A govt economist I once spoke to said that in (unspecified) health
systems he has looked at, governments seem to contribute about 6% of
GDP.
The explanation seemed to be that amongst all a government's
competing interests for funding, that health is about 6% of the
national GDP pie. Somehow this makes sense to me.
Assuming this to be true, to have a better health system, the private
sector has to chip in more.
Attempts to spend more govt money than this are likely to meet
resistance from other interests the government must support - such is
the nature of the system. (All systems resist perturbation and all
western democracies are similar systems.)
One could call the old British system (health pegged at 6% GDP)
"efficient" or "substandard", depending on perspective. Of note, they
are throwing billions of pounds at the problem to make it "better".
Ian.
At 10:35 am +1100 24/2/06, Ken Harvey wrote:
Duncan Guy wrote:
Our model is that you come to one place and get sorted....
I liked the concept of being "sorted" efficiently in a private
health care context.
Which is why many people (including myself) take out private health insurance!
However, there is some evidence that not all private health care is
as efficient as Duncan describes and there are also concerns about
its cost-effectiveness and equity.
I know these topics are a little off the track of gpcg_talk
(although an EHR is common) but I'd be interested if people have any
comments on a recent article I posted to "NewMatilda". See:
http://www.newmatilda.com.au/home/default.asp
Part 1 is appended below. Apologies for the length but academics
tend to be verbose!
Next Wednesday, Part 2 will be published (commenting in more detail
on the government's proposed sale of Medibank Private).
Cheers
Ken
--
Dr. Ken Harvey
http://www.medreach.com.au
VOIP: +61 (03) 9029 0634; Mobile +61 (04) 1918 1910
--------------------------------------------------------------------
Private Health Insurance: Where are we now and where should we be going?
By: Ken Harvey
22 February 2006
Any analysis of private health insurance (PHI) in Australia must begin
with an acknowledgement that its role (and who should pay) is disputed.
Given the existence of a tax-based universal health care system
(Medicare), some believe that that the cost of PHI should be met
entirely by individuals because PHI only funds 'optional extras' such as
choice of doctor, more timely elective surgery and a private room.
Others believe that PHI deserves government support because use of the
private health sector reduces the need for public funding of Medicare.
Regardless of these ideological beliefs, by 1997 this 'mixed' system was
in trouble. An Industry Commission report noted that PHI premiums were
rising rapidly, fund membership was progressively falling (from 50 per
cent in 1984 to 31 per cent in 1997) and the public hospital system was
also under strain. PHI was not only becoming less affordable; it was
also less attractive because an uncoordinated proliferation of doctors'
bills caused unpredictable 'out-of-pocket' expenses. This created a
vicious circle in which rising premiums led to the lower risk (younger)
members dropping out, shrinking the pool of insured but also raising its
overall risk, leading to higher pay outs and higher premiums yet again.
Sequential policy initiatives by the Coalition government included:
* Taxation 'incentives' to encourage PHI (such as the 1 per
cent Medicare levy for high income earners without PHI);
* A 30 per cent government PHI rebate (from April 2005
increased to 35 per cent for those aged between 65 and 69, and to 40
per cent for those aged 70 or older);
* Legislation requiring 'no gaps' or 'known gaps' policies
to be offered by all health insurers, and
* 'Lifetime Health Cover' allowing health funds to offer lower
premium rates to people entering insurance early in their lives and
higher premiums for people joining later supported by a massive
advertising campaign.
In response, the coverage of PHI peaked at 45 per cent in late 2000 and
more younger people joined the funds. Subsequently, these figures have
slowly declined. As at the end of 2005, 43 per cent of the population
was covered by PHI and the average age of policy holders was slowly
increasing. The main cause of increased coverage appeared to be
'LifetimeHealth Cover' probably aided by the 30 per cent rebate which
made PHI more affordable. The 30 per cent rebate costs about $2.5
billion annually while the 2005 increase in rebates for the aged has
added $111.3 million per year.
The Prime Minister argues that these policy measures have provided
'private health choice for most Australians'. The government notes that
private hospital beds are increasing and that more than 50 per cent of
surgery is now done in private hospitals. They quote research (sponsored
by Medibank Private) that argues that for every dollar the government
spends on the private health insurance rebate, the state and federal
governments would otherwise have to spend $2 providing these services
via the public system.
These opinions are disputed. The only objective justification for
spending public money on private health care would be if this approach
was more cost-effective than expanding the public sector. However, when
controlled for case type, a number of surgical procedures cost
considerably more in private hospitals than in public hospitals and
some, for example operative interventions during childbirth delivery,
appear to be performed excessively. There is also wide variation in the
cost of the same procedure on similar patients in comparable private
hospitals. Less cost controls are imposed on private hospitals by health
insurers than are demanded of public hospitals by State Health
Departments. For example, the use of diagnostic related grouping (DRG)
case payment, volume-outcome purchasing and pay for performance are
common in the public sector but rare in the private sector. In addition,
even the health minister recently acknowledged that many patients still
face 'nasty surprises' when their bills arrive despite the introduction
of 'no-gap' PHI policies. It can be argued that providing public subsidy
for PHI without demanding that the funds purchase services more
efficiently is simply rewarding laziness.
