Medicare failing poor and chronically ill says Grattan Institute

Poorest and sickest can't afford specialist visits or medication

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TOO COSTLY: Medicare fails to protect poorer and sicker Australians.

TOO COSTLY: Medicare fails to protect poorer and sicker Australians.

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Bulk-billing rates too low and out-of-pocket costs too high for medical services.

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Hundreds of thousands of the sickest and poorest Australians are deciding not to see a specialist or fill a prescription because they cannot afford it.

Medicare - Australia's supposed universal health care system - is failing the most vulnerable because of gaps in coverage and high fees charged by medical specialists, says a new Grattan Institute report.

"Bulk-billing rates are too low and out-of-pocket payments are too high for some services," says lead author Stephen Duckett.

Not so universal: How to reduce out-of-pocket healthcare paymentsshows that in 2020-21, nearly half a million Australians decided not to see a specialist because they could not afford it, and even more deferred or did not fill a prescription because of the cost.

Overall, Australians spend about $7 billion a year out of their own pockets on out-of-hospital medical services and on medications listed on the Pharmaceutical Benefits Scheme (PBS).

"It's a catch-22: the people who need the most healthcare - the poor and the chronically ill - miss out on care the most," says Dr Duckett, the Grattan Institute's Health and Aged Care Program Director.

"That is obviously bad for those people, but it's also bad for taxpayers, because when people skip or defer recommended treatment they often get sicker and end up in hospital."

Fees charged by medical specialists are a major cause of high out-of-pocket patient payments.

Dr Stephen Duckett

Dr Stephen Duckett

With public hospital outpatient wait times unacceptably long, many Australians have no alternative but to go to a private specialist. But the fees are unregulated, and some private specialists charge way above the Medicare schedule fee.

For example, on average about 50 per cent of initial appointments with a dermatologist, urologist, obstetrician, or ophthalmologist, are charged at more than double the $90 Medicare schedule fee. In 2019, half a million Australians spent on average about $450 on specialist services alone.

The report lays out a policy blueprint for a better Medicare with the recommendations including:

  • State governments should expand outpatient services to reduce wait times, and the federal government should fund bulk-billed specialist services in private clinics, especially in poorer parts of Australia. A pilot roll-out with 10 Primary Health Networks (PHNs) would cost about $120 million and save Australians $60 million to $70 million in out-of-pocket payments per year
  • To cut the number of referrals to specialists, the federal government should pay specialists for giving GPs over-the-phone advice about patients, without actually seeing the patient
  • To cut pharmaceutical costs, especially for people with chronic conditions, the government should lower the co-payment for people on multiple medications and use artificial intelligence software to trigger medication reviews and lower the (post-review) co-payment for non-concession card holders on multiple drugs (5+). This would probably be close to cost neutral, and potentially reduce inappropriate medications for about 300,000 patients
  • Extend the duration of some prescriptions to reduce the number of times a prescription co-payment needs to be paid
  • The government should eliminate out-of-pocket payments for diagnostic services - such as scans and blood tests - and radiotherapy services, by funding them directly through a commercial tender
  • Reduce out-of-pocket payments for allied health services by funding PHNs directly to tender for services subsidised under chronic disease and mental health care plans saving Australians between $90 million to $120 million in out-of-pocket payments per year
  • Expand GP patient enrolment to all people with two or more chronic illnesses. This would cost an estimated $100 million per year and support an additional 1.7 million eligible people
  • Expand telehealth services, subject to a review of implementation of recent telehealth policy. Review the Original Medicare Safety Net and the Extended Medicare Safety Net.

The report shows that if state and federal governments invested an extra $710 million per year on these reforms, Australians could save about $1 billion in out-of-pocket payments each year, and more people would get the care they need when they need it.

"That's a healthy return on investment," Dr Duckett says.

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