Cut price care

The Howard government wants a different Medicare: one where people who can, pay more to visit a doctor. The government is grappling with a complex economic issue, but should not dismiss the social benefits that Medicare delivers to the very sick and less well off. The degree to which the lower paid and the disadvantaged are protected will determine the success of the government’s plans.

In a bold step to restore bulk billing for pensioners and concession card holders, the government has shifted the escalating cost of general practitioner services from the public purse to private households. With seemingly little regard for public opinion, this embrace of a user-pays system heralds a major change in the culture of health services.

To encourage GPs to bulk-bill pensioners and concession card holders in more remote locations, the government will pay a maximum $6 per patient incentive to GPs. No incentive is paid to GPs who bulk bill patients without concession cards. This crude means test furthers the notion that only some people deserve the full value of Medicare cover. Moreover, charging all non-concession patients full fees will then become accepted practice. Bulk billing will largely disappear and become a slim prospect for a few.

In effect this new form of Medicare accepts that bulk-billing rates will fall from the present 70 per cent level to around 50 per cent of all GP consultations. It presumes that those entitled to the full benefit of Medicare are only the most needy.

Holding a concession card is no proof of impoverishment. Self-funded retirees can earn up to $80,000 a year and hold a health care card. Yet ‘working poor’ families on only $34,000 annually receive no benefits and will likely pay more to see the doctor. As research consistently indicates, the lower paid are also the most dependent on health services. This demonstrates the necessity of maintaining broad access to health care. Determining eligibility for full health cover based on income or working status is too simplistic given the diverse factors that give rise to bad health and chronic disability.

Of course the government is the last to admit that its ‘Fairer Medicare’ proposals will open the door to increased medical fees. But the major assumption underpinning the proposals is that bulk billing for concession card holders, at least, must be preserved. What happens for the rest of the community has been less clearly identified.

By releasing its Medicare changes before the Budget, the government tested public reaction to the prospect of higher GP fees. There was widespread community concern and in many instances confusion. How could the proposals be called fair when ‘working poor’ families were left uncompensated to cope with extra medical costs? If the government were instigating a system of user-pays for lower income people, where would these people find the extra money to meet the bills?

Hence the tax cuts on budget night. Most observers have questioned the meagre size of the cuts and their capacity to offset the increased costs of GP consultations. However, the tax cuts demonstrate the government’s preference for giving taxpayers choice over how they spend their income, rather than having the government spend on their behalf.

This may be reasonable in other public domains, but health care is far more complex. Keeping essential health services accessible and affordable is crucial. The more the health care system moves towards a user-pays basis, the more likely those less well off become marginalised through either the centralisation of services or the capacity to pay.

A recent study of the impact of increased charges for pharmaceuticals on lower-paid people is revealing. ‘Working poor’ families, who comprise 25 per cent of those not holding concession cards, already pay up to seven per cent of their after-tax income on medicines and other pharmaceuticals. This figure is expected to rise to nine per cent by 2005. Since the remainder of the population pays four per cent or less of its after-tax income on pharmaceuticals, the inequity is stark. A further study found that up to 20 per cent of people delayed purchasing medicines because of the cost. Access to health care is increasingly determined by affordability rather than necessity.

It is widely recognised that a properly functioning public insurance scheme like Medicare helps constrain health costs and in turn keeps doctors’ fees affordable. When commercial incentives are introduced that favour differential charging practices, the potential for escalation in health costs is greater. All the downsides of access and affordability follow shortly thereafter.

Some economic forecasters have welcomed what they see as the long-term vision of the government’s proposals. They criticise current Medicare arrangements as being ‘middle-class welfare’ and too expensive to maintain. Yet respected research demonstrates that Medicare in its present structure favours the poor. Lower-paid people receive by far the greater proportion of benefits from the system. Those less well off are not only protected, they are advantaged, because those who can afford to do so are compelled to contribute.

Once Medicare becomes only a safety net for some, the middle classes will lose interest and political support will shift. Without widespread support, public safety nets become fragile and those who rely on them are at risk of further marginalisation.

This was not the purpose of Medicare. Medicare was intended to address need, not means. Medicare requires that individuals meet their obligations to the system and, in turn, to the community. It recognises that health care is integral to human dignity and must be safeguarded. Only a robust, universal public health insurance scheme can guarantee these lofty goals.

Ensuring that the Medicare patient rebate keeps pace with the real costs of care will mean long-term stability for a universal public system. Medicare can be far more than a subsidy for medical bills. It acknowledges that paying for health care is a major challenge for household budgets. This is particularly important given that two thirds of Australians bring home less than the $43,000 understood as average yearly earnings. Medicare is a crucial component of the social wage.

Rather than instituting meagre tax cuts, making a tax investment would enable lower-paid people to remain covered for medical expenses. An increase in the Medicare levy of only one per cent would raise in excess of $2 billion annually. Since it requires less than $1 billion a year for doctors to bulk-bill almost all patients, the social benefits are well worth the money.

Surveys have consistently revealed that Aust­ralians will pay more tax if it is directed towards essentials like health care. Published reports demonstrate that voter intentions are swinging back towards spending on social services in lieu of tax cuts. It seems, however, that politicians are too timid to make the shift.

Medicare is too important to become a safety net for only a few. The lower paid are too vulnerable to have their interests traded off in a dubious compensation package of token tax cuts. Only a well-targeted strategy of tax investment will properly protect the poor and marginalised.          

Francis Sullivan is the Chief Executive Officer of Catholic Health Australia.



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