Rachel Siewert (WA, Australian Greens) Share this | Hansard source

I would like to start my comments on the Health Insurance Amendment (Extended Medicare Safety Net) Bill 2009 by articulating that the Australian Greens believe in a universal healthcare system. I think we have made that plain on a number of occasions. We believe we need to be prioritising primary health care and preventive health care. We believe that, currently, there are fundamental flaws in the way our healthcare system is funded, and I have made that plain on numerous occasions. We are particularly concerned about the way the extended Medicare safety net has operated. It has in fact encouraged excessive out-of-pocket expenses, which have necessitated this supposed fix.

While the extended Medicare safety net payments have provided some consumers with financial relief from significant out-of-pocket costs, there is compelling evidence that shows this policy measure is not working effectively. A recent study of the extended Medicare safety net by the Centre for Health Economics Research and Evaluation, CHERE, demonstrates that the extended Medicare safety net is an inflationary measure that does nothing to restore equity of health care for those most in need. It advantages those who can afford their payments upfront and encourages specialists to raise their fees.

Whilst the Greens understand the intent of the proposed changes in this bill, and we understand that it is to reduce the cost to the public purse, we are not convinced that the government’s approach will be effective. We believe this legislation is a halfway house that will address only part of the problem; in fact, it will introduce another set of inequalities.

When the extended Medicare safety net was introduced in 2004, it provided individuals and families with an additional rebate for out-of-hospital Medicare costs once an annual threshold of out-of-pocket expenses was reached. The intention was to ensure that all Australians could access specialty medical services no matter what their level of income. The government’s additional spending on the extended Medicare safety net benefits has not been matched by a drop in the out-of-pocket costs of patients.

Since its introduction, there have been concerns that the extended Medicare safety net has led providers to increase fees, thereby diluting the potential benefits to patients. Since the introduction of the extended Medicare safety net, average fees have increased by around 4.2 per cent per year, and that excludes general practice and pathology. This increase is over and above the rate of inflation, and the CHERE report estimates that the extended Medicare safety net is in fact responsible for 70 per cent of this increase. According to figures taken from the Centre for Health Economics Research and Evaluation report, between 2003 and 2008 the fees charged by obstetricians for in-hospital services reduced by six per cent while the fees charged for out-of-hospital services increased by 267 per cent. Similarly, the fees charged for ART services fell by nine per cent for in-hospital services while the fees for out-of-hospital services increased by 62 per cent. In 2007, over 30 per cent of all extended Medicare safety net benefits helped to fund obstetric services, and 22 per cent went to assisted reproductive services. The extended Medicare safety net has more than doubled the amount of Commonwealth funding for these two professional groups. Only eight per cent of the extended Medicare safety net benefits went towards funding general practice consultations.

We believe, overall, that reform is needed and is, in fact, essential. The health system is in dire need of this overhaul. We do not believe there is a doubt about that and we do not believe that there is much argument about the fact that we need some changes. Decades of fragmented policy and political expediency have resulted in little discipline with respect to financial accountability and, at best, limited attempts to contain and control some of the excessive fees charged by some medical specialists.

The Greens are committed to reducing patients’ out-of-pocket costs, but we do not believe that this particular bill is the way to go about it. This debate over the government’s proposed changes to the EMSN diverts us from the much more important discussion about how we intend to fix health care and fund healthcare costs in this country. We should do this while we have a system that we are still proud of rather than letting it go towards the situation we see in the United States, which everybody thinks is a bad way to go.

Out-of-pocket payments constitute the third largest source of health funding in Australia after federal government and state and territory government payments. They contribute over $15 billion a year to the health system, which is more than double the $6.3 billion paid, on 2005-06 figures, via private health insurance. Out-of-pocket payments constitute 17 per cent of health spending in Australia—a much higher proportion than in 13 out of 20 OECD countries, including the USA. In her recent paper on out-of-pocket expenses, Jennifer Doggett from the Centre for Policy Development wrote:

Although consumer out-of-pocket payments influence both how consumers access health care and which goods and services they access, they receive little political or policy attention.

Ms Doggett argues that the result of this policy neglect is a system of out-of-pocket payments which:

• is inequitable, discriminating against consumers with certain types of health care needs or who live in particular geographic areas;
• is complex, expensive to administer and confusing to both consumers and providers;
• creates barriers to accessing cost-effective health care, typically imposing the highest costs on consumers when they have the least ability to pay; and
• results in perverse incentives in the use of health care.

