Out-of-pocket health costs (OOPs) are a major challenge facing the Australian health system. Australians pay for a higher proportion of total health care in OOPs than do citizens of almost all OECD countries. In fact, OOPs are the third largest funder of health care in Australia, after Commonwealth and State/Territory Governments.
Yet despite the importance of OOPs in influencing access to health care, this area is a policy vacuum. We have no policy framework for addressing OOPs across the spectrum of the health system and no government department or body that takes responsibility for overseeing how these costs impact on consumers. In fact, we lack even the basic building blocks for a policy on OOPs, namely an acknowledgement that the Government has a role in this area, an agreement on the role(s) of OOPs in our health system and reliable and comprehensive data.
Understandably, this ad hoc approach to OOPs leaves consumers confused and often angry. As the survey undertaken by the Consumers Health Forum demonstrates, consumers’ experience of OOPs is frequently unpredictable, inconsistent and inequitable. For many consumers OOPs create financial hardship and stress at an already difficult time of life. For some they mean a choice between vital health care and other necessities.
Understanding the many different ways that OOPs impact on consumers is an essential first step in addressing this important and complex policy problem. Due to the complexity of the system and the diversity of consumers’ health care needs, this requires detailed research on the OOPs consumers experience across different areas of the health system.
Associate Professor Louisa Gordon, Team Head – Health economics at the QIMR Berghofer Medical Research Institute, reports on one such study she has conducted below on consumers accessing cancer treatment in Queensland. She discusses its findings and the implications they have for informing future policies on OOPs and addressing the inequities caused by OOPs within our health system.
Louisa Gordon writes:
There’s a lot of concern among Australians about high out-of-pocket medical expenses.
The recent ABC Four Corners program raised a lot of good points about how the private health system in Australia has some serious market failures. Doctors in private practice set their own fees, there is little competition and some patients are bearing the brunt of very high fees.
These anecdotal cases in the media appear shocking but just how common are high medical out-of-pocket costs? The answer isn’t simple because there isn’t a lot of research on out-of-pocket costs in Australia.
The few reports that exist may have selective samples, where individuals joining the surveys have a vested interest in the topic – usually because they have paid more than the average person – and are not representative of a broad cross-section of Australians.
Study on consumers with cancer
In a recent population-based study we conducted in Queensland, 452 participants with cancer gave the researchers access to their Medicare data through both the Medicare Benefits Scheme and Pharmaceutical Benefits Scheme.
All billings through these schemes were assessed over a two-year period and the participants had a confirmed diagnosis of either breast, prostate, colorectal, or lung cancer or melanoma through the Queensland Cancer Registry.
The types of healthcare costs included were all GP and specialist visits, tests and imaging, therapeutic procedures (surgery, radiotherapy and biopsies) and medications listed on the Medicare Benefits Schedule (MBS) or the Pharmaceutical Benefits Scheme (PBS).
The Medicare data provides information on the fees charged by doctors and other health professionals, the Medicare subsidy and the out-of-pocket cost to the patient.
The out-of-pocket cost is before any reimbursement for in-hospital procedures by health insurers for patients with private health insurance.
Health insurers generally do not cover services in private rooms or diagnostic clinics in the community, or GP and specialist consultations.
Wide range of fees
Overall we found a very wide range of fees charged by doctors as well as for out-of-pocket costs, ranging from zero dollars to tens of thousands of dollars.
The median fees charged to patients for all services and medicines they received over two years were $9800, however, three-quarters of patients were charged up to $20,300. The median out-of-pocket costs borne by people with cancer was $1800, however three-quarters of patients were in the red by $4900.
The median out-of-pocket costs were highest for breast cancer at $4200 and lowest for lung cancer at $1100. The highest out-of-pocket costs paid by any patient were around $20,000 and the lowest was zero. Around 74 per cent of the sample had private health insurance, which compares with around 50 per cent in the Australian population.
Costs for cancer can be significant because the management of cancer is lengthy, often requires multiple health professionals, many doctors’ visits, multiple tests and treatments (surgery, radiotherapy, immunotherapy, chemotherapy) and ongoing monitoring after initial treatment.
Doctors in private practice usually charge above the Medicare subsidy and with multiple services and doctors’ visits, the out-of-pocket costs can quickly add up.
More GPs bulk-bill patients where competition for GP services is healthy (around 86 per cent) but fewer doctors bulk-bill their patients in more sparsely populated areas, where there are fewer medical practices.
Specialists have even lower rates of bulk-billing (around 30 per cent). And that’s because they generally face much lower competition.
Priced out of the market
This means that while we debate the out-of-pocket costs in the context of private health insurance and high specialist fees, the poorest of Australians are simply priced out of visiting a specialist through the private system, or their GP, altogether.
Although low-income individuals are more often bulk-billed, we know that some individuals delay seeing a doctor, skip appointments and avoid preventive care (e.g. dental check-ups) because they cannot afford these expenses.
It is unknown exactly how many Australians on low incomes would choose not to visit a specialist due to high costs, but one international survey found 16 per cent of Australians failed to access healthcare in 2013 because the cost was prohibitive.
It’s worth noting there are numerous other personal costs borne by patients when they are sick, including for parking, travel, accommodation, medical aids, or to pay for carers or in-home assistance.
These costs are not captured in Medicare data or any government database. One of the most distressing causes of financial burden is lost income from taking time off work to receive care or recover from illness.
Extra costs are hardest felt by people with chronic diseases, multiple medical conditions, or those who earn lower incomes, are younger or live in rural areas. Additional medical costs may be too high for low-income earners without savings and other essential living expenses – like rent and food – must take priority.
Rich and poor face different cost burdens
As the debate heats up over private insurance and out-of-pocket costs, we need to remember that the greater financial burden may lie with those in the public system who are struggling to make ends meet due to expenses like time off work and travelling for treatment.
Medical out-of-pocket costs are a significant problem for both wealthier and poorer Australians but the sources of those burdens are different.
High out-of-pocket expenses are a marker of a low-performing health system.
As we enter an era where millions of middle-aged Australians are at risk of being diagnosed with chronic disease, the time for action to improve health, prevent disease and lower the demand for expensive healthcare is in all our interests.