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.

What the Dutch can teach us about private health insurance

The Dutch healthcare system has received international praise. This year the Netherlands are again topping the chart of the Euro Health Consumer Index. What makes the system so good? To get some answers, I caught up with old friends from the Netherlands.

Dutch philosophy

The country’s philosophy is to cut costs and stimulate quality by introducing regulated competition. The Dutch have attempted to create a system that ensures universal health care, offers transparency and choice for consumers, and avoids risk selection. GPs play a key role coordinating care and preventing unnecessary use of hospitals.

‎Dr Pieter van den Hombergh, GP trainer and a former senior policy adviser at the Dutch Association of General Practitioners (LHV), is full of praise:

“In 2006, the country switched to a regulated market-oriented healthcare system: Insurers got purchasing power and the Government withdrew from healthcare, but set strict regulations for insurers and providers.”

Dr Jettie Bont is a GP and former board member of the Dutch Association of General Practitioners. “The Dutch health system is accessible to anyone, rich or poor, old or young,” she says. “Patients don’t have to pay a co-payment or excess payment to see their GP and we’re making sure it stays this way.”

How does it work?

The 6 key elements of Dutch healthcare:

1. Health insurance funds are not allowed to deny coverage because of illness, age or gender. A risk-equalisation system compensates health funds for accepting high-risk individuals.

2. Healthcare covered by the compulsory basic health insurance package is the same for every insurance provider. Basic cover includes GPs, medical specialists, hospital care, basic dental care, most prescriptions, and ambulance. Additional insurance packages can be purchased.

3. All Dutch citizens and residents contribute via a flat-rate premium set by competing funds – in 2014 the average premium was €1120 ($1626) – and an income-dependent payroll tax contribution. The Government covers premiums up to the age of 18, and people who earn less than a specific amount are entitled to a tax credit.

4. People are free to choose their insurance fund and have the option to change once a year. People are free to choose their GP, but must be registered with a nominated family doctor.

5. Doctor’s fees are set, there is no co-payment or excess payment for GP-care (except for travel vaccinations). Dutch GPs are paid via an annual lump sum per patient (capitation) as well as fee-for-service payments.

6. To help consumers, the Dutch Government collects and publishes price, quality and consumer satisfaction records of insurers and providers.

What are the strengths?

According to the authors of the latest Euro Health Consumer Index report, the Netherlands has the best healthcare system in Europe. The authors feel one of its strengths is consumer participation: “The Netherlands probably has the best and most structured arrangement for patient organisation participation in healthcare decision and policymaking in Europe.”

Other positives mentioned in the report are the availability of 24/7 GP care, and the fact that ‘financing agencies and healthcare amateurs such as politicians and bureaucrats’ are not directly responsible for operative healthcare decisions. The Dutch national health budget is €71.3 billion, of which €63.8 billion is funded by insurance premiums. Various levels of Government contribute €7.5 billion.

Euro Health Consumer Index (EHCI) 2014
The Euro Health Consumer Index (EHCI) 2014 compares healthcare in 36 European countries and looks at the following domains: Patient rights and information, accessibility (waiting times), outcomes, range and reach of services, prevention, and pharmaceuticals. Image: EHCI 2014 report.

Van den Hombergh: “General Practice revenue has increased since 2006 and as a result GPs were able to invest in premises, staff and infrastructure, including ICT and communication equipment. Their personal income increased as well.”

“Along with the change to market-oriented financing the total budget for general practice rose from €1.92 billion in 2006 to €2.37 billion in 2010, an increase of 14%. In 2011 all insurers invested another 10%. Before 2006 the macro budget for general practice had been constant.”

“More group practices appeared; solo practices dropped between 2006 and 2012 from 46% to 39%. The availability of nurse practitioners for chronic disease management rose from a few percent to over 90%, managing diabetes, heart & lung disease and mental health. Diagnostic and therapeutic activities were incentivised: About €50 ($73) per service for minor surgery, spirometry, ECG, joint injections etc.”

Incentives and penalties

Until 2006 GPs received capitation payments for their public patients (about two-thirds of their patients), and fees per consultation for their private patients (about one-third), but this two-tiered system is now history. 

“GPs are paid by insurers according to a mixed payment scheme: Partial capitation plus fee-for-service for basic care.

Van den Hombergh: “Regulated competition between healthcare providers and between health insurers was introduced for specialist care, but family medicine provided in general practices was exempted from this competition. GPs are now paid by insurers according to a mixed payment scheme: Partial capitation plus fee-for-service for basic care.”