This is the real issue that we believe we should be debating today. We need to review our out-of-pocket payments, particularly for medical services and pharmaceuticals. Our out-of-pocket arrangements, including the safety net, seem to us, quite frankly, to be a mess. They are hard to understand and achieve few of the disciplines that are necessary. Some services are free. The safety net for medical expenses operates for an individual and on a calendar year basis; the safety net for pharmaceuticals is for a family and operates on a financial year basis. We believe we need to be addressing these very significant issues.

The Greens acknowledge there has been some strong support for this bill. Robert Wells, director of the Menzies Centre for Health Policy at the Australian National University, argues that this bill would address ‘some of the outrageous rorts’ under the extended Medicare safety net ‘without destroying the scheme’. The Australian Healthcare and Hospitals Association has supported the efforts to ‘reduce the opportunities for private providers to manipulate the system’. But the government have not been brave enough to do the work themselves to address the issue of out-of-pocket expenses. What they have come up with is a policy that puts the patients at the front line. The government are basically saying to patients, ‘You go and you bring down these fees.’ The government are telling people whose only hope of having children is through IVF: ‘You go and sort out the doctors who charge thousands more than they really need to. You go and tell them.’ The government are saying, ‘You go and doctor shop to find the cheapest doctor to help you get pregnant, because the market is the best way to drive prices down.’ We do not believe that is the appropriate way to deal with this issue and to deal with patients, particularly patients who are at their most vulnerable. We believe it is inappropriate for the government to say: ‘Here’s the cap, doctors; you’re not going to get more than that. Patients, go and negotiate with doctors to see how much you can drive down their fees.’ We do not believe that is appropriate. As I said, this is for patients who in many cases are at their most vulnerable.

This measure claws back $451 million over the next four years, but what about the $15 billion we are contributing as individuals or families each year to cover out-of-pocket health expenses? What about all those people struggling to make ends meet? We believe the government needs to be addressing this differently. My advice to the government comes from a member of the ophthalmologist’s lobby: ‘In dealing with the problem, this government shouldn’t be thinking about the doctors; it should be focusing on the patients.’

That is what health care is about: the patients. We know that high out-of-pocket costs are a barrier to health care, especially among lower income members of our community, and the CHERE report made the point that this leads to greater health inequities. The Greens believe that out-of-pocket payments undermine the whole basis for sharing the cost of health care because they mean that the less well-off cannot afford health care. What about those people living in rural and remote communities? We know they incur higher out-of-pocket payments than those in the cities because their costs are higher while the rebate remains the same—that is, in the fortunate communities that have access to facilities. Ross Gittins recently made the point in the Sydney Morning Herald that:

People with conditions that can be treated by GPs or in public hospitals usually incur lower out-of-pocket co-payments than those with conditions that require treatment by therapists and over-the-counter medicines.

I quote from a case study from Jennifer Doggett’s paper on out-of-pocket payments:

Michelle and Petra have the same level of income and the same capacity to pay for their health and medical care. Both women have used health and medical services over the past three years that have a value of $20,000. However, of the $20,000 of health care used by each woman, Michelle has contributed $8,000 in out-of-pocket payments and Petra has contributed only $200. This is because Michelle has rheumatoid arthritis and requires regular treatment from a physiotherapist and uses high levels of non-prescription pharmaceuticals (along with GP and specialist care). Petra’s health care needs however have primarily centred on public hospital care for the birth of her two babies, one of which required an operation shortly after birth and an extended hospital stay.

The report continues:

The current system of co-payments impacts unfairly on different consumers, depending on their health care needs. People with ongoing chronic conditions often end up receiving lower levels of subsidy for their health care than those with one-off or self-limiting conditions.

We know matters are made worse by the fact that people who are short of cash have to pay their bills upfront and then see about getting the rebate later. Ms Doggett presents us with another case study and a suggestion that might solve this problem. She suggests we look at creating a healthcare credit card that would allow low-income earners to repay the cost of their care over time without getting into financial difficulties. We do not believe this is the answer, but it may be a transitional process or a way of getting us to a better system of dealing with out-of-pocket expenses. We believe this and other ideas need intense examination so we can start dealing with this issue and bringing equity to health care. Ms Doggett’s second case study also highlights the inequities in the system:

Josh has a cycling accident and injures his back. In the first month after his accident he requires treatment from a number of health care providers, including a GP, specialist physician, exercise physiologist and osteopath. In addition to this, he requires prescription pain relief medication and undergoes a number of tests, including two MRIs. He pays for these goods and services with his health credit card with no upfront payment and therefore is able to access the care he needs immediately, despite not having sufficient savings available to meet the costs up-front. The out-of-pocket costs for this treatment total $900 and he receives a bill for this amount at the end of the month, with each individual service and its cost itemised. Josh’s monthly after-tax income is $3800 and therefore the minimum payment he is required to make for that month is $380. Josh continues to pay the remainder of his $900 bill in monthly instalments with no penalty as long as he meets the minimum payment.

