low-income patients and the chronically ill.

They are suddenly advocating a safety net. Good. But it has to be a substantial one.

This echoes the position I put in a speech to The Sydney Institute last week, where I said:

"The significant challenge for government policy is what happens to the genuinely disadvantaged as co-payments continue to increase if doctors are no longer prepared to subsidise Medicare?

The costs of providing health care will rise and rise, but will the Government's commitment to Medicare and equitable access to health care rise concurrently? History would tell us the answer is no?

We must have a workable safety net system."

Events of this week give credence to those words.

Ever since the Government and the Opposition decided last year to ignore the findings of the Relative Value Study - the RVS - the concept of almost universal bulk billing was history.

We all know that health care has never been free. Taxpayers all had to pay through the tax system. Gaps had to be covered out of private health insurance and household budgets.

We now await the policy auction on the Medicare 'safety net'. Just how does the Government propose to ensure access for the poorest and the sickest? Just how will the Opposition respond?

We hear the Government has a Plan? Excellent. And Simon Crean yesterday signalled a possible resurrection of the RVS debate with increased Medicare patient rebates. The more options the better.

Red tape-heavy incentive payments are not the answer. They are bureaucratic impediments to quality care. They reduce the time that doctors can spend with our patients.

Nor do some of the ideas proposed by Stephen Smith in a speech last week give doctors much joy. While Mr Smith is clearly thinking about solutions, those proposed fail the access and equity tests.

I'll say it again - higher Medicare patient rebates based on geography are not the answer. They don't help all the sickest and poorest, nor do they address the GP shortage issues.

Nevertheless, we await policy developments from both sides with interest.

The medical profession must be in the boat for big decisions like this.

We would rather be in a position to discreetly tell you what the profession will and won't accept so that it can be amended, rather than having to jump up and down waving our arms and making a big fuss to stop an obvious mistake - like the $80 million outer urban GP plan of last year's budget.

We have to stop focussing on bulk billing rates and start addressing the issues of access and affordability.

Let me go over the other priorities with you now in more detail.

I want to remind you of the magnitude of the problems in the health system and the importance of finding lasting political solutions for your communities.

Medical Workforce

For nearly a decade, Australia has been heading toward a GP shortage while governments of both persuasions refused to recognise the symptoms.

But things are changing.

On the weekend, when asked about the decline in bulk billing, the Prime Minister acknowledged that in some areas of Australia "...there aren't enough doctors. It's a supply of doctor problem more than anything else".

Too true, Prime Minister. Yet for years Government policy has been based on an alleged 'oversupply'. So this change of heart is as refreshing as a summer breeze.

Mr Howard promised that his Government is looking into the problem and will release some policy soon. This will make some of his backbenchers breathe a lot easier, I'm sure.

Any solutions must be carefully and strategically crafted to avoid a future oversupply, but sufficient to cater for the needs of Australia into the future.

In Australia, a town without a doctor is marginally worse than a pub with no beer...depending on your priorities.

While affordability is a vital issue that must be addressed, access is just as important. There is no point helping someone afford a GP visit when there is no GP available in the town or in the suburb.

You will have all heard stories from constituents who have had to wait three or four weeks to see a GP - if they were lucky enough to find a local doctor at all who had not closed their books.

To give you an idea of the enormity of the problem, and the fact that no state or region is immune, you will find in your media kits a list of towns and suburbs advertising for a GP this week.

They include Geraldton in WA, Cobar in NSW, Innisfail in Queensland, Whyalla in South Australia, Ivanhoe in Victoria, Zeehan in Tasmania, Tennant Creek in the Northern Territory, and Narrabundah in the ACT.

That list is in the hundreds but does not show every vacancy, just a snapshot, but it clearly demonstrates that the shortage exists and is growing.

Check the vacancies in your electorate.

The AMA Access Economics GP survey in 2001 identified a doctor shortage in Australia of between 1,200 and 2,000 full time equivalent GPs.

It's not simply about the number of GPs; it's about what they do with their time - how much time they spend with their patients.

The expectation that they will bulk bill all or most of their patients has contributed significantly to lower morale.

In addition, the make-up of the workforce is changing.

Older male GPs who traditionally worked excessively long hours per week are retiring. They are being replaced by female and younger GPs who are not prepared to work more than 60 hours a week every week.

