|
Home
|
Issues
|
MJA shop
|
MJA Careers
|
Contact
|
Topics
|
Search
|
RSS |
Medicare: diagnosis and prognosis
Frances C Cunningham
MJA 2000; 173: 52-55
The system of mixed public-private healthcare funding works well in Australia and offers the best foundation for the future
Make a comment - Register to be notified of new articles by e-mail - Current contents list - More articles on Administration and health services
| Australians have now experienced 16 years of national health insurance with Medicare, although the program implemented in 1984 was largely a renamed version of its predecessor, Medibank, introduced 25 years ago. How will the healthcare industry and its external environment change over the next 25 years, and what will be the impact on Medicare? How should we best appraise Medicare's strengths and weaknesses, take account of the fundamental changes that have occurred in healthcare delivery, and apply the better intelligence we now have on financial incentives and delivery mechanisms to develop a more effective national health insurance program for the future? | |||||
Appraising Medicare | |||||
|
How do Australians view Medicare? In a 1998 survey conducted to
measure public satisfaction with healthcare, only 19% of
Australians agreed that, on the whole, the system works well and only
minor changes are needed to make it better.1 Forty-nine per cent wanted
fundamental changes, and waiting times for specialist care and
non-emergency surgery was reported as the most important consumer
issue. The survey also revealed a substantial loss of public
confidence in the healthcare system compared with a decade earlier,
when 34% of Australians felt that the system needed only minor
changes.
On the plus side, Medicare has established affordable universal coverage for publicly funded, public hospital services and largely publicly funded, privately provided medical and optometrical services. Australians also have excellent coverage for mainstream pharmaceuticals. With a view to controlling health expenditure, at present at $50 billion and 8.4% of gross domestic product (GDP),2 these services were seen by government as the boundaries of publicly funded Medicare. While our health expenditure is at the median for OECD countries, our life expectancy is above the average. Weaknesses in the Medicare public program are evident: universal coverage only includes medical practitioners and optometrists, and the provision of other publicly funded ancillary services and community health services varies substantially within the various State or Territory health systems. | |||||
Medicare's financial incentives | |||||
|
A valid concern with implementing a national health insurance
program is that it tends to lock in place the existing healthcare
system. In Australia, this has meant the maintenance of the
open-ended, traditional fee-for-service approach to financing
medical and optometrical services, with little change in the
delivery system structure. There are increasing concerns about the
geographic maldistribution of medical services, especially in
rural areas. With an administered pricing system, it is difficult to
get the prices "right", especially with the rapid technological
changes affecting healthcare. Moreover, the structure of such
systems can have powerful effects (some intended and undesirable) on
services delivered. For example, payment of general practitioners
under Medicare has created incentives for shorter patient visits and
higher patient throughput.
In addition, preventive services -- health screening and disease management programs, and patient education and health outcomes monitoring -- tend not to be as effectively implemented in non-managed systems as in managed systems. Although trials of coordinated care have been implemented in Australia in recent years, they have been primarily public-sector oriented, whereas the major overseas examples of long-term, financially viable care management systems are in the private domain. In the United States, in addition to the coverage that private sector managed health insurance firms provide for those with private insurance, the government has contracted extensively with these health insurers to provide care to beneficiaries in government programs as an alternative to traditional coverage. | |||||
Split responsibilities and inefficiencies | |||||
|
Medicare creates a separation of payment of most ambulatory medical
care from inpatient care, with non-hospital medical services and
pharmaceutical services funded by the Commonwealth, and hospital
and day-surgery services funded through the States and through
private health insurance. This means that there are major structural
impediments to the provision of a "seamless" web of services through
all levels of care. This separation of payment has also made it
difficult to move away from an emphasis on inpatient care and the
resultant high levels of hospital utilisation. In 1997-98, overall
Australian hospital utilisation was 1075 bed-days per thousand
population (excluding same-day admissions).3 This compares
with the 1996-97 rates of 318 and 335 days per 1000 population in the
United States for health maintenance organisations (HMOs) and
non-HMOs, respectively.4 The 1997-98 Australian
hospital admission rate (excluding same-day admissions) of
16%3
was almost three times the 1996 US health insurance rate of 5.7% (for
both managed care and non-managed care).5 In the United States, this
reduction in acute inpatient care has been accompanied by an increase
in subacute, home health and skilled nursing facility care. This has
not happened in Australia, with the result that we have excess
hospital bed capacity in both the public and private sectors.
An important general caveat about measuring service use is that the assumption "more is better" does not necessarily hold true in healthcare consumption. It is inappropriate to assume that more care -- or more costly care -- is better, or that reductions in service use necessarily indicate reductions in quality. Hospital utilisation in Australia thus presents a conundrum: in spite of having such high levels (by international comparisons) of inpatient admissions and bed-day utilisation, as well as excess bed capacity, there are significant problems with public-hospital waiting lists. The solution lies in better care management and in appropriate care at the appropriate level, rather than in funding for additional beds. | |||||
Reform of private health insurance | |||||
|
Although 10% of total health expenditure is funded through private
health insurance,2 the role of private health
insurance within Australia's healthcare system has not been clearly
delineated. Is private health insurance a supplement to or an
alternative to the public health system?
