5 reasons why the Medicare rebate freeze is bad policy

When I tweeted about the Medicare freeze last week, someone asked “Care to explain other than meaning you get less money?”

I thought it was a really good question as it highlights the complexity of the issue. Most people seem to think that it’s all about doctors’ income – but it isn’t. The Medicare rebate is also about the money patients get back from Medicare.

As we speak, around Australia GP practices are adjusting their fees as a result of the government policy. Our practice increased the fee of a basic consultation with five dollars for people without a concession card. Other practices have decided to charge a once-off $30 payment to previously bulkbilled patients.

I expect that if the freeze is not lifted these amounts will have to go up again soon.

Greedy doctors?

Everything gets more expensive over the years, including the cost of running a medical practice – think for example about rent and employing receptionists and nurses. If GP practices would not up fees, their Medicare rebate income would drop with 7.1% by 2017-2018!

Over the years more and more services will require an out-of pocket payment by patients, including pensioners and healthcare card holders. Rural doctors expect that bulkbilling in the bush will soon be a thing of the past.

But the freeze has also affected urban areas. That’s why the the RACGP and AMA have labelled the government policy a ‘copayment by stealth’.

Five arguments

The freeze is bad policy and should be reversed for five reasons:

1. Many practices will stop bulkbilling. This means higher out-of-pocket costs for patients. As a result fewer people will visit the doctor in the early stages of a disease. This will often make treatment later on more difficult, more stressful and more expensive.

2. The policy disproportionately affects disadvantaged people who cannot afford a copayment. Research shows that increased out-of-pocket costs stop people from going to the doctor.

3. The freeze undermines important Australian values such as equity of access and therefore encourages a two-tier health system.

Some argue that a copayment would cut unnecessary use of medical services. But higher out-of-pocket-costs will not weed out unnecessary visits. Many of my colleagues know that often their sickest patients will not seek medical care if it becomes more expensive.

4. Research indicates that areas with poor access to GP services have higher hospital costs. It is likely that more people will visit places where healthcare is free, such as already overloaded public hospitals and emergency departments. Dr Google will become more popular too!

5. Practices continuing to bulkbill will have to change their business model: doctors need to see more patients per hour, or practices will have to hire less staff which will affect service. Some practices will close their doors – such as Dr Adrian Jones, a Redfern GP who decided to close his practice as the margins were getting too small.

Is the freeze a necessary policy?

Medicare is not unsustainable. This is a false argument by the government. In fact, Federal Health Minister Susan Ley admitted at the national AMA conference: “The Government is not claiming we’re in a healthcare funding crisis.”

Australian healthcare performs well in comparison to other countries. The increase in health expenditure in general practice has been slow, and in line with overall economic growth and GDP.

Freezing the patient Medicare rebate will not make healthcare more efficient or reduce waste in the system.

Medicare freeze

The Medicare freeze: A storm is coming

Health Minister Sussan Ley said at the annual AMA conference in Brisbane that the Government is not claiming we’re in a healthcare funding crisis.

At the same time dark clouds are gathering as the frustration about the patient Medicare rebate freeze rises.

The Medicare rebate is the amount patients get back from Medicare after they visit their doctor. This amount is supposed to go up every year to compensate for inflation and higher costs. The government has frozen the annual indexation for four years.

The Consumers Health Forum said in its analysis of the latest Budget: “The retention of the $1.67 billion freeze in Medicare payments to doctors may mean many patients are likely to face higher medical bills.”

The Guardian reported: “The AMA president, Brian Owler, used his opening address on Friday to call for both sides of politics to lift the ‘damaging’ freeze which could force GPs to start passing costs on to their patients, amounting to a so-called co-payment by stealth.”

And: “The federal government could face another fierce campaign from one of the nation’s most powerful lobby groups if it does not lift its freeze on doctors’ rebates before the next election.”

The RACGP has also indicated that it would consider a new campaign. It looks like we’re going to get some fireworks again.