Enabling GPs to earn enough to cover their costs and make a decent living is one way of making general practice more attractive as a career option, but other initiatives will also help.

First and foremost, we must increase the actual number of Australian-trained doctors entering the specialty of general practice.

GP training places should rise from 450 to at least 600 per year. That's if we can encourage graduates to choose general practice as a career.

A carefully created increase is needed in Australian medical school places.

Estimates suggest 300 to 500 more medical graduates per year.

We must avoid flooding medical schools because medical training is very intense and patient contact is essential.

The AMA seeks to work with Government in calculating more exact numbers taking into account factors such as gender shift, higher ethnic and overseas-trained doctor intakes, attitudinal change to working hours, and the special requirements of rural medical schools.

However, the effect of this change will take time to filter through.

In the short term, the AMA is suggesting a range of other measures such as direct subsidies for rural and outer urban GPs, retention incentive payments for doctors approaching retirement, a program to encourage GPs to work in rural areas for a portion of their career, and some overseas trained doctors.

Use of practice nurses to relieve GPs of some of the routine work will help increase the amount of time doctors have available for patients.

The Federal Government in cooperation with the profession must urgently develop a General Practice White Paper.

A White Paper is needed to draw together the many threats and opportunities involved in the delivery of quality affordable and accessible GP services for all Australians now and into the future - and offer some tangible solutions.

Medicare patient rebate/affordability

To fully understand the Medicare safety net issue I alluded to earlier, you must first understand the cost pressures on doctors.

We run small businesses.

Like any small business owner, doctors need to make enough to:

• provide a quality service

• cover our costs, and

• have enough left over to live on comfortably.

Otherwise we might as well do something else, as much as we do love our work.

But general practices operate in a controlled environment that has in recent decades made it difficult to charge like other small businesses.

Over recent decades since Medicare, GPs have been discouraged from simply working out the value of their time and charging accordingly.

For bulk billing doctors, practice costs got away from them as they tried to absorb increasing costs without passing them on.

For bulk billing doctors, bureaucracy has determined the value of their time, and set a limit known as the Medicare rebate.

This rebate values a GP's time at $25.05 for up to 20 minutes with a patient.

A bulk billing doctor must then use this income to pay receptionists' and nurses' salaries, meet their business overheads and pay insurances, computerisation, accreditation, equipment, and high medical indemnity premiums.

The rebate has not risen in line with inflation and has definitely not kept up with doctors' costs.

In 1991, the Medicare patient rebate was $20.00. Today it is $25.05. An increase of only 25 per cent in 12 years.

Over the same period, the cost of running a medical practice has increased by 40 per cent.

The RVS valued a GP's time - updated to November 2002 - at $50 for a standard consultation of 15 minutes.

No wonder doctors can no longer afford to bulk bill their patients and we are seeing bulk billing rates fall around the country - but that is just a symptom of the Medicare malaise.

We need to stop talking about bulk billing and focus on access and affordability.

In all of your electorates bulk billing is probably at its lowest level in over a decade. I can't see the trend reversing. The Prime Minister and the Treasurer confirmed that this week.

After years of subsidising Medicare, GPs are now having to make important decisions about the worth of their skills and experience if they are to stay in business - if they are to continue to provide care for their patients in their communities...your electorates.

I am sure you are all seeing the effect this is having on towns and suburbs in your area.

Doctors are leaving or retiring early, never to be replaced.

Doctors who exclusively bulk bill cannot survive.

As the demise of the RVS has shown, neither the Government nor the Opposition is prepared or able to fund universal access to bulk billing.

Universality applies to the 85 per cent Medicare rebate and access to treatment in public hospitals.

The Opposition bulk billing proposal revealed last week would not restore 'universality' to Medicare. Instead it would create complex access boundaries because it is based on targeted geographical locations.

For example, the proposal included direct grants or incentives for bulk billing practices in target areas.

This does not acknowledge the demographic and socio-economic complexity of each region. It is impossible to just say everyone in one region is wealthy or disadvantaged. This approach can create even more inequity.

As I said earlier, incentive payments create red tape and will be unacceptable to the medical profession. They provide no safety net.

A recent Productivity report found red tape already costs every GP almost $10,000 a year. We think this is a gross under-estimate.

So what are our options for providing affordable health care to those in need?

