Clinics, hospitals and policies in need of intensive care

We have to have a mature debate about the state of our health system.

In 2015-16, more than $170 billion was spent on healthcare in Australia.

To look at it, Australia’s health system is, for the most part, healthy.

Our practitioners are among the most talented and well-regarded; our hospitals are kept to a high standard; public and universal ­access has served us well; and Medicare remains a trusted brand.

On face value, the health system is what keeps Australians happy and active: our average life expectancy is among the highest in the world. But test the system’s vital signs and you soon realise things aren’t quite as rosy as they seem. As with many of the Australians who rely on it, the system is no longer fit and fabulous, and it is grappling with issues of self-image, public expectations and how it can possibly meet the ideal.

Perhaps the greatest worry, however, is that those responsible for running the health system can’t agree on a course of treatment. Partisan politicking, ruthless lobbying and a deadly combination of ignorance and misinformation are making things a whole lot worse for everyone.

Last week alone, there were suggestions, from all sides, the vital signs weren’t good. Some received more attention than others, yet all centred on the rising cost of healthcare and the impact it was having on access and availability, whether that be the price paid by patients or how long they wait.

This is not to say that rising costs haven’t been an issue before now — they have been, reported extensively in The Australian — but to caution that the prognosis for the system remains unclear. This is as true for Medicare as it is for private health and public hospitals.

In 2015-16, more than $170 billion was spent on healthcare in Australia: almost 67 per cent ($114.5bn) came from governments, 17 per cent from individuals directly, 9 per cent from health insurers and the remainder from injury compensation insurers.

Next financial year, 16 per cent, or $78.8bn, of federal government spending will be on health; more than education and defence combined, and second only to social services and welfare.

Late last month, the Australian Medical Association held its national conference and, going into an election year, attracted speeches from federal Health Minister Greg Hunt, opposition health spokeswoman Catherine King and Greens leader Richard Di Natale. Melbourne GP Tony Bartone was elected the new president, declaring the AMA — the health lobby group politicians fear the most — wanted more money for primary care.

“General practice has been systematically starved of funding, putting at risk its very survival,” Bartone told delegates, to much applause.

Then, the ABC’s doctor-broadcaster Norman Swan had Four Corners look at the problem of privately insured patients being left with unexpected costs. Swan gave shocking examples of a persistent problem. In relation to one $16,000 gap fee, Swan acknow­ledged none of the individual fees were “ridiculous” but questioned whether the system should leave patients so exposed.

Swan said: “In the meantime, it’s up to us to ask questions, get second opinions and negotiate, because a large fee doesn’t mean you’ve got a good doctor.”

Predictably, many responded by reiterating their faith in the public system (or criticising Swan for not going after the insurance sector). Yet federal and state governments, Coalition and Labor members, argue over the cost of public hospitals. Depending on who you listen to, the Abbott and Turnbull governments have stripped billions of dollars from public hospitals or delivered record funding and a new agreement with most states.

The fact the states finally will receive funds this week that they are owed for ser­vices delivered two years ago, after a dispute over unexpected cost blowouts, tells you money doesn’t come easy anywhere in the system.

With several by-elections next month, the federal opposition has petitions going, and leaflets being distributed, declaring “only Labor will fight to fix our hospitals”.

As it pledges $2.8bn more for public hospitals, so they can do more for patients without charge, Labor is also vowing to cap insurers’ premium increases in the private sector and hold an inquiry. Not happy with how insurers raise their revenue, Bill Shorten has accused them of “treating Australians like mugs, gouging people on the basis of a con”.

In Canberra last week, a Senate committee went over the recent federal budget. Amid the usual argy-bargy and calculated responses came a surprisingly candid observation from Health Department secretary Glenys Beauchamp. After the Coalition’s divisive first-term efforts to make the health budget more sustainable, and the damage inflicted by Labor’s “Mediscare” campaign, Beauchamp hinted at unfinished business.

“I think we need to look at the sustainability of the health system and how that is financed overall,” Beauchamp said. “I think we will be faced with challenges while we have a significant proportion of the budget allocated to health.”

Finally, to cap off a busy week, an official from the Australian Prudential Regulation Authority told insurers not to be complacent about the challenge of affordability. APRA had previously declared rising health costs the key problem — undermining Labor’s claim insurers are simply profiteering — but official Peter Kohlhagen questioned whether the industry was even prepared for the challenges.

“We see challenges affecting insurers across all sections of the industry,” Kohlhagen said.

“Larger and more sophisticated players may be better resourced to face the challenges, but you will see shortly that there are points of stress across all insurers.”

Now, these may sound like separate issues, and unrelated symptoms, but there is a common cause: how to pay for the cost of doctors, nurses, beds, devices, drugs and everything else. If you accept that costs are rising, and will continue to rise, well above inflation, the question then becomes who should pay for it — governments (through taxes), insurers (through members’ premiums and a government rebate) or patients (however they can) — and whether there needs to be rationing or restrictions on access.

