Issue 24 / 7 July 2014

AN abundance of words have been written about the proposed copayment for some Medicare services, with views ranging from outrage to praise.

The federal government’s Commission of Audit makes this assertion: “Co-payments send a clear price signal to all consumers that medical services come at a cost, which may reduce demand for unnecessary or overused services.”

This statement begs two important questions: How do we judge (prospectively) what services are “unnecessary”? What do we know about how price signals work?

The first question is the most concerning. We have all experienced worries about things that, with the benefit of hindsight, later seemed trivial. In most cases we could not have known in advance there was little to worry about.

So how do patients know when their health concern in “unnecessary”? Do we have any information about the percentage of Medicare-billed services judged to be “necessary”? If so, what were the criteria used to make that judgement?

If the implication is that the current number of Medicare services is “too high”, then what is the right number? If we discourage “unnecessary” services do we encourage more “necessary” ones and therefore have a better health system, or do we aim to deliver less services overall?

Studies of emergency department attendances have shown that, in most cases, people have a good idea about what service meets their need, and make selections that are at least as appropriate as the advice given by telephone triage lines dedicated to this purpose.

An Australian Institute of Health and Welfare report on GP services between 2000 and 2010 found the greatest increase in attendances during the time period was for vaccinations. This would normally be regarded as a measure of success.

So, if the Commission of Audit’s suggestion that current use of Medicare services is “excessive” is debatable, what about their assumption about the effectiveness of price signals?

My fellow MJA InSight author, Dr Aniello Iannuzzi, has drawn a comparison between the copayment and the carbon tax. Many would argue that the purpose of the proposed carbon tax was not just to raise revenue, but also to encourage industry and consumers towards less pollution — a price signal.

So did this price signal work? Despite widespread alarm about increasing electricity prices, how many in the general community have reduced their power use?

Those of us with the means continued to drive through our automatic garage doors, watch our large flat-screen TVs* or sit at our buzzing computers in buzzing air-conditioning. Our gardens are still lit by proximity-triggered lights and watered by powered sprinkler systems. We have bigger fridges, faster clothes dryers and hotter dishwashers.

Meanwhile, the impoverished and the elderly have reduced their power consumption by turning off more lights, huddling in bed under a quilt and watching a small TV. They will use little heating in winter or coolers in summer — economising as they always have.

Will another $7 in the burden of bills lead them to also cut back on essential medical care?

Effective strategies for either containing or funding health care costs are certainly required. What the government has proposed, however, is a questionable strategy based on questionable assumptions.

As a community, we need to think very carefully about where a copayment strategy will take us.

Dr Sue Ieraci is a specialist emergency physician with 30 years’ experience in the public hospital system. Her particular interests include policy development and health system design, and she has held roles in medical regulation and management.

* Disclaimer: the author has neither a garage door nor a flat-screen TV.

12 thoughts on “Sue Ieraci: Unnecessary questions

  1. Marcus Aylward says:

    Wow, haven’t seen Rose and Angry so intertwined since the last Rose Tattoo concert…

    Rose, your point regarding the waste of the health budget in bureaucracy is well-made, but again, which administrator is going to volunteer to reduce the size of their department, particularly given the compliance supervision apparently required these days to prevent, for example, another Jayant Patel bogeyman?

    The rest of your spray is, to be frank, your own ‘stuff’: you will look in vain for any allegation on my part that bulk billing clinics are defrauding the public or Medicare. You will find a statement that says such clinics will suffer a decline in income if they choose not to collect a co-payment, which is a fact.

    And In terms of doctors not discriminating based on patient wealth?; welcome to fee-for-service medicine, where ability to pay absolutely does determine the services you may access. (But systems like the NHS have the opposite problem: where there’s no financial incentive for the doctor to see more patients or do more operations – same sessional payment – why would one bother?).

    It is not Us vs The Government: to paraphrase a slightly unsuccessful slogan, “we are the government”. We vote for them and they spend our taxes, so how do you propose to bring to our attention that the health budget cannot be the bottomless pit that so many seem to want it to be? Cap or cut services, or introduce a price signal. Then come election time, we have finally been made aware that health isn’t a magic pudding afterall.

  2. Genevieve Freer says:

    Marcus refers to escalating healthcare costs-where are these? Are these caused by bulk-billing or by bureaucracy? Please enlighten us with the percentage of the increase in  healthcare costs which are medical.

    Marcus refers to stubbed toes-cannot remember ever seeing these except in diabetics with neuropathy;  

    URTIs- viral stidor and  viral  croups requiring emergency treatment-not worthy of your treatment, Marcus? Should children pay up front ?

    Certificates, Marcus- you believe that $7 will be less than the financial gain of sick pay, centrelink or workcover fraud? 

    Marcus and Paul seem to think that all bulk-billing doctors rip-off Medicare. Please supply your evidence.

    Is the corollary true Marcus and Paul, that all doctors who do not bulk-bill Medicare are honest. and ethical ? Do you think that the wealthy privately insured elderley have never had any unnecessary privately-billed procedure?

    While it is an unfortunate fact that a minority of doctors engage in unethical billing and servicing, you have no evidence that this is caused by, nor confined to   bulk-billing of Medicare, nor do you have any evidence that a $7 co-payment will reduce unethical billing.

