What would real reform to tackle out-of-pocket health care costs look like?

Introduction by Croakey: In news you might have missed, on Saturday the Federal Government released the report from the Ministerial Advisory Committee on Out-of-Pocket Costs, and outlined a national strategy to tackle excessive out-of-pocket costs.

The Committee had been hard at work since January 2018, when health minister Greg Hunt announced that it had been formed to “identify why some doctors are charging large fees, and explore strategies to ensure that consumers and referring General Practitioners can compare fees and out-of-pocket costs when choosing a doctor.”

As part of the new strategy, the Government will provide funding to develop a searchable website of the costs of specialist services, with an initial focus on fees for gynaecology, obstetrics and cancer services.

It will also fund an education initiative “to increase the understanding of medical out of pocket costs among consumers, their families and GPs”.

It could be argued that the Committee has done what it was set up to do but, as outlined in the post below, it is also likely that the new strategy will do little to address the underlying problem. As medical billing expert, Margaret Faux, commented on Twitter,

Suggesting a website will solve out of pocket costs is like thinking you can repair an A380 aircraft because you’re the publisher of a repair manual.”

In a press release, Australian Healthcare and Hospitals Association (AHHA) Acting Chief Executive Dr Linc Thurecht expressed similar reservations that opportunities to deal with known sources of excessive OOP costs had been overlooked.

Late last month, Jennifer Doggett (Croakey Editor, AHCRA Chair, and fellow at the Centre for Policy Development) and Dr Lesley Russell (Croakey Contributing Editor and Associate Professor, Menzies Centre for Health Policy, University of Sydney) published a discussion paper that takes a more holistic view of how the burden of OOP costs can be reduced for Australian consumers.

Here, they summarise their suggested action plan. By way of an introduction, we include their response to last Saturday’s announcement.

Jennifer Doggett and Lesley Russell write:

Introduction 4 March 2019: Since our paper and this post were written, the report from the Ministerial Advisory Committee on Out-of-Pocket Costs has been released.

It is our opinion that the report’s recommendations (for a website that provides information about medical specialists’ costs and for an education campaign to improve the understanding of OOP costs for consumers, GPs and medical specialists) do not go far enough, given the substantial and widespread impact of OOP costs.

The committee recognises that a minority of specialists have been charging egregiously large fees, including to patients on low incomes; that some charge ‘hidden’ administrative or booking fees, which are not disclosed to Medicare or private health insurers; and that there is a cumulative financial impact of more modest charges.

However, disappointingly, there are no substantive recommendations for addressing these issues.

A specialist fees website on its own will not benefit the majority of consumers negatively impacted by OOP costs, such as the 663 000 people who reported delaying or avoiding seeing a GP when needed due to cost or the 974 000 people who delayed or avoided filling a prescription due to cost (AHIW 2016-17 figures).  It also may result in unintended consequences, such as fee increases, if implemented in isolation from other strategies targeting OOP costs.

The out-of-pocket policy vacuum

In almost all areas of our supposedly ‘universal’ health system, increasing costs are preventing average Australians from getting the care they need. Last year over 600 000 people avoided or delayed going to the GP due to cost. Almost one million people who needed a prescription medication avoided or delayed filling their prescription for financial reasons.  Cost was also a barrier for over two million Australians who avoided seeking needed dental care.

Strategies for dealing with the growing problem of out-of-pocket (OOP) health care costs should be central to all political parties’ health policies.  OOP costs make up the largest non-government source of health funding in Australia, contributing almost double the amount of funding as private health insurance, and have a major impact on consumers’ access to care.

However, currently, OOP costs are a ‘policy vacuum’ with payments imposed by providers in an inconsistent, unfair and inefficient manner across the health system in a way that creates barriers to access and reduces the efficiency of our health system overall.

Part of the complexity of this issue is that OOP costs are not a single entity but a group of overlapping and inter-related problems. Together these form a ‘wicked’ policy dilemma not solvable by a single strategy or policy change but requiring long-term action on multiple fronts and the engagement of all stakeholders, including governments, industry and providers.

Due to the complex and dynamic nature of our health system any policy changes also require ongoing monitoring to avoid unintended effects elsewhere.

