Confronting the four factors that threaten Medicare’s future

An opinion piece by Professor Anand Deva

Professor Anand Deva discusses how the current Medicare pay-for-procedure regime isn’t working and looks towards a new approach. Established in the early 1970s, Australia’s public healthcare system remains one of our greatest assets. Today, however, what was put together with the best of intentions, is increasingly coming undone. The system is under threat from a confluence of four forces: ageing and the emergence of chronic disease, advances in medicine, a transactional schedule of payments, and fragmentation among providers and patients. These forces are creating a hostile, adversarial and competitive atmosphere in the face of a shrinking pool of funds. The May budget, while thawing the Medicare freeze and keeping health off the front pages, has done nothing to fix these underlying problems:

1. Ageing and the emergence of chronic disease

All statistics point to Australians becoming physically and mentally sicker as the average population age continues to rise. If we look at disease patterns in a younger population, we see rising rates of overweight/obese Australians (two times higher since 1990) and diabetes (three times higher since 1990), which threaten to reduce life expectancy for the first time in generations. With fewer people working and more retiring over the next few decades, the system will be paid for by a harder working, taxpaying minority.

2. Transactional schedule of payments

The Medicare item schedule places a transactional value on each of the points of access to medical consultations, diagnostic tests and treatments. There is an item number for a consultation or procedure and the providers get paid accordingly. The Medicare item number schedule was probably a necessary way of funding payment, but it placed a monetary value favouring procedural specialists over primary care physicians and non interventional specialists. This has created rifts within the profession and changed our practice. Additionally, the Medicare rebate’s long period of stagnation has lagged behind inflation, and resulted in increasing out-of-pocket costs being passed on to patients.

Fragmentation and conflict among stakeholders. The system has become complex and resists change, with the most obvious divide between state and federal responsibilities for different portions of the public health system. Further competing and fractious “partners” have become more interested in growing their share of the market or acquiring assets to preserve both revenue and control. The relationship between these players can be adversarial – for example, health insurers proposing non-payment for “poor” quality outcomes to both private hospital providers and doctors – and may well become more adversarial as the funding pool shrinks.

3. Advances in medicine

Medicine has become much more expensive because of new technologies and treatments – reaching 10 per cent of the overall GDP for the first time in 2014. These advances have created the unrealistic expectation that modern medicine is infallible and can work miracles. This raises a tricky question: should the latest – and often the most expensive – treatments really be offered immediately without a true assessment of their efficacy and/or comparison with existing treatment options?

4. Fragmentation and conflict among stakeholders

The system has become complex and resists change, with the most obvious divide between state and federal responsibilities for different portions of the public health system. Further competing and fractious “partners” have become more interested in growing their share of the market or acquiring assets to preserve both revenue and control. The relationship between these players can be adversarial – for example, health insurers proposing non-payment for “poor” quality outcomes to both private hospital providers and doctors – and may well become more adversarial as the funding pool shrinks.

The big concern is that these forces are now pushing our healthcare system into dangerous territory. The rise in demand coupled with funding pressure has started to affect accessibility and affordability. A growing number of Australians who are now stuck between a public system they are not sick enough to access and a private system that is out of reach.

As a fourth generation doctor, I also perceive a change in mindset and behaviour of the profession since the advent of the transactional Medicare funding schedule and the growth of medical entrepreneurship. My ancestors worked very much in an honorary capacity – giving their skills and time freely to those who unable to afford care while balancing a good income from patients who could.

Health arguments now tend to revolve around money: that more cash equals better results. We need to create a new paradigm for healthcare in this country. This change needs to come from the ground up rather than from policy makers, corporate offices and insurance companies who do not have instant feedback on the effect of their decisions. We have to also build a more cooperative alliance amongst all players with the intent on solving problems of affordability and access while maintaining quality of care.

 

 

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