Out-of-pocket health costs soar

INCREASING out-of-pocket costs is the main issue of concern for people using the health care system say consumer advocates and health economists, who have called for an urgent review of funding models.

Carol Bennett, CEO of the Consumer Health Forum of Australia (CHFA), said Australia was in danger of following the US, where people often had to choose between putting food on the table and buying vital medicines for their chronic health conditions.

“[Australians] are making those choices all the time”, Ms Bennett told MJA InSight, in response to research in the MJA which found that older Australian households were outlaying $3585 per year in out-of-pocket (OOP) health care costs, compared with $3377 in younger households. (1)

The authors said although the difference in OOP costs was not significant, older households spent 9.4% of their total household budget on OOP health costs, with non-prescription drugs the biggest item of expenditure. In comparison, younger households spent 4.7% of their budget on OOP health costs, with private health insurance premiums the biggest item.

The research analysed the OOP expenditure reported by Australian households grouped into older households (where the reference person selected by the researchers was aged 65 years or older) and younger households (reference person younger than 65 years), using statutory data collected by the Australian Bureau of Statistics.

The authors found that the OOP health care cost was $28.7 billion for the 2009–2010 study period, compared with $21.2 billion estimated by the Australian Institute of Health and Welfare for the same period.

In an accompanying editorial, Professor Jane Hall of the Centre for Health Economics Research and Evaluation at the University of Technology Sydney, warned that “no country can afford to finance all the health care that is possible for everyone”. (2)

“Universal access is no longer envisaged as unlimited access for all to everything, but rather as appropriate access to cost-effective and socially valued services”, Professor Hall wrote. “We need a policy debate about what should be included in that cost-effective and valued minimum package.”

Ms Bennett agreed that policy debate was urgently required.

“This is the number one issue for our members”, she told MJA InSight. “People are remortgaging their homes and cashing in their superannuation to pay for health care.”

Associate Professor Sue O’Malley, of the Australian School of Advanced Medicine at Macquarie University, told MJA InSight that there were problems with the current system of subsidies.

“There is not only a need to examine the OOP expenditure of those suffering chronic illnesses relative to those without a chronic illness”, she said. “There is also a need to examine the impact of the discriminatory fee policy, between concession card holders and those non-concessional patients, practised by many physicians.

“An initial consultation by a specialist physician can attract a fee of $240 for the non-concessional patient compared to $120 for the concession card holder”, Professor O’Malley said. “Working on the assumption that the physician has to earn a certain amount to run a practice and make an acceptable income, this difference in fee must result in a cross-subsidy between the non-concessional patient and the concession card holder.

“Since the [Medicare Benefits Schedule] fee is the same for both, the OOP for the non-concessional patients is inflated by this cross-subsidy.”

Ms Bennett said the costs of medicine and the price disclosure system by drug companies supplying subsidised medicines also needed review.

The CHFA website says Australia pays $1 billion more for prescription medicines than Britain pays for the same medicines. (3)

“That’s because Australia’s medicine pricing policies have failed to take advantage of the plunge in world pharmaceutical costs in recent years”, the website says.

A spokeswoman for Peter Dutton, the new federal Minister for Health, said: “Out-of-pocket expenses in health care are of concern and the government will help make inroads into these costs by support for private health insurance, investments in GPs, offering better targeted dental services and keeping the cost of pharmaceuticals low.”

1. MJA 2013; 199: 475-478
2. MJA 2013; 199: 442-443
3. Consumers Health Forum of Australia 2013; Drugged by reality – losing $2000 a minute and counting