Health is defence – Universal care vs ‘user pays’

Guest post

Gold Coast GP Dr Andrew Rees submitted this thought-provoking guest post about universal health care vs a ‘user pays’ system.

For some decades now, we Australians have been living in a country where basic health services have been provided with heavy government subsidies or in many cases have been provided at no direct cost to patients.

Now the Australian Liberal government wants to change the system so that it is more predominantly ‘user pays’. Despite ample evidence that such a system is more expensive and inefficient than our present approach, and that the care delivered is no better, there is a desire to adopt what has been demonstrated to work poorly elsewhere in the vain hope that it will work well here.

I understand that there are those who believe that universal health care or anything approximating it is a ‘Socialist’ idea. Preventing disease and treating the sick and injured might, however, be regarded as a way of protecting the community from harm. Indeed, we have other institutions established by the government to protect our community. The civil authorities include the fire, ambulance and police services. The Army, Navy and Air Force provide military defence. Customs and Border Protection also play a role.

So, some might say, “Why do I have to pay for the Air Force? If I had a constitutional right to bear arms (we don’t), then I could just buy my own jet fighter and go and shoot up any bad guys. Socialists have forced this on us, surely. Bunch of Commies making us pay for armed forces. Police, too. Nobody ever broke into my house. Why should I have to pay taxes so the police can investigate your burglary? You got burgled – you pay for it!”

The reason that we, as a society, tend not to think this way (although I am sure that there are some who do) is that there is recognition that some services are best provided on a universally available and publicly funded basis.

In fact, Section 51 of the Australian Constitution provides Federal Parliament certain powers including ‘to make laws for the peace, order, and good government of the Commonwealth with respect to (for example) “… the naval and military defence of the Commonwealth …” and a little later on “… pharmaceutical, sickness and hospital benefits, medical and dental services” …’

It seems to me, therefore, that those who framed the Australian Constitution recognised that providing ready access to health services was a way of protecting the nation as a whole. Sick people are less productive than the well. Infectious diseases spread easily without treatment and where appropriate, vaccines and quarantine. That individuals owe a debt of care to other members of a society is not a new thought:

“No man is an island, entire of itself; every man is a piece of the continent, a part of the main. If a clod be washed away by the sea, Europe is the less, as well as if a promontory were, as well as if a manor of thy friend’s or of thine own were: any man’s death diminishes me, because I am involved in mankind, and therefore never send to know for whom the bells tolls; it tolls for thee. (John Donne)

The Australian Government has a Constitutional obligation to protect the Commonwealth. Attacking and weakening the health system whether delivered in the doctor’s office or in a State run (ultimately Federally funded) hospital suggests a lack of resolve on the part of Government to discharge this duty. A person who mounted such a spirited attack against his or her own defence force in a time of war would probably be regarded to have committed treason.

However, because the enemies those health professionals protect the community from are more insidious – such as smoking, heart disease, cancer, and infectious diseases – there is a perception that this kind of attack on the health system and its practitioners is somehow acceptable.

If we accept that in ill-health we share a common foe, then as Thomas Hobbes’ states:

“Whatsoever therefore is consequent to a time of war, where every man is enemy to every man, the same consequent to the time wherein men live without other security than what their own strength and their own invention shall furnish them withal. In such condition there is no place for industry, because the fruit thereof is uncertain: and consequently no culture of the earth; no navigation, nor use of the commodities that may be imported by sea; no commodious building; no instruments of moving and removing such things as require much force; no knowledge of the face of the earth; no account of time; no arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short. (Hobbes, Leviathan)

No doubt, the Liberal Government would reason that they are not attacking or endangering the system, but rather they are going to make it better. However, they have no evidence that their approach is likely to have any success. Rather, evidence from the US is that using a ‘user pays,’ predominantly commercial health fund system leads to burgeoning expenses and substantially decreased access for the majority of the community.

