Will the Albanese Government revive the values that underpinned Medicare?

May 6, 2023
Conceptual image of national healthcare system in Australia

Or will it  fiddle around the edges like the Rudd/Gillard Governments?

After seven years of struggle against the AMA and others ,Gough Whitlam and Bill Hayden launched Medibank/Medicare in 1975.

Bob Hawke and Neal Blewett then put Medicare back in place after Fraser tried to destroy it.

Despite a lot of good intentions and bold statements about taking over state hospitals, Rudd/Gillard and Minister Roxon really went nowhere in health reform during their time in office. The Labor Governments got off to a bad start by appointing an enquiry that was full of providers and chaired by a senior executive of a major Private Health Insurance (PHI) company. The one real achievement was plain packaging of tobacco. But that was relatively easy because the AMA did not run a campaign in opposition. Roxon’s proposals to curb ophthalmologists’ fee gouging failed. The providers won… again.

Hopefully the Budget next week will show us that Albanese and Butler have learned the lessons of the past. An encouraging early feature was that Minister Butler chaired the Strengthening Medicare Task Force.

The most important lesson in my view is that for real reform, the power of providers… the AMA, Pharmacy Guild, PHI and Private Hospitals… and their lobbyists must be contested and the primacy of patients asserted. Graveyards are full of failed health ministers who were ambushed by providers. Ministers may have been in office but they have not been in power.

The Government must listen to doctors but not the AMA which in any event represents only about 30% of doctors.

The Government must listen to professional pharmacists but not the Pharmacy Guild with its focus on shop keeping.

In Medicare reform the government must NOT provide more money to do the same things the same way.

But more money will be required and after AUKUS, Stage 3 tax cuts and fossil fuel subsidies the government cannot seriously contend that money cannot be found for health.

Phasing out the Private Health Insurance subsidy

The Government should start by progressively abolishing the tax payer subsidy of over $10b per annum for PHI. That subsidy is like a tapeworm slowly eating away at Medicare. That is what John Howard designed it to do.

The $10bn subsidy pa is made up of the direct subsidy of over $7bn and over $2bn pa for tax expenditures or as Treasury describes them – ‘Medicare exemption for residents with taxable income below the low-income thresh hold’.

A lot of good could be done in health reform with $10bn. For example the public has shown that it would like this subsidy spent in other ways. In an Essential Report Poll in February 2018, 48 per cent of respondents supported abolishing the private health insurance subsidy and using the money to include dental care within Medicare. 32 per cent were opposed.

If people want private health insurance, that is their right, but there is no reason taxpayers should pay $10 billion a year to subsidise the socially divisive and nationally damaging private health insurance boondoggle. PHI deliberately undermines the key principle of Medicare, universality for all.

PHI is a lame duck industry propped up with taxpayers’ money. As Ross Gittins has said: ‘it is a con’.

PHI does not deliver any health services. At great cost including high executive salaries, it churns money, including taxpayers’ money, for the benefit of private hospitals, private specialists and better off people so that they can jump the public hospital queue.

The parasitic PHI system has other damaging consequences and risks:

  • It threatens our universal health system through seriously weakening the ability of Medicare as a single funder to control costs. We have seen the enormous damage PHI has wrought in the US.Value for money the US has the worst health service in the world. We are steadily going down the same dangerous path. On present trends, we will have a divided healthcare system, which is what conservatives want. One system for the wealthy with a safety net system for the indigent.
  • It penalises people living in the country who have limited access to private hospitals.
  • Its administrative costs are three times higher than Medicare’s.
  • It has made it extremely difficult for public hospitals to retain specialists. Remuneration is often at least three times higher in private practice and private hospitals.
  • It has not taken the pressure off public hospitals despite the ‘promise’ of John Howard.

So in addition to progressively eliminating the $10b PHI subsidy and reallocating funds in the budget, what should be Medicare reform priorities?

Primary Care must be the key area of reform

Primary care is the anchor of a good health system. Unfortunately the important, primary care, gets pushed aside by the urgent, acute care in hospitals. And politicians love iconic hospitals.

We must reduce pressure on hospitals by encouraging much greater delivery of health services outside hospitals. Hospitals should be the last resort rather than the first resort. Denmark is showing the way. In 2007 there were 40 hospitals in Denmark. By 2016 there were 21. As many health services as possible were provided through health centres and outpatient clinics. Hospital admissions are reserved for the acutely sick, providing them with highly specialised services. The major health reform we need is in primary care and GP services in particular to keep people out of hospitals.

General Practice in Australia is in serious trouble – with the corporatisation of many general practises, collapse of bulk billing, waiting times and a lot more.

The Medicare rebate to doctors has been frozen for many years. It needs to be increased but only in association with other major reforms I outline below.

Public Health clinics

At the last election the ALP said it would ‘deliver at least 50 Medicare Urgent Care Clinics to take pressure off our emergency departments’. A year after the election we have not heard any more about these clinics.

In any event fifty clinics is grossly inadequate. In cooperation with the states we need to establish hundreds of publicly funded multi disciplinary clinics with salaried staff. That staff would include doctors, nurses, physiotherapists, dieticians, pharmacists, dentists and other health professionals. The Whitlam Government commenced the roll out of these clinics but the Fraser Government put an end to the program.

This should be the principle focus of Medicare reform with special attention to dental service which were initially excluded from Medicare because Gough Whitlam believed that he would have enough political problems combating the AMA without adding dentists to his problems.

