We start 2016 as we started 2015 – with big challenges for the health system and uncertainty as to how governments will meet them.
The health care headaches in 2016 are, in fact, the same ones we faced a decade ago, albeit different in severity and symptoms. They include population growth, ageing and the rise of chronic disease; inequality in access to care and health outcomes; technological change (the good, the bad and the expensive) and the seemingly inexorable rise in health costs.
Circling for landing are three major reviews on private health insurance, primary care, and low-value care. Their recommendations, and the government’s response to them, are very much up in the air.
Adding to the uncertainty is the broader review of federalism and its consequences for public hospital funding, along with speculation around the 2016 federal election date and what each party’s Santa sack of election promises might contain.
Private health insurance
The number of people with private health insurance continues to creep up but the market is not in good shape.
The rebate is one of the fastest growing areas of government health expenditure and complaints about the product abound. High levels of coverage are being achieved through carrots (the rebate) and sticks (penalties for the uninsured) rather than genuine consumer appeal.
One solution being floated is for the whole subsidy framework to be thrown out. Instead of subsidising private insurers, which pay private hospitals, the government could subsidise private hospitals directly.
Government advisers are impressed by the efficiency gains that activity-based funding (paying hospitals per procedure rather than a lump sum) brought to public hospitals and believe similar improvement can be brought to the private sector.
The mechanism to achieve this could be a Hospital Benefits Schedule which, like the Medicare Benefits Schedule, would prescribe a schedule fee for private hospital care, based on existing Commonwealth payments for public hospital services under activity-based funding. The same schedule may later be used for public hospitals, replacing grants to the states.
However, it will only be politically palatable if it is cost neutral for consumers or comes with reduced private health insurance sticks.
The devil is in the detail of a new policy such as this. Will payment be to the hospital or surgeon? Will it cover the surgeon’s fee, as in public hospitals? Will it cover diagnostics? Without this information it is impossible to forecast the impact of the shift. (Dr Ginny and Shelly Horton talk about what a “normal” vagina looks like.)