Investments and returns

For these reasons, our new paper on this issue proposes a staged approach, starting with agreement on the overall aims and guiding principles for OOP costs and their (constrained) role within the Australian healthcare system. These should take account of the fact that Australia will need to spend more on healthcare in the future to maintain our world class healthcare system, but also recognise that evidence- and value-based expenditures on health are investments that deliver reductions in costs elsewhere in the healthcare system and in the federal budget.

Ensuring visibility

Fundamental to this approach is the need for a dedicated area within the Health Department to consolidate the disparate sources of data on OOPs, coordinate stakeholder input and lead policy development. One reason for the lack of progress in addressing this issue is that it has been largely invisible to policymakers (although not to consumers) as the effects of OOPs are spread across different areas of the health portfolio and different levels of government. We cannot solve a problem that we cannot see.

Setting the parameters

Addressing the current problems with OOPs will involve choices about how healthcare funding is raised (eg taxation and levies), about what are considered essential vs non-essential services, about which healthcare costs we share with others (eg via Medicare or PHI) and which costs are more suitably bourne by individuals. All stakeholders should have input into debating these questions but ultimately it needs to be consumers and the community whose interests guide the development of policy solutions.

Guiding principles

Our initial suggestions is to establish some overarching principles for OOPs, including the following:

1. OOP costs (for individual services, episodes of care, and ongoing treatments) should not be a financial barrier to accessing essential healthcare.
2. OOP costs should promote the efficient use of healthcare.
3. Adequate safety-nets should be established to ensure vulnerable individuals and groups (eg. people on low incomes and those who are high level users of services) are protected from OOP costs and not discriminated against.
4. Data should be collected on OOP costs across the healthcare system and used to inform policies and strategies. There must be recognition of the cumulative impact of these costs and also that some people do not incur any OOP costs because they are so financially disadvantaged that they never present for needed care.
5. Consumer experience should be at the centre of policy development to address OOP costs.

We also suggest that priority areas for action should be those areas of health care and groups of consumers particularly impacted by OOP costs. These include people with chronic conditions, people who require services/products not currently subsidised (such as non-PBS medications, medical aids and appliances), people on low incomes and those requiring basic dental care.

Suggested strategies

Based on these principles and priorities we propose a number of strategies, both short and long-term, including:

• A ‘fee disclosure’ resource and comprehensive complaints mechanism to support consumers to make informed choices about their health care and seek redress when OOP costs are unreasonable;
• A comprehensive medical and health care safety-net (initially combining existing MBS and PBS safety-nets and over time including other health care costs);
• Agreements with the medical and health care professions to limit OOP costs, with support for lower charges and penalties (such as the withdrawal of Medicare entitlements) for egregious billing;
• Government-backed low/no interest loans for consumers faced with large unexpected health care costs; and
• Workforce reforms, such as changes to the GP gatekeeper role, increased use of paramedics, nurse practitioners and allied health professionals and a strengthened role for generalists (to reduce reliance on multiple specialists).

Tackling the causes

Ultimately we believe that the idiosyncratic features of the Australian healthcare system – in which there are no constraints on prices charged by healthcare professionals for Medicare-funded services, and efforts to address the maldistribution of the healthcare workforce are hamstrung by a constitutional provision and that provides billions of dollars annually in subsidies for private health insurance which the majority of Australians do not have and even fewer want – must be addressed.

However, these are controversial and major reforms which we will take time to develop and sell to the powerful stakeholder groups that influence the health system.

In the meantime, action on OOPs is imperative to ensure our universal health system remains viable long enough for these broader reforms to take place.

Jennifer Doggett is a Croakey Editor, AHCRA Chair, and fellow at the Centre for Policy Development. Dr Lesley Russell is a Croakey Contributing Editor and Associate Professor at the Menzies Centre for Health Policy, University of Sydney.

Further responses to the National Strategy to tackle specialist out-of-pocket costs.

The Australian Medical Association says the proposed website needs to list what patients can expect back from Medicare and their private health insurance fund, as well as specialist fees.

Private Healthcare Australia says the federal government plan is a welcome step, and further urgent action must be taken against medical specialists who charge egregious fees or fail to inform consumers of likely costs in advance.

Consumers Health Forum of Australia says the new national strategy is a good first step, and they would like to see ways to ensure participation, and individual performance statistics of specialists.