Repost: Co-payments: no rhyme or reason. Guest blogger Jennifer Doggett


This earlier post is reposted as it is relevant to the question of co-payments which a paper submitted to the Commission of Audit has proposed. 

Australians are often justifiably proud of Medicare and its role in making health care accessible to all in the community. However, a largely unrecognised threat to Medicare is the increasingly large component of health funding which comes directly out of people’s pockets in the form of out-of-pocket costs or co-payments.

Co-payments are the second largest source of health funding in Australia, second only to governments. They currently contribute 18 per cent of total health funding or just over $21 billion per year,[1] more than double that contributed by private health insurance.

Co-payments are currently implemented in our health system without any overarching policy framework or assessment of their overall impact on consumers. The end result of this that many Australians find themselves unable to access care because of the co-payments they face. This has been shown by two Commonwealth Fund surveys[2]  and a 2012 survey by the Australian Bureau of Statistics[3] which found that one in 15 sick Australians has put off seeing a doctor because it cost too much.

These problems are often not obvious to policy makers because, when averaged out across the entire population, the total co-payment contribution by consumers is not excessive (the AIHW estimates it is $900 per person per year).[4]  However, in health care few consumers are ever ‘average’.  Demand for health care varies widely with a small group of consumers requiring large amounts of health care and the rest of the population very little.

The level of consumer co-payments also differs significantly across the health system, as demonstrated by the following table[5]. This creates inconsistency across different forms of health care and results in inefficient and inequitable impacts on consumers.


Type of service Total co-payment amount ($m) Co-payments as a proportion of total funding
Medical services 2 641 12.4%
PBS/RPBS medicines 1 500 16%
Other health practitioners 1 700 45%
Dental services 4 600 61%
Aids and appliances 3 560 70.2%
Non-PBS medicines 4 036 94%


Addressing this problem requires a ‘ground-up’ building of a co-payments system that reflects the values and priorities of the community.  This should include a joint Commonwealth and State/Territory policy on consumer co-payments for health care, which clearly articulates the aim of co-payments and outlines effective safety-net and other arrangements to ensure co-payments do not create barriers to accessing care.

Within this overarching structure, options such as standardising co-payments across sectors, allowing structured payments over time and other arrangements can be explored. Unfortunately, none of these issues are addressed in the current health reform. This is a mistake from both a practical and policy perspective and if not addressed could ultimately undermine the goals of the health reform agenda and compromise the ability of our public health system to deliver accessible and effective care to all in the community.


[1] AIHW 2012. Australia’s health 2012. Australia’s health no. 13. Cat. no. AUS 156. Canberra: AIHW


[2] C. Schoen, R. Osborn, D. Squires, M. M. Doty, R. Pierson, and S. Applebaum, New 2011 Survey of Patients with Complex Care Needs in 11 Countries Finds That Care Is Often Poorly Coordinated, Health Affairs Web First, Nov. 9, 2011 and C. Schoen, R. Osborn, S. K. H. How, M. M. Doty, and J. Peugh, “In Chronic Condition: Experiences of Patients with Complex Health Care Needs, in Eight Countries, 2008,” Health Affairs Web Exclusive, Nov. 13, 2008, w1–w16.

[3] Australian Bureau of Statistics Patient Experiences in Australia: Summary of Findings, 2011-12

[4] AIHW 2012.

[5] Australian Institute of Health and Welfare 2011. Health expenditure Australia 2009-10. Health and welfare expenditure series no. 46. Cat. no. HWE 55. Canberra: AIHW

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