Under the US health system, Health Management Organisations (HMOs) may perversely interfere with the ability of appropriately trained physicians and surgeons to provide the most appropriate care because of a commercial requirement to maximise financial returns for the HMO.

Bacterium or bullet, cancer or cannon shell, tuberculosis or terror attack – the community is still worse off because of the suffering of the individual. Whether one dies from influenza or an improvised explosive device, one is still dead. Leaving citizens to fend for themselves and fund their own care will certainly reduce the number of attendances in the short term.

However, the real cost of a change to a predominantly ‘user pays’ system will be far greater. What kind of life is it that we seek for the members of our community? Neighbourly, prosperous, pleasant, lovely and long: or solitary, poor, nasty, brutish, and short?

Dr Andrew Rees

Disclaimer and disclosure notice.

Minister, please don’t ruin our holiday again

Before Christmas – just as I was about to pack my suitcase – Prime Minister Tony Abbott dropped a bomb.

Together with the Health Minister he announced that the Government had introduced a policy to stop 6-minute medicine – or ‘sausage machine medicine’ as he called it. As a result the Medicare rebate would be reduced in January by $20 for GP consultations of less than 10 minutes.

Battle won, but not the war

This cut to Medicare patient rebates was meant to deliver $1.3 billion in savings over four years. However, as a result of the backlash by GPs and health consumers, the proposal has now been scrapped.

The other 2 components of the Government’s revised co-payment plan are still on the table: $873 million saving from a $5 Medicare rebate cut, and $1.3 billion saving by a four-year freeze of Medicare fees for GPs, medical specialists, optometrists, and others.

Expect more fireworks in the coming months.

6-minute medicine

Was Abbott right about the sausage machine? Are bulk-billing doctors churning through patients in six-minute sessions?

Most GPs felt Abbott’s argument was a sham as the issue was never raised in the budget. The real agenda was obviously to save health dollars. The timing – just before the Christmas break – as well as the one month’s notice before the measure would kick in, added insult to injury.

Some said it was a case of attempted political suicide.

Research shows that the average GP consultation lasts 14 minutes, not six. Some consultations may only take 5 or 6 minutes, but that’s not necessarily a bad thing. Here’s an example:

Someone comes in with a painful wrist after a fall. An efficient, experienced GP can take a history, examine the wrist and, if needed, organise further investigations within 6 minutes. The GP-in-training may take 20 minutes to do the same, should she be paid more? Probably not.

Abbott’s argument is of course not coming out of the blue: ‘6-minute medicine’ has a bad reputation because some business models of larger corporate GP clinics are purely profit-driven, and it is thought that this can lead to a high patient-turnover.

If Abbott has a problem with this practice, his Government should deal with those clinics, and not punish all GPs and their patients. But there’s more to it.

The real problem

The real problem is the increasing gap between the Medicare rebate and the costs of running a practice. While business expenses are going up every year, Medicare has only slightly increased the rebates over the years – barely covering inflation, and for the past 1.5 years the rebate has been frozen.

As a result, doctors need to see more patients per hour or work more hours, if they want to continue bulk billing. Another option is to retire (not recommended). Or they can choose to charge a gap fee or co-payment. This has happened before.

In 2003 bulk billing rates were at an all-time low of 66%. This didn’t make the Howard Government very popular, so the health-minister – Tony Abbott – had to increase the Medicare rebates. As a result, bulk billing went up again.

The solution

At the moment bulk billing rates are at an all-time high, about 85%. If the planned $5 rebate cut and freeze per the 1st of July 2015 go ahead, it is likely that less clinics can afford to bulk bill. History tends to repeat itself: If voters start to complain at a level of about 66% the Government may feel there is room to play – that is if they can get their proposals through the senate.

The new Health Minister Sussan Ley indicated after the backdown last week that she will continue to look for ways to make Medicare ‘sustainable’ and introduce a price signal by way of a co-payment. At the same time she wants to protect bulk billing and maintain and improve high quality healthcare.

