This is the second in a series of essays adapted from the Centre for Policy Development book, More Than Luck: Ideas Australia needs now.
A Medicare credit card could make healthcare co-payments simpler and more affordable, writes Jennifer Doggett.
If you’ve ever been sick – really sick - in this country, you know that paying your medical bills isn’t cheap.
It’s also complex. Health insurance seldom covers the full cost of a procedure, so patients often leave hospital with a big bill waiting for them. Some of it can be claimed back on Medicare; some of it can’t. As well as being expensive, medical expenses are difficult to understand and a huge waste of time and effort. And all when you’re supposed to be resting and recuperating!
Our current system of health funding is failing. We spend more on health services every year and still many Australians miss out on the care they need.
An international survey of seven OECD countries in 2007 found that more Australians have problems affording health care than citizens of any country, apart from the United States.
A similar 2008 survey of chronically ill adults found that over a third (36%) of Australians with chronic conditions reported problems with accessing health care due to cost. Again, only the chronically dysfunctional US health system reported a worse rate.
The problem is not that we are spending too little on health care – we spend about the OECD average. The problem is the way in which we spend it. For instance, our public hospitals struggle to cope with demand. Yet one in eleven people who are admitted to hospital has a problem that could have been prevented or managed in the community.
In Australia, more than one in six dollars spent on health care comes directly out of consumers’ pockets. Individual payments are the third largest source of health funding (after Federal and State/Territory Governments) and make up a higher proportion of health funding in Australia than in many comparable OECD countries, including the USA, UK, Canada, New Zealand, Ireland, Japan and France.
These out-of-pocket costs are unpredictable and unfair. They often hit consumers when they are least able to pay, and make it difficult for people at risk of developing serious health problems to access preventive care. In some areas, like mental health, the very services that could do the most good are the most expensive and difficult to navigate.
Attempts to subsidise individual payments through private health insurance or safety-nets end up mainly in the pockets of the rich, or are eaten up in higher medical fees and administrative costs.
The result is a system which creates barriers to the most cost-effective forms of care and steers consumers towards the most expensive.
As a result, it’s now easier for many Australians to afford a plasma screen TV than some forms of health care. There is a reason for this: most retailers at the shopping mall are able to offer payment plans and other financing options that make it easier for consumers to buy.
One of the most common options at Harvey Norman and other retailers is “pay nothing now.” Why can’t we do the same for health care? Removing up-front costs for health care, allowing patients to pay their bills off in installments, would have a number of advantages.
The evidence tells us that even when up-front health care costs appear small in isolation, they can create barriers for consumers with low incomes and patchy cash flows, let alone those already in debt or with multiple health care needs.
One way we could help remove these barriers is by helping consumers manage health care expenses by letting them pay for health care over time, with predictable and regular re-payments. We need to help consumers to manage health care costs the same way they manage their mortgages or
utilities bills.
What if the federal Government issued all consumers with a ‘Health Credit Card’ to pay for health goods and services without upfront payments? The Government would then assume responsibility for paying health care providers directly, subtract any subsidies from Medicare or other programs and bill consumers for the out-of-pocket costs.
Consumers would then receive one consolidated bill for all their health care expense incurred over a given period. This alone would make a big difference – reducing the thickets of invoices we now receive. It would also give us the option of paying costs in regular installments, with maximum payments capped according to our income level.
This would ensure that no consumer is prevented from accessing care due to cost and remove the current uncertainty and stress associated with high and unpredictable health and medical expenses.
It would also allow the creation of a single comprehensive safety-net for all health-related goods and services to target consumers who have difficulty affording health care. This would replace the existing Medicare and PBS safety-nets and the Medicare tax-offset - which are uncoordinated, poorly targeted and exclude many forms of health care.
And, using new health information technology systems the government is already rolling out, it could be built into the next generation of Medicare cards, which most Australians are already familiar with.
A government-issued health credit card might sound scary to some. But if implemented fairly and competently, it would significantly improve both the equity and efficiency of our health system. It would also make a big difference to ordinary people’s ability to deal with complex and stressful medical expenses at a difficult time of their life.
Jennifer Doggett is a health policy analyst and consultant who has worked in a number of different areas of the health system.
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