Initial estimates of the cost of Medicare assumed that at least 40% of Australians would maintain their private health insurance cover.6 Levels of private cover declined from 60% immediately pre-Medicare in 1983 to 30.1% in 1998.7 The legislative changes introduced in 1995 were intended to make insurance better value for money through agreements made between health insurers and hospitals and health insurers and medical practitioners. These changes have resulted in more effective negotiations between insurers and private hospitals. Since coming into power in 1996, the Howard Liberal-National Coalition Government has made significant progress in modernising the regulation of private health insurance. Within a short timeframe, most of the key recommendations of the 1997 Industry Commission Inquiry8 into private health insurance have been introduced, with the exception of the recommendation for a broad public inquiry into Australia's health system. Australians value choice, whether it be in education, airlines or healthcare. Australians also value a fair go. The Howard Government has introduced strategies to ensure that we maintain a viable mixed private and public healthcare system in Australia. Compared with the financial contribution of those relying totally on the public system, the contribution of privately insured Australians was inequitable. The 30% tax rebate on health insurance premiums for consumers is one part of an overall strategy to ensure the continuation of a mixed public and private health system in Australia. There is bipartisan support for the rebate, with the Leader of the Opposition, Kim Beazley, promising its retention by a Labor Government.9 The rebate ensures that there is a fairer, more equitable approach to financing healthcare for those who choose to pay for private cover, in addition to their Medicare levy payments and their contributions through taxable income (estimates for which range from 5% to 10%). The Private Health Insurance Administration Council reports that a record 187 000 Australians have joined health funds in the first three months of this year, with the fastest-growing membership being in the age bracket 30-34 years.7 This means that more than six million Australians now have health insurance, the highest level since 1996. There has also been stronger growth in no-gap cover for hospital-related medical costs, after the Harradine* amendment. The latter requires health insurers to have no-gap products in place by 1 July 2000 in order to offer the 30% rebate to their members. The legislation, just passed by Federal Parliament (the Health Legislation Amendment (Gap Cover Schemes) Act 2000), will allow the private health industry to develop "no gap" or "known gap" schemes which will operate without the need for contracts. The introduction of Lifetime Health Cover on 1 July 2000 is currently resulting in continued growth in private health insurance membership. Major changes relating to the capital adequacy and solvency requirements of health insurers are to be introduced shortly to provide more clearly defined safeguards for consumers. | |||||
Major impacts over the next 25 years | |||||
|
The fundamental challenge for Medicare, with its financing and
delivery systems belonging to the last century, will be coping with
the impact of key trends envisaged for 2025. Most of these trends will
affect the future costs of Medicare. The health insurance system of
the future will also be shaped by the wider sociopolitical, moral and
ethical environment, in terms of what is politically feasible and
acceptable to the electorate. In particular, what will be the
trade-off between the extent of public coverage and the tax burden?
Also relevant will be our capacity to reduce behavioural risk factors
across societal groups to achieve reductions in morbidity and
increases in life expectancy. The magnitude of the contribution of
the behavioural risk factors to the disease burden in Australia has
recently been estimated, with tobacco smoking causing an estimated
10% of the disease burden in Australia, followed by physical
inactivity (7%).10
The Internet, electronic commerce and information technology Beyond clinical uses, promising Internet applications in healthcare include:
The challenges in achieving such uses lie in standardising the coding and formats for clinical and health-related data and in standardising patient identification while protecting privacy. The National Health Information Management Advisory Council has developed a national plan of action for information management in the health sector.12 However, gaps in private sector representation on the Council need to be addressed urgently. Further, the Commonwealth must take the lead in legislatively mandating the development of such electronic standardisation requirements. This would accelerate progress to be made in efficiencies from e-commerce and from performance measurement across the health system. Rising consumer expectations Medical advances, technological change and clinical practice
Berwick envisages that, in the information age, medical practice will be a "knowledge producing" enterprise and not the "contact producing" enterprise of the last century.13 That knowledge will include the best evidence for diagnosis and treatments. There will be a greater focus on the development of standards of care, clinical guidelines and protocols, and on prevention, as well as ambulatory or home care. A greying Australia | |||||
The ideal future financing model | |||||
|
An ideal model for future healthcare financing is outlined in the Box.
I have described this model in greater detail elsewhere.15
Advocates for one single health funder, while largely driven by ideology, are campaigning for all health services to be funded through a government-run, single government payer system. Debate over whether government funding or private insurance constitutes the ideal financing model is reaching resolution in a number of overseas countries. The answer seems to be both. On average, private insurance pays about 10% of healthcare costs in OECD countries and is growing at a rate of 5%-7% a year. According to the report HealthCast 2010: smaller world, bigger expectations,16 these trends mean that most of the industrialised world will have both a strong publicly funded government health program and a private, market-based one. While acknowledging areas for improvement in both sectors, on balance the mixed public-private system works well in Australia and offers the best foundation for the future. This aspect of the overall framework of Medicare allows for choice by consumers, rather than the alternative of a totally government-controlled, nationalised health system. In addition, with proposals such as that of the Democrats for regional health authorities to pay medical practitioners on a capitation or salaried basis,17 it could be wise for medical practitioners themselves to have the option of another payer. Ideally, within the future Medicare framework, private health insurers should be able to offer their members a comprehensive range of health services, which should include, as a minimum, ambulatory medical services and inpatient services. This would extend the benefits of a mixed system to both consumers and medical practitioners. | |||||
| Footnotes | * Brian Harradine, Independent Tasmanian Senator in Federal Parliament (from 1975 to the present). | ||||
| References | |||||
| |||||
Authors' details | |||||
| |||||
|
©MJA 2000
Readers may print a single copy for personal use. No further reproduction or distribution of the articles should proceed without the permission of the publisher. For permission, contact the Australasian Medical Publishing Company. Journalists are welcome to write news stories based on what they read here, but should acknowledge their source as "an article published on the Internet by The Medical Journal of Australia <http://www.mja.com.au>". <URL: http://www.mja.com.au/> © 2000 Medical Journal of Australia. We appreciate your comments. | |||||
| |||||
| Back to text | |||||