I just hope that whatever the solution will be, private insurers are kept at a distance.

It’s good to hear that Minister Ley will talk to doctors – she seems genuine. Many GPs have already started the debate about ways to cut red-tape and increase efficiency in primary care. I’ve heard some excellent suggestions.

A bottom-up approach to health reform takes longer, but is more likely to succeed.

9 reasons why GPs are being screwed by government

GPs screwed by government

The government’s revised co-payment plan is a dog’s breakfast. Here are 9 reasons why the proposal has angered Australian GPs.

#1

Prime-minister Abbott’s reference to sausage machine medicine is insulting. If the government is unhappy about the way some clinics churn through patients, they should do something about it, but not punish all Australian GPs – and patients.

Besides, it looks like the government didn’t do their homework properly: A recent report debunked the myth that GP care is ‘6-minute medicine’. The authors of the report: “If people feel they must ignore the wide range, and refer to the length of GP consultations in one phrase, it would be far more accurate to call it ‘14 minute medicine’.”

#2

The revised co-payment plan will not make healthcare more efficient or reduce waste in the system. It unfairly targets a part of healthcare that is operating in an efficient and effective way. RACGP president Dr Frank Jones: “If the Government is serious about this move, it is reasonable to ask the question: why not across all healthcare services?”

#3

Medicare is not unsustainable. This is a false argument by the government. The increase in health expenditure in general practice has been slow, and in line with overall economic growth and GDP. Professor Jeff Richardson, Centre for Health Economics at Monash University said this:

“Public spending on health as a percentage of GDP is among the lowest in the OECD. Only Chile, Estonia, Hungary, Israel, Mexico, Poland and the Slovak Republic channel less of their GDP into health via the government.

#4

Yes, research shows that increased out-of-pocket costs stop people from going to the doctor. This is not rocket science. Research also indicates that areas with the fewest GP services have higher hospital costs.

It’s not rocket science either to figure out that more patients will attend the free, but more expensive emergency departments of public hospitals, thus increasing overall health expenditure.

#5

Unfortunately, out-of-pocket-costs will not weed out unnecessary visits. The extra expense will also deter people with a serious illness from going to the doctor – especially people on a low-income.

#6

If the revised co-payment plan will cut the amount of visits to the doctor, a highly skilled, expensive medical workforce will be doing less work. The revised co-payment plan does not change the opportunity cost of medical care.

#7

The government wants GPs to work longer for less. Up to ten minutes of work now pays $37.05, but if the revised co-payment plan goes ahead, the government will only pay $11.95 – a drop of $25!

Note that $11.95 is not doctor’s income: After practice costs (staff wages, rent etc) and tax are deducted about $4 will be left for the GP to spend.

#8

Look at the chart and it is clear that the expected drop in revenue, in combination with ever-increasing costs, will make GP practices unsustainable – unless fees go up. The fees will need to cover the before mentioned $25, and will continue to rise each year as the rebate will not go up until at least 2018.

Medicare
The expectation: If the government’s alternative co-payment plan goes ahead, Medicare income will drop and not change until 2018, while the costs of running a medical service will continue to climb. Note: this is a forward estimation only, not based on empirical data.

#9

The revised co-payment plan may stop certain clinics from bulk billing, but it will not prevent these clinics from undercutting more comprehensive GP services. The gap fees of those clinics will likely still be much lower.

In summary: This plan will alienate GPs, shift costs instead of making real savings, and not improve care in any way – it will only make things worse.

In her open letter to Tony Abbott and Peter Dutton, Dr Sally Cockburn wrote:

“Your government is taking advantage of GP benevolence with your cut to Medicare rebates. We’re sick of being kicked around. While most of my colleagues are too busy looking after patients to play political games, this time I think you may have woken a sleeping giant.

Sally, you are right!

Follow me on Twitter: @EdwinKruys

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