There are no easy answers but it helps to know the recent history.

When the Coalition came to power federally in 2013, its focus was one of broader budget repair. An audit commission recommended a GP co-payment and greater use of health insurance, on the basis that those who could afford it should pay more for it. A co-payment would require patients to contribute towards any bill attracting a Medicare rebate, all but ending bulk-billing in Australia. Former health minister Peter Dutton wanted most patients to pay $7 to see a GP or have a pathology test or scan.

The government accepted the GP co-payment proposal, advised by the Health Department that Australians could afford it given how much money they spent on non-essential health items such as vitamins and the like.

The co-payment proposal flopped and was replaced by an extended freeze on indexation of Medicare rebates, leading some GPs to complain they were being forced to impose a co-payment by stealth. This, combined with secrecy over plans to replace the Medicare payments system, was used by Labor with great success at the 2016 election, when it said the ­Coalition would privatise Medicare. Bruised by the experience, Malcolm Turnbull vowed to pay more attention to health policy, conceding “there was some fertile ground in which that grotesque lie could be sown, there is no doubt about that”.

From that, it can be assumed, the major parties realised the dangers associated with trying to force patients to pay more — though not necessarily that investing more in prevention and primary care could save money on more expensive hospital services in the longer term. Even the Medicare rebate freeze is starting to thaw.

Historically, one of the most controversial attempts to control health expenditure was to restrict the number of doctors. This led not only to an over-reliance on overseas-trained doctors in the bush but a strengthening of the position of certain specialty groups, which now have the largest private out-of-pocket fees and the largest public waiting lists.

In the last budget, the government vowed to boost the supply of locally trained doctors in areas of need while cutting 200 overseas-trained GPs each year from the cities. This is forecast to save Medicare $415.5 million across four years, which Chief Medical Officer Brendan Murphy revealed was due to over-servicing in cities.

Despite the much-proclaimed increases in Medicare funding, ­future growth has slowed across the board, partly due to predicted changes in how people will use Medicare. Reflecting on the cities, Murphy says “there is some evidence of perhaps subconscious, supplier-induced demand”.

According to Murphy, the savings will not only be in GP-type services but also in specialist referrals, scans and tests. If, indeed, there is over-servicing, for no real patient benefit, this promises flow-on savings across the system. If the sick and injured go without primary care, however, it ultimately will cost-shift to public hospitals run by state governments. This is only one way the system is interconnected and interdependent, for better or worse.

Health insurers say a joint compliance effort with the government, cutting back on unnecessary and wasteful services, could save the system $1bn a year. While a Medicare taskforce has been targeting low-value care, and the department is getting tougher on compliance, insurers have had to make do with other reforms.

There is not only cost-shifting between the commonwealth and the states, between Medicare and public hospitals, but also between the private sector and the public sector. In the belief that the private sector exists to take pressure off the public sector, the commonwealth provides a $6bn insurance rebate to help counter premium costs.

The need for balance between public and private is one of the justifications for Hunt’s focus on reducing the costs borne by insurers and improving the value of policies to consumers. Rising premiums, exacerbated by an eroding rebate and rising costs, has brought a decline in the number of Australians with private health coverage, prompting reforms through to 2020. There is no reliable evidence, however, that this decline has put pressure on the public system. To the contrary, insurance is propping up public hospital budgets by more than $1bn a year.

The states are required to provide public hospital care to Australians without charge but have realised they also can obtain patients’ insurance status and bill their health fund with great success. They have built more private rooms and offer private patients faster treatment.

In a commonwealth heads of agreement signed by all states except Queensland and Victoria, Hunt calls for a return to the traditional principle that public hospital patients, regardless of insurance status, be treated on the basis of clinical need. There is no offer of additional commonwealth funding, however, just a continuation of the existing funding formula (which federal Labor also appears to have adopted, separate to its $2.8bn election war chest).

In the coming months, Hunt will focus on getting this agreement sealed, and also will work with the AMA and GP groups to develop a new funding model for primary care, likely to feature quality-based and performance-based incentive payments. He also has Murphy looking at how to deal with the problem of unexpected out of pocket expenses. Election campaigns, however, have a tendency to bring the unexpected and voters are accustomed to getting more for less.

So where does that leave Australia as we enter the winter of 2018? For starters, patients desperately need to inform themselves about their health needs, their rights and options, to protect themselves now and into the ­future. Whether you go public or private, there is already considerable variation in the quality and cost of care, and persistent pockets of inequality and the vital signs point only to more pain.

But the question of informed ­financial consent really needs to extend beyond the doctors’ rooms and into the community generally.

Australia needs to have an educated, mature debate about the state of the health system, whom it should serve and how to pay for it into the future.

Otherwise, the blame-shifting and buck-passing will only worsen, confidence will suffer and people will make poor decisions about their healthcare rather than let the system treat them poorly. This can be the beginning of a conversation or the beginning of the end.