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Health inequalities

May 4, 2012

Out-of-pocket health costs: adding to the burden on patients

Recent reports highlight the economic hardship facing many patients with chronic diseases, according to Kellie Bisset, editor of the HARC e-Bulletin and Communications

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Recent reports highlight the economic hardship facing many patients with chronic diseases, according to Kellie Bisset, editor of the HARC e-Bulletin and Communications Director at the Sax Institute.  

She cites a suggestion that researchers and policymakers have been too complacent about the relatively high out-of-pocket costs faced by Australian patients.

Time will tell whether the forthcoming Federal budget relieves or exacerbates these costs.

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 How might our relatively high out-of-pocket costs be addressed?

Kellie Bisset writes:

As Australia faces an impending chronic disease epidemic, it’s not just the healthcare budget that will feel the strain — the hip pockets of patients unfortunate enough to be diagnosed with a chronic illness are already under considerable pressure.

This severe economic impact on patients is one of the key themes to emerge from the latest Hospital Alliance for Research Collaboration (HARC) e-Bulletin. This month, the e-Bulletin highlights three reports that address this important area.

An Australian study of patients with chronic obstructive pulmonary disease in western Sydney, published in the Journal of Health Services Research & Policy, shows that rising out-of-pocket costs and poorly subsidised health support are making the management of chronic illness “seriously economically stressful”.

So stressful in fact, that nearly half of the patients who experienced hardship had “catastrophic” levels of out-of-pocket spending. The authors note that out-of-pocket health costs have steadily increased in Australia over the past 25 years and the burden on the chronically ill is emerging as a serious social problem.

The Bureau of Health Information’s 2011 annual performance report finds more than 40% of NSW sicker adults (defined as people likely to have had significant direct experience of the healthcare system in the recent past) or their families have spent more than $1000 out-of-pocket on medical care in the previous year.

The report also shows that 17% of NSW sicker adults say concerns about costs have discouraged them from seeing a doctor for a specific medical problem, 16% have not filled a prescription because of cost, and cost has caused 19% to skip a medical test, treatment or follow up recommended by a doctor.

A perspectives piece published in the MJA says Australia compares unfavourably with other high-income countries when it comes to out-of-pocket healthcare costs and action is necessary to reduce health-related economic hardship.

The authors, from the George Institute and the Menzies Centre for Health Policy, say out-of-pocket spending as a proportion of total health expenditure is 18.2% in Australia – above the OECD median of 15.8%. These costs appear to disproportionately affect certain patient populations mainly because of costs such as transport, which are not usually regarded as a healthcare expense.

The authors contend that we need more evidence and a consistent approach to recording personal and household illness-related costs and how they affect health and wellbeing.

This debate is very interesting in light of the current focus on the Obama Administration’s healthcare reforms and the inequities of the US healthcare system. Australia likes to think of itself as having a far more equitable system and there is evidence to support this.

The Bureau of Health Information report, for example, shows that NSW and Australia compare favourably to 10 other OECD countries when it comes to getting value for the healthcare dollar. No country spends less per person and has lower premature mortality than NSW. The US has the highest spending and the highest premature mortality of all the countries surveyed, the report shows.

But it also shows that the picture is not so positive when it comes to out-of-pocket costs. NSW and the rest of Australia rate at the bottom of the table on this measure, lower than all other countries surveyed – including the US.

The Menzies Centre and George Institute researchers suggest that universal publicly funded healthcare and social security arrangements in Australia may have encouraged complacency among researchers and policy makers about tackling this issue.

So we might have a significant edge on the US when it comes to healthcare equity. But that does not mean people aren’t falling through the cracks.

The question of how to address this growing and significant concern most likely has many answers. But it would seem that gathering comprehensive and systematic evidence on the extent and impact of the problem is a good first step.

HARC is a partnership between the Agency for Clinical Innovation, Clinical Excellence Commission and the Sax Institute and aims to link clinicians, researchers, health service managers and policy makers so they can share knowledge and ideas about emerging healthcare challenges. The HARC e-Bulletin is sent to the 7000 members who have joined the HARC network.

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