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EQUITY,
EFFICIENCY AND HEALTH CARE
Australia's health care investment
Health care is a substantial component of Australia's economic activity.
Health care employs around 7% of the total workforce and accounts for around
8.4% of Gross Domestic Product (GDP). This means annual health care expenditure
can be averaged as more than $2,500 for every person. It is vital that we use
these funds efficiently if we are to get good value for our expenditure.
The price of health
Spending on health has been stable over this decade, primarily due to the
impact of Medicare and the large funding role played by governments. Because the
public sector is the largest funder and provider of health care, it effectively
controls how and at what level health care prices are set.
Between 1989-90 and 1997-98 the average rate of inflation was 2.3% per annum,
compared to an average inflation rate of 2.2% per annum for health related price
rises. Without the strong role of government in funding health care this result
would not have been achieved. By contrast there were significant increases in
prices that individual households faced when purchasing private health services
and health insurance. These grew by 7.1% per year. This is three times the rate
of inflation over that period.
Is Medicare efficient?
The Health Insurance Commission's administrative costs are low. There's no
advertising and no premiums to collect. Bulk billing substantially reduces the
costs of processing claims compared with the costs of processing individual
patient claims. Service patterns for practitioners and patients can be easily
monitored to detect fraud, over-servicing or inappropriate patterns of services.
Universal access to public hospitals without charges or means testing reduces
hospital administration costs. The budget caps that apply to public hospital
funding are said to encourage efficiency.
Such funding constraints do not apply as strongly to funding of private
medical services or private hospitals.
Governments are also able to impose other funding arrangements in public
hospitals, which encourage efficiencies, for example, case-mix arrangements.
Doing this is much more difficult in the private sector.
The overlaps and uncertainties in responsibilities
at both levels of (State/Federal) Government, between the public and private sectors and among different
providers, for example GP’s and specialists, does lead to duplication and
waste. It also leads to exercises more concerned with moving the cost of
providing services to other payers than with the most efficient way to provide
services.
What about the private sector?
Exact comparisons between public and private hospitals are difficult to make.
Public hospitals generally treat more complex cases. The consensus seems to be
that there is little difference between them in terms of efficiency.
In recent years average length of stay has fallen substantially both in
public and private hospitals, despite the increasing complexity of cases.
Occupancy rates in private hospitals are lower than in public hospitals.
While this allows quicker access for elective services, it also raises costs.
As a proportion of total funds, the administrative costs of private health
funds are proportionately about four times those of the Health Insurance
Commission in regard to Medicare.
Utilisation patterns
By international standards Australians make high use of doctors and hospitals
(OECD, report). These are two of the most costly elements of a health system.
Could we get a more efficient system if we relied more on community based
services and used doctors only for what they are uniquely qualified to do?
Substantial expenditure goes to alleviate health problems that are readily
preventable (AIHW, 1998).
Inappropriate prescribing or over-use of pharmaceutical’s is a major source
of inefficiency. Not only is the direct expenditure wasteful, drug misadventures
are estimated to account for a substantial proportion of hospital admissions,
readmissions and nursing home admissions (Wilson et al, MJA, 163).
Are new directions in Australia likely to be more
efficient?
International experts have concluded those health systems using public funds
to finance public service provision are more efficient than those which use
public funds to subsidise private services. Australia has a mixed system.
Through its subsidies to private health insurance the Federal Government is
moving more towards public funding of private services, the less efficient
arrangement.
Efficiency and effectiveness
Australia is very successful at maintaining health care costs, has as an
extensive, well-developed and easily accessible health care system and a skilled
health workforce. It achieves better health outcomes than many comparable
countries. The Australian health care system may not be perfect, but it's proven
that it serves the nation well. Central to this effort is Medicare and continued
high levels of government involvement in health care funding and delivery.
Australians recognise this by their continued high level of support for
Medicare.
Health results for our investment
Apart from some specific population groups, such as the Aboriginal
population, Australia has high levels of population health, long life expectancy
and low infant mortality. Life expectancies for Aboriginal and Torres Strait
Islander peoples are around 20 years less than the average for Australians
overall.
However, it is not the same for all Australians. Social inequalities
contribute to variable health outcomes. Twenty-nine per cent of people with
below average income report fair or poor health compared with 10% of those with
above average income. People living in rural and remote Australia have worse
health than their urban and metropolitan counterparts (AIHW 1998).
Health facilities and the health workforce are not uniformly distributed
across Australia. Although around 90% of the population see a private doctor at
least once in every year, there are still big differences in the average number
of such services received depending on location. People in rural and remote
Australia generally use such services less frequently.
Overall measures of access do not exist, but waiting lists for elective
surgery give some indication of access to hospital care. In 1995-96 the median
waiting time was 8 days for category one elective surgery (admission within 30
days desirable) and 36 days for less urgent categories. The clearance time (the
theoretical time to reduce waiting lists to zero if there were no new patients)
was 2.5 months in 1995-96 (AIHW 1998). A recent report found that 28% of people
with below average income waited four months or more to receive non emergency
elective surgery, compared with 3% of those with above average incomes (Ragg
1999).
References
- AIHW (Australian Institute of Health and Welfare) Health
Expenditure
Bulletin number 15), AIHW 1999
- Elola, J. Health Care System Reforms in Western European
Countries:
the Relevance of health Care Organisation, International Journal
of Health Services, 20 (2), 239-251.
- OECD The reform of health care systems: a review of seventeen
OECD
countries, Social Policy Studies No 5 Paris OECD, AIHW, Australia's Health,
1996 Canberra AGPS 1997.
- Wilson R M, Runciman W B, Giberd R W et al (1995) The Quality in
Australian
Health Care Study, Medical Journal of Australia 163, pp 452-453.
- AIHW (Australian Institute of Health and Welfare) Australia's
Health,
AIHW 1998
- International Health: how Australia compares, AIHW 1998.
- Ragg M, Wait Watching, Sydney Morning Herald, 14 August 1999
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