Academic journal article Journal of Australian Political Economy

Cutting Health Costs: Lowering Out-of-Pocket Expenses by Changing Processes

Academic journal article Journal of Australian Political Economy

Cutting Health Costs: Lowering Out-of-Pocket Expenses by Changing Processes

Article excerpt

Australia has had a system of state funded universal health insurance since 1984. Known as Medicare, it aims to provide 'fair and affordable' access to medical services for all Australians irrespective of their financial situation (Biggs 2004). Complementing this system is the Pharmaceutical Benefits Scheme (PBS), which subsidises prescription medications. The PBS was enacted in 1953, with some benefits having been available since 1948. This article considers the effects on equity of charging out-of-pocket expenses and, accordingly, reducing the 'fair and affordable' delivery of health care. In turn, it estimates the personal financial cost of these charges for Australians.

Such questions of accessibility and affordability are particularly pertinent in light of the controversial reforms to public health care announced in the 2014-15 Federal Budget. The Budget undermines thirty years of equitable health care policy by introducing a $7 charge for primary health care (for more details, see Bundey's contribution in this volume). The figures presented in this article illustrate the burden already faced by Australians in accessing primary health care. In this context, an additional charge of $7for each visit to the doctor, pathology test or xray--even if it is only the cost of a third of a packet of 'ciggies'--is a cost burden that many Auatralians cannot afford. If passed by the Federal Parliament, this extra charge result in a person's level of social disadvantage becoming an even greater determinant of whether or not they access health care.

The Australian Institute of Health and Welfare (AIHW 2012) has identified age and social disadvantage as key determinants of poor health. While an individual's health needs generally increase as they age, social disadvantage is associated with poorer health at all ages which in turn means people will need to see the doctor more often. In some cases, levels of social disadvantage can mean these visits are postponed or avoided. There is evidence that similar delays are made in having prescriptions filled. Delays are likely to compound the detrimental effects social disadvantage can have on a person's health. The following snapshot of the cost of accessing health services also highlights the effect socio-economic status can have on the cost burden of health care.

The Australian Bureau of Statistics (ABS) regularly surveys household expenditure on goods and services in the Household Expenditure Survey (HES). The most recent survey confirms that age influences the amount a household spends on medical care and health expenses. In 2009-10 (ABS 2011) Australian households spent an average of $389 per year on GP visits ($85.80 after the Medicare rebate) and $303.20 on prescription medication. Figure One below shows households in the lowest two income quintiles spent approximately the same on visits to the doctor and prescription medicine, with the amount spent increasing for the next three quintiles. There was a larger difference in the amount spent seeing a GP compared with expenditure on medication.

Figure One also shows household health expenditure as a proportion of money spent on holidays--a discretionary expense. Households in the top quintile spent ten times as much on holidays as they did seeing the doctor and paying for medication. This contrasts with households in the lowest and second quintiles for whom medical costs represented a quarter and a fifth of the amount spent on holidays respectively. Unlike holidays, medical costs are not a discretionary expenditure. If out-of-pocket expenses mean that some Australians need to think twice about seeing the doctor, having a prescription filled or following up a referral then health care is not 'fair and affordable' for all Australians.

This article looks, in turn, at the incidence of out-of-pocket expenses incurred in seeing the doctor, having prescriptions filled and referrals for diagnostic testing. …

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