Most consumers don’t know or care
which level of government funds their health care, they just want a system
which works. However, the structural reforms proposed by the Government provide
a solid foundation for addressing some of the outstanding issues that do
directly impact upon consumers using health care.

One of the biggest gaps in the
current health reform debate is the issue of consumer co-payments. Almost one
in five dollars spent on health care in Australia comes directly out of
consumers’ pockets. In fact, consumer co-payments make up 17% of total health
funding, which is more than double the 7% contributed by private health
insurance.

Individual payments are important
because they have a strong influence on how consumers access health care and
which goods and services they access. Our current approach to co-payments means
that many consumers cannot access the care they need and many others are
steered towards less effective or more expensive treatments because they cost less
at the point of care.

For example, a recent survey of
people with mental illnesses, found that over half of the respondents (54%) had
not been able to afford treatments recommended by their doctor, and 42% had not
filled scripts for medication they had been prescribed because of the expense.

Many of the problems
associated with co-payments in Australia
are due to the fact that health care expenses are not predictable but typically
occur unexpectedly and often coincide with reduced earning capacity. The
problem many consumers face is not an overall affordability problem but a
cash-flow issue.

One
solution to this problem would be to issue all consumers a ‘Health Credit Card’
to pay for health care without upfront payments.  The Federal Government could assume
responsibility for paying health care providers directly (ensuring they get
paid promptly and in full) and simply bill consumers for the out-of-pocket
costs (for example, the ‘gap’ between the Medicare rebate and the GP’s fee).

Consumers
would then have the option of making one payment for the total amount of all
consolidated out-of-pocket costs for the given period or paying in instalments
(similar to credit card payments) with minimal or no interest. They would be
required to make a minimum payment required but (unlike in the case of
conventional credit cards) this would be indexed to consumers’ ability to pay
(based on income and assets) rather than the amount of the debt (similar to the
Higher Education Contribution Scheme – HECS – for tertiary education).  Minimum payments would be capped at a
pre-determined level (for example 10% of after-tax income), so that no
consumers faced financial hardship due to their health and medical bills. 

This
would need to occur in conjunction with the consolidation of existing health
safety-nets (such as those for Medicare and the PBS) into a single
comprehensive safety-net for all health-related goods and services to target
consumers who have difficulty affording health care over the long term.

The
Government’s proposed structural reforms to the health system are, in
isolation, difficult to sell to consumers. However, their importance lies in
the fact they will give the Federal Government the funding and policy levers
required to address key consumer health issues, such as co-payments for health
services. This needs to be the central point of the Government’s argument as it
seeks community support for its reform agenda.

Read more from Jennifer’s
paper Out of pocket: rethinking health copayments
here.