    Marcus , doctors are not supposed to discriminate against the sick, poor, disadvantaged, children, , elderley, chronically ill, demented , yet this is exactly what the co-payment does.

    Paul, I am not worried personally by the co-payment, because I can close my practice and work in an ED , however, I am happy for you to treat my poor patients in a rural town with no Medicare office, and no permanent Police presence to protect your cash co-payment, and byo book-keeper to account for your co-payments and bad debts.

  3. Department of Health Victoria Clinicians Health Channel says:

    Hi Sue,

    if by ‘service provision’ you mean improved preventive programs through research and medical education, then absolutely. 

    If on the other hand you mean the nature of the transaction, then good luck. No government has prepared the ground for a frontal assault on the vested interests supporting fee-for-service medicine, with the necessary exodus from the public health system that that would entail.

    I return to my original: when and where shall we start?

  4. Sue Ieraci says:

    Marcus – In general, I agree. Why not tackle the nature of the service provision, then, rather than just trying to discourage attendances? As Philip Dawson said above, price signals are likely to deter the needy, not the anxious.

  5. Marcus Aylward says:

    Sue (13.30): I have not read your other pieces but they sound well-directed. The easy retort to “lack of evidence” is always “Absence of proof is not proof of absence”. If not a co-payment, then what other measures should be proposed to make the necessary savings?

    Preventive medicine is the current and untouchable golden child of general practice: any criticism of it will inevitably lead to the diseased hoardes descending on the public hospital system at even greater cost. But we don’t do preventive medicine well: witness the ongoing furore over the validity of screening for prostate cancer.

    There are actually people around who know about preventive medicine and disease screening – clinical epidemiologists – who can tell what diseases can usefully be screened for and even use Bayesian-style analysis of prior probability of disease to design programs, where effective therapies exist. Simply ordering a scattergun bunch of tests – often at the behest of the “medical-industrial complex” in order to push their latest technology, or pill to incrementally tweak a blood figure – does not constitute cost-effective preventive medicine, much as the practitioner might naively believe they are keeping the punters out of hospital.

    And of those programs that are effective?: a great many of them do not require the expertise of a GP. They could very easily be administered by a practice nurse, educator, or other paramedical. But we like talking about that a lot less….

  6. Paul Jenkinson says:

    Bulk billing doctors might perhaps be less inclined to service their  patients so often because ,doctors “create” demand by supplying extra services oh so easily.Don’t they?

    The co-payment price signal will worry many doctors much more than their patients I suspect.

  7. Sue Ieraci says:

    Hi, Marcus. You lament the lack of evidence for ”preventive medicine”, but appear to support the GP co-payment. Have you seen evidence that this sort of price signal works? If you read my other Insight articles, you will see that I argue for less risk-aversion and an end to the pursuit for non-clinically-relevant diagnoses – both are influences that drive significant costs.

  8. Marcus Aylward says:

    Just so much feather-bedding.

    Fact #1: escalating healthcare costs (see % of GDP growth in last 20 years) are unsustainable

    Fact #2: no one ever wants their sphere of activity to bear the cost-cutting

    The co-payment is one idea to try to deter the stubbed toes/URTIs and certicate-seekers from attending the GP. All those professing interest in policy do not seem keen to direct their attention to how costs might otherwise be contained. But contained they have to be.

    Co-payments already occur in the PBS, and for virtually all specilists: this is not a new concept people. GPs retain the discretion to make concession for the needy. Is this more about bulk-billing clinics suffering a potential fall in income because they won’t be bothered collecting the co-payment but will then have to put up with a reduced Medicare reimbursement for bulk-billing??

    And preventive medicine is all well and good, but the outcome data of events which didn’t occur are hard to measure, and therefore to ascertain whether we are getting value for money.

    Like the numbers of strokes prevented by routine carotid artery stenosis screening perhaps?….

  9. Genevieve Freer says:

    I agree with Sue Ieraci.

    Assuming that a co-payment ” may reduce demand for unnecessary or overused services ” has no evidence base.

    Perhaps a constructive approach could be for the government to identify these “unnecessary and overused  services ” and invite submissions from the medical, allied health and pharmacy professions on how to reduce demand .

    As a GP working in rural and remote Australia for decades, I have seen little demand for unnecessary services.

    Rather, I see a demand for necessary  GP and other health  services which are unable to be met due to shortage of GPs and health services. In the town where I work, there in no Medicare office for patients to submit claims. Many patients cannot access GP services, because there are not enough doctors, and so attend hospital emergency departments , which are already overburdened..


  10. Edward Brentnall says:

    “Common Sense” is remarkably UNcommon, but Sue Ieraci can be counted on for a display of genuine common sense.  Thank you, Sue. 

  11. Philip Dawson says:

    You are right to question the validity of a “price signal” for medical services. Exploring a little further, the people who need to cut back on their excessive use of publically funded medical services are the chronically anxious, not the chronically ill. A price signal is not likely to affect the anxious, they will pay it, but the chronically ill who already are poor compliers with treatment , diet and exercise  will come less often to their GP, ending up sicker and more likely to go to hospital.

  12. Diane Campbell says:

    Great signal.  My GP was priceless,  now the government tells me he’s worth $7.

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