“GPs receive ancillary payments, mainly on a fee-for-service basis, for additional or special services such as care for people with chronic diseases. They are compensated on an hourly basis for care during out-of-office-hours. The incentives were negotiated with the profession and were closely aligned to professional values, which limited the risk of perverse consequences.”

“In 2008, the Dutch Association of General Practitioners accepted new benchmarks on availability and accessibility. Insurers offered €4 ($5.81) for each patient when the KPIs were met. Practices should minimally be open six hours a day, five days a week and address emergency calls by a medically trained person within 30 seconds. The GP had to visit the emergency patients within 15 minutes. It was incentivised but also checked by the Dutch Health Care Inspection and failure to meet the standard was financially penalised: Practices with more than 2500 patients could miss out on over €10,000 ($14,514). In the end, only three practices did not meet the target.”

Bont: “A combination of capitation and fee-for-service in a 40/60 or 60/40 ratio incentivises effective and efficient care. A consultation should have a financial stimulus, but not too much, and at the same time the prerequisites should be there to deliver optimal care.”

“Mandatory patient registration works well and helps GPs to coordinate care. GPs are paid to do this via an annual registration fee per patient. We have our own quality assurance system and our own national general practice guidelines.”

What are the weaknesses?

Australian politicians claim that Australian health care is too costly (9.1% of GDP), but the Dutch system is even more expensive: 11.8% of GDP is spent on health (note that the US devote 16.9% to the health sector).

Dr Marith Rebel-Volp is a GP and Member of the Dutch House of Representatives. She says: “GP-care is cheap. The total health budget is €71.3 billion and General Practice costs only €2.67 billion. At the same time GPs are dealing with the majority of health problems and act as gate keepers to more expensive parts of the health system. However, long-term chronic care is expensive and one of the reasons the system is being criticised is its costs.”

“Insurers can set the benchmarks and, as collective bargaining by GPs is not allowed, this is a problem.

The Dutch Association of General Practitioners is concerned that health insurance funds are becoming too powerful, limiting choices of doctors and patients. A survey showed that most GPs are unable to negotiate or discuss their individual contracts with insurers.

Rebel-Volp shares this concern: “Although General Practice has a relative protected position within the healthcare system, there is friction between insurers and GPs. Insurers can set the benchmarks and, as collective bargaining by GPs is not allowed, this is a problem. GPs feel pressured to sign on the dotted line. Recently, a parliamentary motion was accepted which called for re-introducing collective bargaining – this is an interesting development.”

Bont: “Compared to many other countries Dutch GPs are in a strong position, but our workload has increased. Sometimes the expectations are unrealistic. For example, GPs will be required to manage people with serious mental health conditions like ADHD, and we have to hire mental health workers, but I don’t have the physical space to accommodate more staff in the practice.”

“Another result of the current system is the focus on KPIs. I often don’t have time to look at my patient during a consultation as we have to register so many details for the health funds.”

Private health funds require ongoing scrutiny by watchdogs. Last year the Dutch Healthcare Authority (NZa) had to intervene to make sure insurers offered the basic package to everyone without discrimination. The mission of the Healthcare Authority is to guard quality, efficiency, market transparency, freedom of choice, access to healthcare.

“The senate blocked proposed legislation changes which would have opened the door to risk-selection by insurers,” Rebel-Volp says. Although risk selection by insurers is not allowed by law for the basic health insurance package, this doesn’t apply to complementary packages. Insurers will try to push people to take out more expensive insurance products, for example by making it harder for certain patient groups to obtain the basic package online or directing people to the expensive packages on their websites.

Rebel-Volp: “Another issue is the level of the excess payment. This is high and many GPs feel patients are avoiding specialist care as a result. Currently the Health Minister has proposed a new plan in which a lower excess payment is an option if patients choose insurer-preferred, contracted specialist care.”

Vertical integration of care, where health insurers provide health services, is a topic of political debate in the Netherlands. Although it is cost-effective, risks are loss of quality, consumer choice and professional autonomy. Doctors and consumers often argue that insurers should not interfere in the patient-doctor relationship to avoid managed care situations as seen in the US. At the moment the Dutch Health Minister and the majority of the House of Representatives do not support vertical integration.

Conclusion

It is not surprising that the Netherlands is topping the international healthcare charts. Although their system is not perfect – and still a work in progress – the Dutch have solved some major issues such as access and equity. The Government has become the regulator and withdrew from the operational side of healthcare – this appears to have been very beneficial for the industry. On the flip side, the system is not cheap, private health funds need to be watched closely, and Dutch GPs have had to sacrifice at least some of their clinical autonomy.