How does Australia’s health system compare.

Jul 17, 2014

The Treasurer, the Minister for Health and the Commission of Audit have warned us in one way or another that the Australian health service is unsustainable, particularly with an ageing population. The Treasurer tells us that the age of entitlement has to end in health as elsewhere.

We need to keep modernising Medicare but by almost any international comparison we have one of the best and most sustainable health services in the world. We need to keep our problems in perspective.

The Commonwealth Fund publishes a regular research report on health systems in major countries. The Commonwealth Fund is a highly regarded private US foundation that compares major systems around the world to stimulate innovative policies and practices in the US and elsewhere.

In its 2014 report ‘Mirror, mirror on the wall’ it compares the performance of healthcare systems in eleven major countries. The comparisons cover quality of care, access, efficiency, equity,‘healthy lives’ and health expenditures per capita.

Its overall health ratings for these eleven countries were as follows:

  1. UK
  2. Switzerland
  3. Sweden
  4. Australia
  5. Germany and Netherlands (equal)
  6. .
  7. New Zealand and Norway
  8. .
  9. France
  10. Canada
  11. US

On almost all the measures the UK with its National Health Service is a stand-out performer. It has well and truly stood the test of time. The single payer nature of the UK health service is its strength. The regular laggard in almost all these rankings is the US. It tells us a great deal about the failure of a health service based on multiple private insurance payers. (Our private health insurance lobby is trying to take us down this disastrous US path.)

When one looks at the break-down of these rankings, the UK ranks at the top in quality of care, access, efficiency and equity. US ranks last in access, efficiency and equity. What is more, the UK system is the cheapest at $US3,405 per capita in 2011 compared with the US, the most expensive at $US8,508 per capita in that same year.

As indicated above, Australia stands at number four in overall rankings amongst the eleven countries. In particular areas we ranked as follows

  • In quality of care we ranked number 2.
  • In access, we are well down the list at number 8. This reflects in part our high level of co-payments or out of pocket costs. The proposed $7 co-payment will add to our problem of access.
  • In efficiency, we rank number 4.
  • In equity we rank number 5, which reflects in part our failures in mental health, indigenous health and in remote healthcare.
  • In ‘healthy lives’ we rank number 4.
  • In health expenditure per capita in 2011 at $US3,800 we were the third lowest amongst the 11 countries.

Another measure of our success of course is our high life expectancy.

It is quite clear that by world standards we rank quite well. We are behind the UK, but far ahead of the US. The single payer Medicare has also stood the test of time.

But there are ways that we could improve our health services.

  • Mental health, indigenous health and remote healthcare are major shortcomings.
  • Our co-payments are confused and inequitable.
  • Subsidised private health insurance makes it harder for Medicare to control costs. (I find it hard to put up with the gall of the private health insurance funds that will never publicly debate their cause, privately lobby ministers in order to achieve results that will take us down the disastrous US path.)

There are many ways in which the efficiency of our system could be improved and costs better managed.

  • The split of commonwealth and state responsibilities adds to costs and hinders integration of hospital and non hospital care.
  • The remuneration of doctors through fee-for-service is a perverse incentive which encourages over-servicing and over-prescribing. It also hinders the treatment of long-term chronic sufferers.
  • The government subsidy to private health insurance adds $5 billion plus per annum to government costs, benefits the wealthy and weakens Medicare.
  • Australian drugs cost substantially more than in least $2b. pa.. because of the clout of Medicines Australia in negotiating prices with the Australian government.
  • With its lobbying power, the Australian Pharmacy Guild protects pharmacists from competition.

There is a lot we can do to improve healthcare in Australia and better manage costs. But overall, we have a very good and sustainable health service which ranks well against comparable countries. We need to keep a sense of proportion.

For further information on the Commonwealth Fund Report, including the overall rankings, google The Commonwealth Fund and search Mirror, Mirror on the Wall 2014 Update.

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