John Menadue. Our health system is sustainable.

To justify an increase in the GST, Premier Baird has joined the long list of conservatives who keep telling us that our health system is unsustainable. Earlier the Treasurer, Ministers for Health and the Commission of Audit warned us in one way or another that the Australian health service is unsustainable, particularly with an ageing population.

The fact is that it is sustainable. .

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(equal)
  8. .
  9. France
  10. Canada
  11. US

On almost all the measures the UK with its National Health Service is a stand-out performer. . Grounded in primary care and with a single payer it has well and truly stood the test of time. 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, 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 Abbott Government plans will make this worse.
  • 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. . Medicare has served us well but is 40 years old without major review.

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.

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

  • Can we afford the funding we commit to IVF and end of life services at the expense say of indigenous and mental health?
  • The split of commonwealth and state responsibilities adds to costs and hinders integration of hospital and non hospital care. We have in reality two stand-alone health systems, primary care and hospital care. There is little incentive for the Commonwealth to improve primary (GP) care in order to reduce pressure on expensive state run public hospitals. We need joint funding and planning of all health care that I have proposed for many years.
  • The remuneration of doctors, pathologists and radiologist 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 $10 billion per annum to government costs benefits the wealthy and weakens Medicare.
  • Australian drugs cost at least $2b. Per annum more than similar drugs in NZ 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.
  • Our health workforce is riddled with demarcations and restrictive work practices. Nurses are not properly encouraged and employed. Yet they hold the system together.
  • The Productivity Commission has drawn attention to great variations in productivity between public hospitals and between private hospitals.
  • There is no accountability in any meaningful way for what the health industry produces particularly in general practise. There is little effective peer review in private hospitals. Where are the service bench marks in patient outcomes, the use of preventive strategies, and integration of care or even waiting times?

There is clearly 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.

Sorry if I keep repeating myself on health care but the myths about our unsustainable health care are recycled time and time again and seldom contested.

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One Response to John Menadue. Our health system is sustainable.

  1. Peter Graves says:

    Thanks the reminder that our health system may be creaking at the edges but is sustainable. One of the reasons that it is stems from the fact that the baby-boomers will be far healthier in their advancing years, than were their parents and grandparents. They will not be incurring the same healthcare costs as their parents or grandparents, who typically were being sicker in their 60s and 70s.

    Successive Intergenerational Reports by Treasury have (carefully) avoided detailed examination of this, called the “compression of morbidity”. The first IGR actually conflated their projected medical costs with their retirement (financial) benefits – it added the two together, inappropriately.

    The considered evidence is in the following four papers:
    (1) The original 1982 paper is here – http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0009.2005.00401.x/abstract;jsessionid=9ED1B888C0B482854BDDC93F70B907AC.f02t01

    (2) An assessment by the WHO in 2002 is here – http://www.scielosp.org/scielo.php?script=sci_arttext&pid=S0042-96862002000300011

    (3) More about the original author James Fries (2008) -http://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2008.135731

    (4) A 2011 paper in the Journal of Ageing Research is here – Compression of Morbidity 1980–2011: A Focused Review of Paradigms and Progress http://www.hindawi.com/journals/jar/2011/261702/

    Time to review the statistics on projected medical costs and expenditure, I suggest.

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