We see the results of excluding dental care from Medicare:

  • Many low income people cannot afford to see a dentist.
  • Of those who do see a dentist, many do not go ahead with the recommended treatment because it is too expensive.
  • Poor dental health not only affects a person’s overall health but also makes it harder to find a job, particularly for young people.
  • There is a huge disparity in the availability of dental services, particularly in rural and remote areas.
  • There are large numbers of people on public dental waiting lists. The problem is getting worse.

I used to favour future dental care being funded in the same way as medical services in Medicare. I now think the dental services would be better supplied through multi disciplinary public clinics.

Is there a doctor shortage?

It is claimed that there is a national shortage of doctors but on a per capita basis Australia has more doctors than comparable countries such as New Zealand, the UK and Canada. However there are two particular problems about the alleged shortage of doctors. The first problem is that to protect their territory the AMA bitterly resists sharing territory with qualified nurses, pharmacists, allied health and other professionals.

We can and must end demarcations and restrictive work practices right across the health sector. We must break down the 18th Century restrictive work practices imposed principally by doctors at the expense of nurses, pharmacists and allied healthcare workers. There are work force silos everywhere with little effective integration. The Coalition and the media are strident about blue collar work practices but never a word about restrictive work practices by doctors and lawyers. The best qualified and the most efficient should deliver health care. There must be a greatly expanded role for nurses. There need to be additional financial incentives for example to employ nurse practitioners.

The doctor defence of territory must be challenged and changed. The work force planning agency, Health Workforce Australia was abolished by the Abbott Government. It must be restored.

Secondly, the ‘doctor shortage’ is really a mal distribution of doctors. Some areas are over serviced and others severely under serviced, particularly country areas which the National Party seems unconcerned about. Provider Numbers for new GPs to access the MBS should give priority to areas where there is a real shortage of doctors. The Commonwealth should not hesitate to do this as about 80% of doctors’ incomes come from Medicare.

Changing the way doctors are paid

Fee For Service (FFS) by doctors needs an overhaul. It has been talked about for a decade but nothing has been done. Provider resistance again. FFS promotes an excessive volume of services (turn style medicine!). The financial incentive is all wrong. The financial incentive or reward should be to keep people as healthy as possible and not reward providers when people become sick. FFS may be appropriate for ‘episodic care’ but we need to move to salaries, contracts and per capita payments to general practitioners for quality long-term patient care to keep people healthy, particularly the chronically ill. This change would improve the delivery of health services. The change is long overdue.

More funding for specialist funding in public hospitals

For years the Commonwealth has under funded public hospitals in the states. That funding must be reviewed with a focus on providing sufficient funds to the states to deliver better outpatient services in public hospitals to allow those hospitals to provide specialist services to overcome delays in private specialist waiting times and in many cases, reduce fee-gouging. And their fee gouging has been very successful. Four out of the top five occupation groups in Australia are medical specialists – Surgeons, anaesthetists, internal medicine specialists and psychiatrists.

Professor Graeme Stewart has written on the need for major reform in this field.

“The figures are as disturbing as they are worth reading in detail. Only four states release data on specialist delays: Victoria, Tasmania, South Australia and Queensland. As a sample, the average statewide waiting times in Victoria were over 15 months for hepatobiliary and pancreas, ENT, orthopaedics, plastic surgery, ophthalmology, dermatology, immunology, urology, rheumatology, and gynaecology. These are averages; the waiting times for the health services with the longest wait, across this huge disease spectrum, ranged from 2.9 to 9 years!…. But public hospital waiting times for gap-free, specialist consultation can be addressed now and at a reasonable and affordable cost. It requires funding for building more outpatient clinic space and the clinicians who would staff them, each cost reasonably easily calculated. The Commonwealth would have to provide the cost of both but the better model for employment of the staff would be with the state hospital to facilitate modern integrated and multidisciplinary models of care. The goal is to provide sufficient rate of consultation to bring waiting times down to the clinically appropriate period. 

Prevention and Covid

The delivery of prevention services have also been grossly underfunded and we saw the dire consequences in the Covid epidemic under the Morrison Government.  It says a lot about our failures in health prevention when we enlist an Army General to roll out Covid vaccines.

We need an Australian Centre for Disease Control.

Integration of Commonwealth and State Health Services

The Commonwealth and the States blame each other on the delivery of health services. The states run and partially fund the hospitals and the Commonwealth funds general practice. That is a recipe for confusion in the delivery of health services. State hospitals are under continual pressure because Commonwealth funded general practise is failing in many respects to provide appropriate care in the community.

The Commonwealth should negotiate with the states to develop regional/local health services in which Commonwealth and State funds are pooled and all health services are integrated in delivery. That does not happen today. It is a mess. A dog’s breakfast.

With all the mainland states having Labor Government there is a great opportunity to put in place  important reforms that require cooperation of the states- like public health clinics across the country and expanded specialist clinics in public hospitals.

The forms and externals of Medicare – the shell – may remain but its founding values – fairness, universality, solidarity and efficiency are being whittled away or not addressed. For example the average out of pocket cost for GP services has risen 60% over the past ten years.

For decades the ALP has been living off the Medicare legacy of Whitlam, Hayden, Hawke and Blewett. It is about time the ALP did some serious thinking about updating this legacy.

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