Medicare reform is overdue and must be handled with great care

As doctors in Australia watch in horror at the collapse of the NHS in Britain, the clock is ticking on our own ‘broken’ Medicare system.

Health workers strike in Britain as the NHS crumbles. Picture: Getty Images

Medicare’s status as a national ­insurance scheme that stands as a bulwark against inequality and guarantees universal access to healthcare has long been cemented in the national psyche. Labor has sought to capitalise on its status as the party synonymous with the birth of the cherished national scheme at every opportunity, especially since the May election.

While Bill Shorten’s failed 2016 and 2019 election pitches relied heavily on a “Mediscare” campaign that railed against Liberal cuts, Anthony Albanese’s Labor put more meat on the policy bone at last year’s poll and promised to “strengthen” the national health insurance scheme and usher in a “21st century Medicare”.

Now federal Health Minister Mark Butler finds himself at the pointy end of that promise, with a monumental and highly complex policy task ahead of him as it becomes clear Medicare needs far more than just strengthening, with bulk billing rates plummeting and primary care facing an enormous looming workforce shortage.

A report of the Strengthening Medicare taskforce convened by Labor immediately after the election and made up of peak medical and consumer groups, public servants and health economists is soon to be publicly released amid consensus across the sector that the 40-year-old fee-for-service rebate model of funding primary healthcare must be overhauled.

“Medicare is broken,” says psychiatrist Ian Hickie, who has long argued that Australia’s funding model stands as a barrier to medicine’s evolution towards multi­disciplinary care.

“Australians pride ourselves on Medicare, and they want to believe the health system is equitable. We believe we have the best health system in the world. We believe the Americans have the worst. But we become more and more like the US system every day. And those who can’t pay either get no care, or they fall back on almost charity options and the public systems that can’t cope,” Hickie said.

“Medicare was a great innovation in the 1980s. But it reinforced the model of care of the 1980s. We now have much more personalised care, we have digital innovations, we have much greater treatment options, but care itself is much more complicated.

“The reality is that many complex problems require teams of specialists, not just primary care teams, but teams that have mixed skills, right across the skill spectrum. Now we need to reward teams, not individuals.”

Psychiatrist Ian Hickie says Australia’s health system has become more and more like the US system.

This is not just an Australian problem. The widespread prevalence of chronic disease and increasingly ageing populations are burdening health systems everywhere as costs grow exponentially and workforces shrink. Doctors in Australia are watching in horror at what is being described as the collapse of the NHS in Britain as despairing doctors reveal people are dying in hospital corridors, ambulances regularly take over an hour to respond to critical cases, and the service faces its worst staffing crisis in history. While Covid-19 and the economic catastrophe of Brexit has precipitated the NHS collapse, it was a decade of chronic underfunding and in part a dysfunctional primary care system that are the underlying causes of the extraordinary pressure on British hospitals.

A nationalised model such as Britain’s is something Gough Whitlam forcefully rejected in the early 1970s as he crafted Medicare’s precursor, Medibank, a model of universal healthcare based on free access to public hospitals and fee-for-service funding for general practice in which the government paid 85 per cent of all doctors’ fees via a patient rebate.

Concerns that the fee-for-service model rewarded episodic rather than preventative care were voiced at that time by internal critics during Labor’s bitter struggle to realise universal healthcare.

Medicare, now an article of faith for both sides of politics, has served Australia remarkably well for 50 years, but the fee-for-service model’s flaws, as foreseen 50 years ago, are now so significant in the context of widespread chronic disease that the funding system is no longer functional.

The challenge for Health Minister Mark Butler is that there is no real road map. Picture: NCA NewsWire / Brenton Edwards

Butler has described general practice as being in its worst shape in Medicare’s history as bulk billing rates plummet, patients across the country struggle to secure appointments, and the chronically ill poor who cannot pay gap fees are unable to afford to see a doctor at all. Doctors’ groups have blamed the freezing and indexation of the Medicare rebate over the past seven years for the crisis in general practice. But they have also acknowledged the necessity of fundamental reform to the financing model, a position partly borne out of the reality that under the current model they are attempting to address a tidal wave of chronic illness in patients but are not recompensed for the time or labour that co-ordinating complex care entails.

The challenge for Butler as he crafts a “blended” general practice funding model in Australia made up of part fee-for-service and part flexible block funding is that there is no real road map. Countries around the world have been grappling with how to integrate multidisciplinary care within their health systems with varying levels of success, but there is no clearly successful model in a country that is any way comparable to Australia, with its remote geography, deep regional and remote health inequalities, and the administrative and fiscal complexities of federalism.

Governments have been trying to make co-ordinated care a part of our healthcare system to combat chronic disease for decades. There have been four national trials of new funding models since the 1990s, including most recently the failed Health Care Homes.

Howard government health minister Dr Michael Wooldridge presided over the Co-ordinated Care Trials between 1997 and 1999 that funded a care co-ordinator for about 16,000 individuals with complex health needs.

“Medicare has always been a health financing system,” Wooldridge says. “It has been about ­access, it has never been about outcomes.”