By paying for health services with a health credit card, Josh is able to receive the care he requires immediately, his health care providers are paid promptly, and he is able to repay the cost of his care over time without causing him financial difficulties.

This is what I am talking about when I say we should look at practical ways to move forward in this debate. At the present we do not believe there is enough effort going to addressing situations like this. Instead of asking the patients through market forces to force down the price of the highest-setting fees, we believe we should take a different approach. We believe we should not put the onus on the patients to drive down the costs when, as I said, they are at their most vulnerable. We are talking about people who are ill and in need of medical care. No wonder there is a significant number of people—that is, 17 per cent in one study—who are skipping medical treatment, tests or follow-up because of the high costs. We have been left with an Extended Medicare Safety Net which ignores the overall problem, advantages those who can afford the upfront fees and encourages people in the medical profession—in some instances, and I am not pointing at everybody in the medical profession; I want to make that very clear—to raise their fees. It is quite clear there have been situations where elements of the medical profession and medical specialities have been encouraged to raise their fees.

The Greens cannot support this bill in its current form because we believe it is poor legislation, with poor process and debatable benefits. It is a blunt instrument used to redress what are inarguably excessive fees charged in particular areas of health care, when what is needed is a complete overhaul of the out-of-pocket contributions. There are many areas in this bill that are targeted for a cap, which will leave people worse off. This does not address the overall issue and will cause hardship to a number of people, particularly those requiring ART services. We believe the government need to outline a much more comprehensive approach to how they intend to deal with inequity and how they intend to deal with spiralling out-of-pocket expenses. We acknowledge there is a problem. The Extended Medicare Safety Net exacerbated that. Just introducing a cap on certain services does not go far enough to addressing this issue, and we do not want the government to think that it does.

The changes to the EMSN measures set out the government’s ability to introduce caps on the safety net but not the actual caps themselves. We acknowledge that. That is being done by regulation, which has been circulated. This is becoming increasingly common practice with government—that is, they leave the details of the legislation to regulation, which is then a disallowable but also blunt instrument where you can say yes or no. We are concerned that these measures will have a negative impact on access to health services for many people. We have noted in particular the impact on access to cataract surgery for people on low incomes in outer metropolitan, rural and regional areas as well as the impact on those seeking to access ART services. The cataract issue also intersects with a reduction in the service payment. We acknowledge there is a double problem there. We have called for a debate on the critical issue of out-of-pocket payments and the marginalisation of vital elements of Medicare reform. We need to look at the long term to see how we can fix our medical services and our healthcare system into the future.

We believe the process underpinning this legislation is flawed. We believe the safety net has issues and has helped drive this problem. This bill, as I said, establishes a framework to set the caps, which will be set by regulation. We believe there needs to be further consultation about how we actually address issues—for example, around ART. There is absolutely no doubt that prices have gone up, in some cases exponentially. We do not believe the blunt instrument of this bill deals with that. It does not deal with other areas of spiralling medical costs. We are concerned that if you push down here you will get an increase elsewhere.

We believe that the government needs to be very clearly outlining and articulating how they intend to deal with out-of-pocket expenses into the future. As I said, this bill does not do it and at this stage the Greens find themselves in a position where we cannot support the bill. We need a bit of framework for how we are going to be addressing spiralling out-of-pocket expenses. Until the government comes up with another way of ensuring that putting a cap on the expenses of the medical profession that does not require a patient to doctor shop, we cannot support the bill. We do not believe that that is appropriate. We do not believe it is appropriate for government to put the onus on the patient. We believe that the government should have enough guts to say to the medical profession, ‘This is not good enough,’ and to look at another way of controlling out-of-control medical expenses. Do not put the onus on the patient. When I am sick, I do not want to be negotiating with the doctor about how much I am going to pay. That is ridiculous. They need to come up with a better way of doing this. I acknowledge their attempt at doing something—we need to be doing something—but this does not get it right.