Medicare was never meant to make a visit to the doctor free at the point of service for all patients.

Instead, a patient-centred solution is required, where the Government establishes a policy that ensures the disadvantaged have access to affordable health care, which is not heavily subsidised by the doctor.

The AMA is suggesting that the most effective way of delivering this promise is through a safety net system.

A safety net will ensure the chronically ill, pensioners and low income families are protected against high medical costs.

At a recent meeting of GP representatives from around the country the idea of a safety net was endorsed by the states and territories.

The AMA will be putting forward some concrete policy proposals in this regard over the coming weeks.

The AMA is also advocating a co-payment system where the doctor only charges the patient up-front the difference between his or her fee and the rebate.

Under this system, the patient would face a relatively small out of pocket expense.

This would be streamlined if the rebate is automatically paid to the GP instead of the patient.

Under this system, GPs would still bulk bill those patients that simply cannot afford a co-payment or they can discount the co-payment for disadvantaged groups.

What we have to remember, though, is that despite the commitment of GPs to care for their patients, it is the Government's responsibility to provide the safety net for patients who are disadvantaged.

At the same time, the Government must maintain the balance between the public and private health systems in Australia.

It is this balance that makes our system unique and, despite its problems, a better option than either the US or UK models. But the problems can and must be fixed.

Private health rebate

There is no doubt the introduction of the private health insurance 30 per cent rebate has succeeded in encouraging private health insurance participation and has shifted patients from the public to the private hospital sector.

The rebate has achieved a dramatic rebound in private health insurance coverage. In fact, it has increased nearly 50 per cent, from 30 per cent of the population and falling in 1999 to 44 per cent today.

This change was brought about by two measures - the 30 per cent rebate and Lifetime Health Cover. A convincing combination.

Private hospital separations have grown strongly, taking some of the pressure off the public hospitals.

Between 1995-96 and 2000-01, private hospital separations grew by more than 44 per cent while public hospital separations grew by less than 10 per cent over the same period. But there is still unmet need in the public system.

The AMA's position is quite clear. As stated earlier, there is no case for cutting the real level of public hospital funding - by either level of government.

Public hospitals play a very important role in our health system, not only in direct patient care, but also in teaching and research.

A quite significant number of Australians cannot afford private health insurance. On equity grounds, they must have access through public hospitals.

Further, there are many high-tech procedures that can only be undertaken in the public hospital setting, such as treatment for childhood cancer.

Public hospitals have been starved of resources for too long and the hangover of unmet need is too large.

Australia has been very well served by a mixed - part public, part private - hospital system. This must continue.

The issue is where would we have been had private health insurance had been left in free fall. And the answer to that is a very big mess indeed.

Participation in private insurance was heading towards the UK experience of 10-15 per cent of the population.

That would have decimated the private hospital system and imposed massive workload pressures on the public hospitals.

Medicare's supposed 'promise' of free hospital care to every Australian only works at its level of funding if millions volunteer to use private hospitals and meet some of their own costs.

Some claim the rebate had no impact on the rebound in participation. Price signals are not effective. It was all due to Lifetime Health Cover, so we are told.

But Lifetime Health Cover is, at its core, a price signal. By making private cover affordable, the rebate has facilitated access to services instead of a place in a queue, and it has given patients choice of doctor, hospital and timing as a quid pro quo for reaching into their own pockets.

There is also a view that the subsidies can be removed from private health insurance without making much difference to coverage or pressures on public hospitals.

History proves these claims wrong.

In real terms, the rebate provides about the same level of assistance as applied to private health cover when Medicare was introduced.

The subsidies were pulled out one after another, and participation fell.

But there is scope to further fine-tune the rebate.

The AMA supports the recent removal of some of the more dubious items covered by ancillary insurance such as gym shoes and CDs and DVDs.

Further pruning may create greater efficiencies.

We have urged the Commonwealth to ensure that health insurance benefits are used effectively for better health outcomes by increasing the level at which health insurance funds reimburse public hospitals for privately insured patients.

We understand that public hospitals currently receive substantially less - $150 less - per day for privately insured patients than private hospitals.

While some difference may be justifiable, the difference is too great at the moment - and the revenue raised must be kept by the hospital.

Using health insurance funds to redress this clear inequality would also help ensure greater community support for the rebate. But premiums will rise as a result.

