Why we don’t want private health insurance for primary care

Dec 4, 2015

The worst possible outcome from the current review of Private Health Insurance would be changes that resulted in the best-resourced Primary Care being only available to those who have such insurance.

Obviously insurers and the insured would be expecting a service that was superior to that available to the non-insured. We certainly need to make major improvements to the way we deliver Primary and Community care to meet contemporary needs but those improvements must be available to all. This requirement is not just about equity it’s also about rational health economics.

The “Win Win” outcome sought from restructuring our health system to improve the effectiveness of Primary Care would see a generation of healthier Australians with far fewer needing inpatient hospital care. We spend about 20 billion dollars a year on Medicare, the major payer for our Primary Care services, but more than 50 billion dollars a year providing public hospital care. The ever-increasing demand for hospital care has the cost of such care growing far more rapidly than the cost of providing Medicare. This is the major reality that is economically unsustainable but reversible through innovative health care reform.

Many countries have realised that the only way to minimise the tsunami of patients with chronic and complex diseases, who suffer a poorer quality of life and utilise most of our health dollars, is to resource Primary Care to reverse this situation. There is a very strong evidence base to suggest this is possible. With the exception of diseases associated with excess alcohol consumption all the lifestyle risks that can lead to chronic disease are more prevalent in less economically advantaged Australians. The best possible Primary Care program must be available to all. We must not accept a two-tired Primary Care system.

Private Health Insurers are faced with a difficult situation. Roughly 5-10 percent of the Australians they insure are responsible for 60-70 percent of their payments. These individuals require multiple expensive hospital admissions because of serious and chronic disability. There costs are increasing and as the government allows them to pass these onto consumers, many younger Australians are opting out of health insurance (500,000 in the last year). Insurers and their customers also are adversely affected by the over servicing that occurs in many private hospitals. Many surgical procedures that offer patients little or no benefit create unnecessary expense for Insurers and patients alike.

Given the above scenario Insurers want to become players in delivering Primary Care to see if improvements they might fund would reduce the admission rates for their “frequent flyers”. Currently they have few leavers to pull to reduce the need for admissions. Since current regulations prevent them from paying directly for care delivery, some have experimented with paying GP practices for other than direct care expecting that, in return, their insured patients will receive better and preferential care. Such efforts to circumvent current rules are unlikely to make a difference and offer no real solutions.

Of course State governments are faced with the exact same problems and dilemmas. They are finding it increasingly difficult to fund the growth in demand for hospital services and have little influence on the quality and appropriateness of Primary Care that they need to do a better job of reducing admissions to public hospitals. This situation is all the more problematic with the Federal government’s withdrawal of the previous government’s promise of a 40 billion dollar contribution to hospital costs.

While there is no doubt that we could improve the care in the community of many who frequently need admission to both public and private hospitals with end of life planning being a major contributor, the major imperative is to resource Primary Care to reduce the incidence of chronic disease. We need to urgently start the journey to reshape our doctor and sickness centric system into one emphasising prevention and the maintenance of wellness. There is an abundance of international evidence that the “Medical Home” model is the one we want.

In this model Australians would enrol in a practice that features a multidisciplinary team of doctors, nurses and allied health professionals. The inherent philosophy involves a mutual commitment by patient and team to help keep one well and offer in-house integrated care when one is ill. Some team members focus on prevention and improving health literacy, others on early diagnosis and management of problems that could lead to chronic disease. The multidisciplinary care needed by patients with established disease is provided in house and there are team members that extend care to a community/ home setting, an initiative that has been shown to markedly reduce the need for hospitalisation. Australian data suggests that such resources could reduce public hospital admissions by 6-700,000 per year.

International experience suggests that over a decade long journey to implement this vision, reduced hospital expenditure would more than pay for the additional costs to Medicare. The case for the health dollars we provide to State and Federal governments being pooled to fund this transformation is overwhelming. As the politics of personality give way to serious discussion of needed policy initiatives plans to implement these changes to benefit all Australians should become a major priority.

Professor John Dwyer AO, Emeritus Professor of Medicine UNSW.

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