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Co-payments by stealth will hurt low income and vulnerable Australians

Toby Hall - Guardian Australia
May 2016

At some point in the future co-payments for mainstream health services are likely to be introduced, whether through policy or by default.

The Coalition government received a bloody nose for its efforts to introduce a GP co-payment in 2014 – a policy it was forced to discard.

Whether intentional or not, extending the freeze of the Medicare rebate for another two years, takes the default route.

It will create an environment where GPs and specialists will have no alternative but to introduce, or increase, fees for their services.

It will sweep up low income Australians – those with the least ability to pay, who are traditionally the sickest in our society, and who are the most likely to delay health care because of cost – into the co-payment net.
 
This will put even more pressure on already buckling hospital emergency departments – the most expensive part of the health system – as low income Australians seek the medical care they need while avoiding a fee.

The Medicare freeze is just the most obvious example of a set of policies from the Coalition that will increase co-payments across the health and aged care landscape.

For further evidence, look no further than the decision to remove bulk-billing incentives for pathology services and its $1.2bn in cuts to aged care.

Announced in December 2015, the Turnbull government painted its decision to remove bulk-billing incentives for pathology services as a necessary measure targeted at big for-profit providers.

Fast forward six months and the Coalition’s compromise on its proposal – to defer the cuts until legislation is introduced to bring the rents of pathology collection centres in line with market rates – won’t make co-payments any less likely among a good number of providers.

It’s a great outcome for the for-profits who dominate the sector. Given their large number of pathology centres, rent relief will deliver major savings, allowing them to absorb the cuts while maintaining bulk-billing.

But not-for-profit pathology providers – which make up a significant minority in the sector – were not part of the government’s deal.

Our pathology services are different to those offered by the for-profits.

Unlike them, we don’t have the scale and efficiencies that come with high volumes of largely automated tests.

We also serve a disproportionate number of low income patients, for whom there are no protections under the government’s policy.

Make no mistake, unless the government reverses its bulk-billing decision – or provides some targeted relief that recognises the unique role not-for-profits play – we will likely have to introduce co-payments of between $20-$50, or our pathology services will close.

The recently announced $1.2bn reduction in aged care funding has the same effect.

Essentially what’s occurred is the Coalition government has made changes to the formula it uses to calculate the funding services received for each resident. The allocations for residents with the most complex issues: people with dementia, chronic pain and other severe health issues are being significantly reduced.

To manage the change, providers will either have to cut services or introduce co-payments for residents.  

But low income residents in aged care homes don’t have the funds to pay more.

Because of our heritage and values, St Vincent’s chooses to provide care for low income and disadvantaged residents at twice the level required by government.

More than half of our total number of residents are on low incomes.

If we’re not funded to provide the services they need for complex care, and the majority of our residents can’t afford to pay, then what?

Low income residents with complex care needs will be displaced into public hospitals – which is the wrong place for their health and welfare, and creates a bigger drain on the public purse.

It’s not only a case of co-payments by stealth, but it’s cost-shifting by stealth as well.

A better policy would be to invest more to support this group and keep them in their aged care facility and out of hospital. Estimates suggest we could save up to $3bn from this policy alone.

For its part, Labor deserves credit for agreeing to end the Medicare rebate freeze but is yet to show its colours on either the pathology or aged care issues.

By cultivating an environment where the hands of healthcare service providers are forced to introduce blanket co-payments, the Coalition will hurt low income and vulnerable Australians.

And let’s not forget these come on top of proposals from 2014 that remain Coalition policy despite never having been legislated: significant increases to the co-payments patients pay for scripts, plus changes to the Medicare Safety Net that reduce out of pocket costs.

The irony is I actually believe there is a convincing argument for co-payments to help make our healthcare system more sustainable – but ones that are targeted at those with the capacity to pay.

To quote John Menadue, a universal health service does not necessarily mean it should be free.

But underpinning everything should be a commitment that low income and vulnerable Australians are protected.

Targeted co-payments require targeted policy. It requires leaders who are prepared to make their case for their introduction and be upfront with the Australian people.

If either party had the political courage to build serious policy around such a proposal, I believe they would find the necessary reservoirs of support in the healthcare sector and wider community to help make it a reality.