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Busting the four great myths of GP co-payments

The debate about co-payments for GP and hospital emergency departments, sparked by a paper by Terry Barnes for the Australian Centre for Health Research, has raised a number of broader issues about our health system and how we pay for it. Common to many of the arguments (on both sides of the debate) are some myths about how we should pay for healthcare. Let’s do some busting …

Myth 1: we can’t afford our health care costs without taking some drastic action

It’s true we are spending more on healthcare than we did 20 or 30 years ago. This is not necessarily a problem (we are also spending more on cappuccinos, but no one seems to think this is a crisis). We are a much wealthier society than we were when Medicare was introduced, and it makes sense that we would want to spend some of this increased wealth on healthcare.

Research by Ian McAuley of the University of Canberra has shown that even if healthcare expenditure were to rise from 10% of GDP to 20% between now and 2050, the remaining 80% of GDP in 2050 would still be higher than 90% of GDP in 2013 (unless economic growth is significantly lower than anyone is predicting). In other words, we could double the proportion of our national income we spend on healthcare over the next 35 years and still be better off, in economic terms, than we are today.

Myth 2: averages matter

Reports of out-of-pocket expenses frequently cite “average” out-of-pocket costs for medical and health services. These are often presented as supporting the case that co-payments are not an issue of major concern. For example, AMA President Dr Steve Hambelton said last year: ”The average total out-of-pocket costs per person for medical fees in 2011-12 was $131”. This figure may be true, but it is also largely irrelevant.

Averages matter in some areas of public policy, but when it comes to health few people are “average”. People tend to be either sick or well; those who are mostly well spend very little on healthcare and those who are sick spend a lot. In statistical terms the pattern of health expenditure across the population would be described as having a “long tail”. In practical terms, this means that we need to focus policies on areas where the bulk of health spending occurs, not on a largely mythical “average” consumer.

Co-payments, which are based on “average” patterns of health service utilisation and expenditure, will result in the healthy and wealthy contributing much less towards their care than the sick and the poor.

Myth 3: primary care services are ‘free’ from bulkbilled GPs

The myth of bulkbilling is that it provides free primary care.  This only occurs in the minority of cases where the GP consultation is the only service required. For most people, going to the GP is just one component of the care they need to treat their condition.

For example, the majority of GP visits result in a prescription, which almost always requires a co-payment to fill. Data from the Bettering the Evaluation and Care of Health program shows that there 83 prescriptions issued per 100 GP “encounters”. There are also frequently referrals for further tests, allied health and specialist appointments. Often a return visit is required to assess progress and/or discuss the outcomes of the tests. These are not independent services occurring in isolation — they are all components of the same episode of care, and their financial impact should be seen as a whole.

A $5 co-payment per GP consultation needs to be seen in the context of all the other costs faced by individuals and families when accessing care.

Myth 4: a healthcare system without co-payments is doomed, as people will always overuse ‘free’ services

People who believe that health systems cannot function without co-payments for basic services should take a trip to Canada, where co-payments for GP and public hospital services are banned. Their health system, while not perfect, achieves similar health outcomes to Australia for around the same level of expenditure.

Also, behavioural economics has taught us to be wary of imposing simplistic economic models on complex areas of human behaviour, such as healthcare. There are many examples in the health sector where consumers have acted completely contrary to the predictions of economists (paying for people to donate blood, for example, which has been shown to reduce, rather than increase, the level of donations).

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  • 1
    Jack Dunham
    Posted Saturday, 18 January 2014 at 12:07 am | Permalink

    Health care, just another Abbott blunder on the way.

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