Michael Wooldridge thinks medical practitioners must be at the centre of the Medicare model Picture: Aaron Francis

That observation is echoed by Anne-Marie Boxall and James Gillespie in their book Making Medicare, who remark that “a criticism of the current system is that it does not provide optimal care, rather it is episodic, creating incentives for abuse of the system because doctors’ incomes are generated by multiplying the episodes of care. Because Medicare was never designed to foster co-ordinated care, it is perhaps not surprising that it now struggles to achieve it.”

Wooldridge says the lessons from the Co-ordinated Care Trials are that any policy to fund multidisciplinary care will fail without doctors placed at the centre of the model. And governments must be wary of the “near religious belief” among bureaucrats, particularly in treasury, that team-based care is a way of getting better outcomes while saving money.

“No work I ever saw as minister and no briefing I ever had as minister said that the outcomes were better,” says Wooldridge, who also believes GPs are not adequately remunerated. “The warning to me is you have to make medical practitioners the centre of it. If you have medical practitioners at the centre of it, and understand it is probably going to cost you more money, then you might actually get really good outcomes. But if it’s really just some sort of Trojan horse to have Commonwealth Primary Health Networks as commissioning bodies, it won’t work,”

The Royal Australian College of GPs president Nicole Higgins is already alert to what may prove a flashpoint of conflict, and is opposing funding being channelled through PHNs, which are regionally based federal primary care bureaucracies that were set up to improve patient care and drive efficiencies. “We want to make sure that the money that has been earmarked for general practice goes to patient care; it shouldn’t be going to PHNs and more red tape and bureaucracy,” Higgins says.

“It is important that it does fund multidisciplinary care that is based in general practice to support ­patients with complex chronic ­disease. GPs need to continue to be the stewards of the multi­disciplinary care team, because they’re the ones who have the whole patient picture.”

The RACGP has pointed to Denmark as a blended funding model that pursued a policy of closing hospitals and funnelling money into multidisciplinary primary care to combat chronic disease.

RACGP president Dr Nicole Higgins is opposed to funding being channelled through Commonwealth Primary Health Networks.

But as Wooldridge points out, simply introducing a team-based care model is not a guarantee of success. Examples abound around the world of where countries have floundered. The UK capitation model – whereby doctors are paid an annual fee for each patient they have enrolled in their practice – has resulted in massive underservicing. Voluntary patient enrolment in the Australian context would not be a capitation model but rather tied to a flexible pool of funding directed towards co-ordination of care.

A recent parliamentary report on the UK’s primary care reforms reinforced the critical importance of “relationship-based care” which resulted in fewer hospital visits, lower mortality and reduced cost to health systems. Parliamentarians described a primary care system in crisis in which “the elastic has snapped after many years of pressure” despite attempts to ease GPs’ burden with the introduction of nurses and allied health teams to general practice. They registered “extreme concern” about the decline of continuity of care.

“Seeing your GP should not be like phoning a call centre or booking an Uber driver who you will never see again: relationship-based care is essential for patient safety and patient experience,” said the report of the House of Commons’ cross-party Health and Social Care Select Committee.

The Kings’ Fund senior fellow Beccy Baird gave evidence to that committee and says while Australia’s system is radically different from the UK’s, policymakers here should be taking note of the lessons from abroad. And she has a piece of advice that in retrospect, might have assisted Whitlam 50 years ago.

“I think in any health reform, starting with the way that the system is structured is always flawed,” Baird says. “We need to start with what kind of care we’re looking for for patients, and therefore what’s the right way to enable that care to happen. It will be different in different places, because populations are different.

“Certainly, all the research that I’ve done shows that teams work best when they know each other, when there’s psychological safety and trust, where they’re small, where you get what we call a ‘warm hand-off’ between patients. They’re all together with a shared set of goals, a shared purpose and shared organisation.

“It also needs really good clinical leadership, and I think that’s one thing you wouldn’t want to lose. GPs are still the leaders of the team, they are still the clinical leaders, they need time and resources to be the leaders. Because fragmented care is terrible for ­patients.”

If Labor gets this right, it will cement their legacy as the champions of Medicare. Change will be incremental but it must be far-reaching. As health systems come under unprecedented pressure and ordinary Australians are increasingly unable to afford or access primary care, half measures are not an option.

“If the taskforce recommends these steps and the government accepts them, it could be a very big and long overdue improvement to primary care in Australia,” says the Grattan Institute’s Peter Breadon.

“One thing we have to avoid is another round of short-term pilots or trials. We know enough about what’s needed. It’s time for a long-term plan to roll it out. Because if we don’t change, it’s going to get harder and harder for GPs to effectively help people manage chronic disease.

“And that means people get avoidable illnesses, and hospital admissions will keep going up, ­putting pressure on all governments’ budgets. And ultimately, people will die younger without their chronic diseases being well managed.

“The silver lining of everybody agreeing that the system is in crisis is that we might finally get the long-overdue reforms that doctors and patients need. I think there is a big opportunity here.”