Health spending: patients bearing higher costs



Recent reports have highlighted the growing cost of health services and the increasing financial burden on individuals. According to data from the Australian Institute of Health and Welfare (AIHW) Australia spent more than $130 billion on health in 2010–11, or around 9.3% of Gross Domestic Product (GDP). Around 70% of this was spending by Government—the Commonwealth and the states and territories combined, through programs such as Medicare, public hospital services and the Pharmaceutical Benefits Scheme (PBS). But a significant and growing component of health expenditure comes from individuals.

Managing the performance of the health care system

Image source: Health Statistics New South Wales

Performance of the health care system was put on the national agenda in 2010 when the then Prime Minister Kevin Rudd outlined his vision for the National Health and Hospital Network (NHHN). One of the features of the NHHN was improved reporting and performance standards. The precursor to this were the objectives, outcomes, progress measures and outputs that were agreed by the Council of Australian governments (COAG) in 2008 as part of the National Healthcare Agreement (NHA). Although aspects of the NHHN were re-negotiated, the commitment to improved transparency and accountability remained.

What can be done about the growing cost of health care in Australia?

Source: Courier Mail

 The sustainability of Australia’s health system is becoming a key concern for Australian governments, along with those in many other advanced economies. But, with growing demand for high quality health care, an ageing population and rapid advances in medical technology, what can be done to keep a lid on health expenditure? This recently published Parliamentary Library Research Paper outlines the key mechanisms the Australian government has to control health care spending, and it proposes some potential options for reform.

 

In a recent speech on the sustainability of the health system, the Finance Minister, Penny Wong, highlighted the problem policymakers now face: health care expenditure is projected to continue to rise, but the pool of taxpayers is shrinking. According to The Treasury’s 2010 Intergenerational Report, health care will consume about two thirds of the projected increase in government spending over the next 40 years if current trends continue. Clearly, this is not going to happen because changes will be made. But what changes?

Health Insurance in Australia: time for a new debate?



Image: Department of Health, Victoria

 In July 2011 the Government re-introduced its Fairer Private Health Insurance Incentives legislation into the House of Representatives; for an overview of the history of this legislation, see here. The Bills have not yet been debated. The key changes proposed by this legislation are: a means-test on tax-funded rebates for private health insurance (PHI) for those on incomes above a specified threshold, and; a higher Medicare Levy Surcharge for people on high incomes who choose not to purchase PHI.

If passed, the legislation will mean that higher income earners will receive a lower or no tax-funded subsidy when they purchase PHI, and, if they choose not to purchase PHI, they will face higher tax penalties.

National Health Reform Agreement: what might it achieve?

Image Source: Access to Justice

After nearly four years in government, an 18 month independent inquiry into the health system, a Prime Ministerial listening tour of the nation’s hospitals, several fraught Council of Australian Governments (COAG) meetings and one unsuccessful attempt, the federal Labor Government has finally secured a health reform deal with all states and territories.

The National Health Reform Agreement announced this week is essentially a detailed implementation plan for the Heads of Agreement on National Health Reform, which was negotiated at COAG in February 2011. Most commentators agree that the scope of reform has been scaled back over time. The reforms outlined in this Agreement and the earlier Heads of Agreement are less extensive than those outlined in the April 2010 National Health and Hospitals Network (NHHN) Agreement (for a summary of the changes made to the NHHN Agreement see here). The contentious proposal to hold back GST from the states in order to fund reforms has disappeared (this was the main reason Western Australia refused to sign up before). Other discarded reforms include plans for a Commonwealth ‘take over’ of primary health care and to become the majority funder of public hospitals.

Paying for health care: how can we sustain it?

At budget time, the federal health minister has one of the toughest jobs. We got a glimpse into this a few weeks ago when the Government announced that it had decided to defer listing some new drugs on the Pharmaceutical Benefits Scheme even though they work and have been deemed by experts to be cost-effective. The announcement sparked outcry from consumer groups and health care organisations alike.

Medicare Locals - many questions yet be answered

The Government has released the guidelines for the establishment and initial operation of Medicare Locals (MLs) following the consultations around its discussion paper on the governance framework. Applications are invited for the operation of MLs to commence in either mid 2011 or January 2012. Approximately 15 MLs will be awarded in each round. The guidelines and prior ministerial statements would indicate that the initial groups of MLs are likely to be drawn from existing Divisions of General Practice.

Medicare Locals and reform of primary care

In their joint statement about the Agreement signed at the Council of Australian Governments (COAG) meeting on 13 February 2011, the Prime Minister and the Minister for Health stated that one of the aims of the reform package was to ‘shift the centre of gravity from hospitals towards primary health care’. To that end, the Government has committed to: increasing the number of Medicare Locals (MLs) that are to be established as a result of the health package announced by the Government in March 2010, bringing forward the establishment of more MLs, fast-tracking reforms to after-hours GP care and ensuring that local communities have more information about their local primary health care services.

Financing of aged care - recommendations from the Productivity Commission

The draft report of the Productivity Commission’s (PC) Inquiry into Caring for Older Australians, released on 21 January 2011, provides a sobering assessment of the current state of the aged care system. It argues that the current system can not withstand future challenges without comprehensive reform. A staged implementation plan over five years of the Commission’s recommendations has been put forward to address this. The PC’s report has been met with broad support from stakeholders with many welcoming the ‘bold’ proposals for reform.

Department of Health's FOI release - challenges ahead for health reform

Various government departments have made publicly available incoming government briefs that have been released under Freedom of Information. Despite sections of the briefs having been blacked out they provide an insight into the workings of government and the advice provided to Ministers in the post-election environment. The Department of Health and Ageing’s (DoHA) incoming government brief provides an overview of the health system and arrangements for implementing health reforms begun during the previous parliament. The brief also lists key decisions for the Minister to make in the first four months.

Health reform - special issue of the MJA

For those interested in health reform, the latest edition of the Medical Journal of Australia has a number of articles addressing this topic, particularly as it relates to general practice.

The Croakey health blog also regularly features discussions on health reform. And for background on the health reform options that have featured in recent years see this Parliamentary Library paper by Anne-Marie Boxall and Luke Buckmaster.

(Image sourced from: http://www.mja.com.au/public/issues/193_02_190710/contents_190710.html)