The underlying rationale for the rebate is that it takes the pressure off the public hospital system and allows people who have no alternative but to use the public system to access it.

This is the litmus test by which it can be justified and judged. However, costs must not be allowed to blow out and possibly put pressure on adequate funding for the public system.

Costs have blown out in medical indemnity insurance, though. I don't think you need reminding of that fact.

Medical Indemnity

While the Government has come a long way in a year on the medical indemnity rollercoaster, much more needs to be done.

The AMA has some major reservations with the proposed legislation and we have pushed and will continue to push for changes.

Without the changes, more doctors will drop out of high risk specialties.

Your constituents won't be happy about that.

Last Friday, the AMA met with the Medical Defence Organisations - the insurers known as the MDOs - to work on a joint position in relation to the Government's legislation.

The proposed Medical Indemnity Prudential Supervision and Product Standard Bill 2002 goes before the Parliament in a couple of weeks.

A few things must be addressed in those couple of weeks.

The AMA and the MDOs are united on the key issues.

We have asked the Government to extend its high claims subsidy to include 100% of the so-called 'blue sky' liability.

This is for the amount of a claim above $15 million that doctors are exposed to under the new capped insurance contract.

This could provide comfort and security for doctors to keep working at least until the long-term care scheme proposed by the AMA was operational. More about that scheme in a moment.

Just the switch to insurance contracts alone will add 10 to 40 per cent to premiums, largely due to State stamp duty.

Awards over $15 million may sound like a rare event, maybe, but they can and will happen.

With enforced insurance contracts, a more feasible solution is for the government to provide cover over the insured limit, rather than doctors working in fear of being caught with such a liability.

There is also a need for full and portable Death, Disability and Retirement cover - DDR.

We believe that a Government established and guaranteed statutory pool is needed.

And portability is required to ensure competition.

We require the government to cover liability for claims notified outside the government's prescribed minimum 'run-off' cover or the retroactive period of cover.

Then there is the long-term care and rehabilitation scheme.

The massive and unpredictable future care costs of the severely disabled must be removed as a head of damages from the tort system and there must be a government scheme to provide the care - when it is needed, not years later.

The AMA recommends a community funded nationally coordinated medical accident care and rehabilitation scheme for patients severely injured as a result of medical accident.

The scheme should provide efficiently managed services where possible, not pots of money to individuals.

But perhaps the biggest sticking point will be the proposed levy on doctors.

Doctors will not countenance a levy until:

1. The high cost claims scheme is expanded to cover 100 per cent of claims above the insurable cap, which is currently $15 million
2. The long-term care and rehabilitation scheme is operational, and

c. Tort law reform is effective, particularly that Statutes of Limitations are reduced and made more certain.

A copy of a recent speech explaining the AMA's position on medical indemnity is in your media kit today.

There is a lot we agree on with the Government in the way they have handled the medical indemnity crisis. We have worked closely together.

A few small - but vital - extra steps will make things acceptable. It would be a shame to waste this opportunity to put some certainty back into the system.

Conclusion

There is much more I could have covered today but instead I chose to concentrate on the issues that the AMA considers will win or lose votes for the major political parties.

The issues are straightforward.

Access to quality health care. We need to plan our medical workforce carefully into the future.

Affordability for the disadvantaged to access quality health care. There must be a Medicare safety net to cover pensioners, the chronically ill, and low income patients.

A balance between public and private health must be maintained. At the moment the rebate is doing the job but nobody can be complacent that it will always be so.

Our public hospitals must be adequately funded, and cooperation maximised between State and Federal Governments.

The Australian Health Care Agreements must be about better health outcomes, not funding feuds between the Commonwealth and the States.

The medical indemnity legislation must be changed to reflect the concerns I raised today.

Whoever properly addresses these issues will win the confidence of Australian voters on health policy. To get the policy right, you should consult the AMA. We're here to help, after all.

In closing, let me say this is my final Parliamentary Breakfast as AMA President.

I have got to know many of you personally over the last three years, and most of you professionally...directly or indirectly.

It has been an honour to represent the views of the AMA's 27,000 members to you. I wish you all well in the important task of representing your electorates and your constituents.

Thank you. I'm happy to take questions.

Contact: John Flannery, 02 6270 5477/0419 494 761

Judith Tokley, 02 6270 5471/0408 824 306