The Medicare Select proposal has been generating some deep thinking and interesting debates.
Dr Tim Woodruff from the Doctors Reform Society has been putting his thinking cap to work, and you can read some of his concerns and conclusions below.
“The debate about Medicare Select as a viable health reform option is welcome, given that it has been promoted by the National Health and Hospitals Reform Commission, is supported by significant parts of the private health insurance industry, and has some support amongst health policy academics.
It’s worth noting, however, that suggesting that it could represent an improvement over the current system is a long way from suggesting that it is the best option to address the many problems identified by the Commission.
Lauded by its supporters as increasing choice and enabling consumers to drive change, it is worth noting that in the Netherlands, from which this model comes, only 3.6% of the population changed plans in 2008. The idea is that consumers will change or threaten to change plans and this will ensure that insurers will improve their products, moving to sophisticated purchasing strategies.
In Australia, those who can afford private health insurance have a choice of funds. That choice is close to meaningless in terms of improving the health care such funds support. The funds present all sorts of optional packages but essentially fund the same basic services. Most buyers have a real challenge sorting out meaningful differences in the product.
With Medicare Select, an independent agency will provide information about the different health plans to enable meaningful choices, but given that the basic health package is mandated, the differences will be at the edges only, and will continue to be confusing and populist rather than important for long term health benefit.
The emphasis will inevitably be on hospital care because it is much more easily identified as a need by buyers, and it’s easier for insurers to market hospital care. Prevention packages will fall by the wayside. Indeed, private health insurance packages were allowed for under our current system after a 2008 change to the Health Insurance Act. We haven’t exactly been overwhelmed by advertisements for long term care packages from private insurers since because it’s all too difficult to both put together, and to sell.
Choice without meaningful options is not really choice. Medicare Select would offer some level of meaningful choice, available to those few who can understand the different plans, and those who can afford the extra packages.
Medicare Select sounds very much like a plan to increase the choices for those who already can choose, and to give just the basics to the remainder of the population, including the most needy and disadvantaged who frequently either cannot afford extra choices, or don’t have the knowledge or understanding to differentiate between plans (if there are meaningful differences).
Thus, there seems no justification for expecting meaningful choice to a degree to drive change where it is needed most, ie at the prevention level, at the primary care level, and at the level of the most needy and disadvantaged.
There are other serious concerns however. We have a major problem of distribution of health resources, partly geographic, and partly across the socio-economic gradient. The least needy in major urban centres consume the most health resources, and the most needy get the least.
Providers don’t go to the most needy areas so funds don’t either because we fund providers, not need. Under Medicare Select, funds will be distributed to citizens on the basis of need which will therefore give them a right to adequate funding, and the theoretical capacity to spend it to get what they need.
But they will have to give that money to an insurance company and rely on the insurance company to find health providers in regions which simply don’t have them. These insurance companies will then be expected to compete with each other to get providers to work in areas of disadvantage.
The insurance companies or plan providers can include governments. For profit organisations will run a mile from such areas. Where markets fail, governments and not for profit organisations will compete for the care of the needy. In theory, they will at least have adequate funds at their disposal. But they will be competing with each other to get those funds by getting more people to sign up to their plans. This model will therefore rely on the altruism of not for profit insurers and on whatever motivates governments to look after the most disadvantaged, marginalised and most vulnerable.
This is not a good starting point to address their needs especially as both governments and not for profit insurers will also be in the market in other areas where their work will be much less challenging.
Medicare Select is partially based on the Netherlands model. The Netherlands has a maximum dimension of 300km. Geographical inequity is not an issue. Getting providers into areas of need is a minor problem compared to Australia. This is not addressed in discussions about Medicare Select.
Medicare Select pools funds and distributes according to need. That is a great starting point for reform.
Supporters suggest that their model of distributing funds is much better than the alternative which is distribution of funds to regional fundholding organisations. It is suggested that consumer choice can drive change and that a regional fundholding model denies consumer choice, limits involvement of the private system and limits consumer involvement.
A regional fundholding model however, could very easily involve the private system extensively. Indeed, any such model should include primary care by doctors, most of whom are private providers. Private hospital services could also be part of such a model.
Crucial to consumer involvement however, is information. Under the Medicare Select model this would be limited to information about different plans. Under a regional fundholding model it would be imperative that an extensive data set of national, regional, and sub regional health care needs, health service utilization, and health care funding be made available so that regional fundholding organisations with appropriate governance models which include significant consumer and citizen involvement, would be accountable to the local population.
Armed with regularly updated and independently audited information at the regional level, citizens could be involved in driving change to a degree not even considered by the proponents of Medicare Select. Prevention and primary health care would then have a chance against the pressure of hospital care.
The adequately funded region could be innovative in co-ordinating and facilitating the integration of service delivery and attracting the appropriate mix of providers without competing within the region for scarce resources. The professionalism of providers would be enhanced rather than diminished by working co-operatively with rather than competitively against other health providers.
Both the Medicare Select model and a regional fundholding model are complex. Both pool funds and distribute on the basis of need.
But consumer and citizen involvement would be much more profound in a regional fundholding model which uses data in the hands of consumers to drive change, rather than relying on the superficial consumer empowerment of the market.”