Like a movie zombie, a policy idea that should have died has arisen from the dead and is likely to feature as a cost-savings measure in next month’s budget. The idea is simple: most GP patients should make a A$5 or A$6 co-payment to keep Medicare “sustainable”.

The idea was proposed in October by Terry Barnes, a policy adviser to Tony Abbott when he was health minister. Under the plan, bulk billing (without a co-payment) would be reserved for “pensioners, concession card holders and children under 16”. Barnes calculates this would save around A$750 million over four years.

It all sounds very reasonable; the amount concerned passes a “milk bar test” of what is seen to be affordable to ordinary consumers, and the “deserving poor” are protected. But once you look behind it, big risks emerge.
Save now, spend later

A co-payment will cut demand for GP visits. Some will shift to hospital emergency departments for care, a much more costly place to get health care and one which doesn’t offer the continuity of care available from a GP.

Other GP visits won’t be replaced at all. The problem is that the GP visits reduced will be not only more discretionary ones but also those that doctors think need to occur. As patients, we’re not good judges between the two classes.

To the extent that necessary visits don’t go ahead, either patients’ health will suffer, or they will eventually present for care, often with higher costs of treatment because of the late presentation.

Making sure everyone can get primary care is an investment, not a waste, even if there are some proportion of visits that turn out to have been “unnecessary”. In the long run, it saves money.
Poverty traps

A further key problem is recognised by Barnes when he noted:

The lines between bulk-billing need and capacity to pay will always be blurry.

Any form of means testing always involves problems at the margins, creating what policy analysts call “poverty traps”. There will always be families immediately above the concession limits for whom their cumulative health care expenses will be a hardship.

In Barnes’ proposal to exempt children under 16, why is someone aged 15 deserving, but are no longer so on their 16th birthday? Is it that they should leave school, get a job and start paying? On 16-year old youth wages of A$7.74 per hour and unemployment rates of over 10%? Or is it that their parents should pay, regardless of whether they have just missed out on a concession card?

People on lower incomes, who are not entitled to a concession card, are more likely to drop out of care because of the fee – and they are also likely to be sicker and benefit from care more. Already 16% of the population reports not seeing a GP or filling prescriptions because of cost; introducing a mandatory co-payment will make that situation worse.
Health-care gatekeepers

More importantly, is reducing GP demand a good thing? After all, the rest of the world is moving toward strengthening primary care.

The first point of access to the health system should be readily available, so that problems are treated early and do not develop into more serious conditions that are more expensive to treat, and often produce worse outcomes.

GPs in Australia act as gatekeepers and gate-openers to the more expensive parts of the health system: specialists, diagnostic tests, pharmaceuticals and hospitals. It makes good sense to encourage this part of the system to work more effectively.

It is more than 50 years since Nobel prize-winning Professor of Economics Kenneth Arrow showed why it made sense for a whole community to share the cost of health care. Shifting costs onto sick people has been seen as bad policy since then, and was wiped off the policy agenda in 1984 with the introduction of Medicare.
Better alternatives

There are a number of alternatives to ensure Medicare’s affordability. One is to adopt the policy directions of the rest of the world and strengthen primary care. Revitalise Medicare so that it better addresses contemporary concerns such as the care of people with chronic conditions, ensuring a full range of support services are available.

Another is to strengthen prevention to keep people from getting sick in the first place.

There is also waste in the system that can be cut without hurting patients or the system as a whole.

Both Terry Barnes and Health Minister Peter Dutton have dismissed increasing the Medicare Levy, but both only set out what it would mean if the levy was increased to pay for all health costs (or all costs met by the Commonwealth). This is a paper tiger: no one has proposed such a huge increase.

The Medicare levy was never designed to fund the full cost of health care, only the incremental costs of introducing Medicare. A small increase in the levy to fund health care can certainly be justified. What we judge to be unsustainable fundamentally reflects our values, our priorities and what we are prepared to fund through taxation.

Although a A$5 or A$6 co-payment has the virtue of superficial simplicity, it is not the solution to the rising costs of health care. Depending on the extent to which demand is shifted to emergency departments, there may be no savings at all. Even worse, if “necessary” visits to GPs are deferred, costs could even increase.

Image courtesy of  AAP Image/Dave Hunt

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