Reform Medicare to help the sickest and poorest: new Grattan report

Hundreds of thousands of the sickest and poorest Australians are missing out on healthcare because of gaps in Medicare coverage and high fees charged by medical specialists, according to a new Grattan Institute report.

Not so universal: How to reduce out-of-pocket healthcare payments shows 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).

‘Bulk-billing rates are too low and out-of-pocket payments are too high for some services,’ says lead author and Grattan Institute Health and Aged Care Program Director Stephen Duckett.

‘It’s a catch-22: the people who need the most healthcare – the poor and the chronically ill – miss out on care the most.

‘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.

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.

The report lays out a policy blueprint for a better Medicare:

  • 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.
  • 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.
  • 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.

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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