Another concern with subsidising PHI with public money is equity. The
lower a person's income the less likely it is that they will have PHI
yet poorer people tend to have greater health needs than those with
higher socioeconomic status. While there are about a million Australians
over 65 who are privately insured there is another 1.5 million, mostly
age pension recipients, who rely on the public system. In addition,
there are far fewer private hospitals in the country compared to the
cities so that people in rural areas (who also have lower income) also
miss out. Furthermore, people with PHI (often with less health care
needs) make more use of health services, probably because of capacity to
pay and consumer and supplier-induced demand. Given constraints on
health services supply, such as the number of surgeons available, it is
likely that services provided for patients with PHI come at the expense
those without PHI (but whose needs are greater). Finally, the PHI rebate
is regressive, reducing the contribution gap between the rich and the poor.
In short, given the inefficiencies and inequity outlined above, it is
not surprising that many believe the PHI rebate would have been better
spent funding more public hospital beds for the chronically ill,
decreasing public elective surgery waiting times, and improving services
in hospital accident and emergency centres. The 2004 National Platform
and Constitution of the Australian Labor Party says, 'Labor believes
that the private health insurance industry needs to be reviewed,
including the operation of the private health insurance rebate'.
Policy options for an alternative government include:
1. Immediately eliminating the PHI rebate and transferring the
money saved to expand the public health sector. While ideologically
sound this option is likely to be politically unpalatable.
2. Over time, slowly reducing the PHI rebate (and the
regulatory constraints on funds) in order to allow market forces to
ultimately determine the health services insured against and the
premium levels. Once again, the money saved would be invested in the
public sector.
3. Progressively linking the PHI rebate to specific performance
indicators that funds would have to meet in order to continue to have
their premiums subsidised with public money.
4. A combination of 2 & 3 above.
5. Doing nothing until such time as the inexorable cycle of
rising health care costs, rising PHI premiums and falling fund
membership produces the next unavoidable crisis.
--------------------------------------------------------------------
About the author: Dr. Ken Harvey is the Adjunct Senior Research Fellow
at the School of Public Health, La Trobe University. He is also a member
of Medibank Private and a member of the Australian Labor Party.
--------------------------------------------------------------------
References:
Industry Commission, Private Health Insurance, (Report No 57), Canberra,
AGPS, 1997. Available here.
http://www.pc.gov.au/ic/inquiry/57privatehealth/finalreport/
Private Health Insurance Administrative Council. Industry Statistics.
Canberra, 2006. Available: http://www.phiac.gov.au/statistics/index.htm
Howard J. Government rewards older Australians who contribute to private
health insurance. Press release, August 22, 2004. Available:
http://www.pm.gov.au/news/media_releases/media_Release1090.html
Harper I. Brief summary of Harper Report on 30 per cent Rebate for PHI.
Available:
http://www.fedhealth.com.au/WebFiles/30_percent_rebate_harper_report_brief_summary.Pdf
Harper I. Preserving Choice: A Defence of Public Support for Private
Health Care Funding in Australia. Harper Associates 2003, Commissioned
by Medibank Private Limited. Available:
www.medibankprivate.com.au/pdfs/PreservingChoiceSummary.pdf
Duckett S, Jackson T. The New Health Insurance Rebate: An Inefficient
Way of Assisting Public Hospitals. Medical Journal of Australia 72
(2000), pp.439-442. Available:
http://www.mja.com.au/public/issues/172_09_010500/duckett/duckett.html
Hindle D, McAuley I. The effects of increased private health insurance:
a review of the evidence. Australian Health Review 2004: 28; 119-138.
Lokuge B, Denniss R, Faunce TA. Private health insurance and regional
Australia. Med J Aust 2005; 182: 290-293. Available:
http://www.mja.com.au/public/issues/182_06_210305/lok10745_fm.html
King JF. Obstetric interventions among private and public patients. BMJ
2000; 321: 125-126. Available:
http://bmj.bmjjournals.com/cgi/content/full/321/7254/125
King JF. Metherell M. Hospital costs outed in bid to ease excess fees.
Sydney Morning Herald; June 8, 2005. Available:
http://smh.com.au/news/National/Hospital-costs-outed-in-bid-to-ease-excess-fees/2005/06/07/1118123841735.html
Willcox S. Buying best value health care: Evolution of purchasing among
Australian private health insurers. Australia and New Zealand Health
Policy 2005; 2:6. Available: http://www.anzhealthpolicy.com/content/2/1/6
Abbott T. Private patient gap payments. Press release, July 25, 2005.
Available:
http://www.health.gov.au/internet/ministers/publishing.nsf/Content/health-mediarel-yr2005-ta-abb090.htm
Australian Labor Party. National Platform and Constitution 2004 [90].
Available: http://www.alp.org.au/platform/index.php
--------------------------------------------------------------------
_______________________________________________
Gpcg_talk mailing list
[email protected]
http://ozdocit.org/cgi-bin/mailman/listinfo/gpcg_talk
--
Dr Ian R Cheong, BMedSc, FRACGP, GradDipCompSc, MBA(Exec)
Health Informatics Consultant, Brisbane, Australia
Elected Member, GPCG Management Committee
Internet: [EMAIL PROTECTED]
(for urgent matters, please send a copy to my practice email as well:
[EMAIL PROTECTED])
PRIVACY NOTE
I am happy for others to forward on email sent by me to public email lists.
Please ask my permission first if you wish to forward private email
to other parties.
_______________________________________________
Gpcg_talk mailing list
[email protected]
http://ozdocit.org/cgi-bin/mailman/listinfo/gpcg_talk
