The LNP candidate for Griffith, former AMA president Dr Bill Glasson, has reportedly backed away from his previously stated support for a GP co-payment, a development that is seen as an acknowledgement of the proposal’s unpopularity with the electorate.

However, the analysis below argues that there are many reasons to be concerned about the co-payment proposal. It is “a regressive move that has been inadequately researched,” says Dr Rosalie Schultz, Jo Walker and Andrew Waters, members of the Public Health Association of Australia’s Primary Health Care Special Interest Group.


Patient co-payments for GP visits: regressive & counter-productive

Rosalie Schultz, Jo Walker and Andrew Waters write:

Why consider $6 patient co-payments for GP visits? It doesn’t sound like a lot. The Australian Centre for Health Research (ACHR) has proposed co-payments in order to save money on Medicare and the Federal Government is taking the proposal seriously.

The Public Health Association of Australia supports the overall aim to manage how much is spent on health care, as outlined in our Primary Health Care policy. We agree with the importance of ensuring the efficiency of health service provision. Resources must allocated to achieve best possible outcomes, and optimise the effectiveness of services2.

However, there are many options to constrain health expenditure. Introducing co-payments for GP services should be considered with other opportunities to reduce expenditure and optimise Australian’s health.

Medicare expenditure was $18.7 billion in 2012-13, out of a total health expenditure of $140.2 billion (Source: Australian Institute of Health and Welfare 2013. Health expenditure Australia 2011–12. Health and welfare expenditure series no. 50. Cat. no. HWE 59. Canberra: AIHW).

Thus Medicare is only approximately 13% of the cost of health services in Australia. Of the Medicare expenditure of $18.7 billion, only $4.9 billion is for GP services, less than 25%.

Around 80% of GP attendances are bulk-billed, compared with 29% of specialist attendances. It is not clear why co-payments should be only on GP attendances, given the central role of primary health care in community well-being. The AHCR proposal estimates savings totalling only $750 000 000 over 4 years, such a small amount that cost-savings alone would not justify the proposal.

By way of international comparison, Australia’s total health expenditure in 2012-13 was around $5900 per person, or 9.1% of GDP. Overall Australia spends a similar proportion of GDP on health as Spain and the United Kingdom, a higher proportion than Sweden, Norway and Ireland, and a lower proportion than New Zealand, Canada and France (Source: AIHW).

Expenditure in USA was 17.0% of GDP, or $12 000 per person, demonstrating the inefficiency of their highly privatised system. Australian governments fund 70% of our health expenditure, including 42% by Commonwealth and 27% by state and territory governments (Source: AIHW).

Thus a genuine attempt to manage government health expenditure should look much more broadly than at GP visits alone. The Public Health Association of Australia supports the ACHR conclusion about the need for more and better data on primary health care, including quality, funding and provision.

Besides the intention to cut costs, ACHR provides additional reasons to introduce co-payments for GP services. These are to reduce avoidable demand for GP services, reduce incentives for GPs to overservice, send a price signal to consumers that GP services are not free, reduce moral hazard risks by making people think twice about going to the doctor about minor ailments, and offering a simple yet powerful reminder that we have a responsibility to look after our own health.

These are strong economic arguments, and if health care was a commodity, they would offer a strong argument for introducing a co-payment. However, health care is unique, and has many features unlike commodities.

Firstly, the suggestion that there is an avoidable demand for GP services suggests that GP services are discretionary. Each GP encounter is different. There is an extent to which people attend GPs without perceiving a health need, and that GPs create a demand for their own services.

However, these factors can be addressed through analysis and fine-tuning of remuneration systems. The introduction of co-payments is a blunt means to address these specific funding concerns.

In contrast, it is well established that hospital admissions can be prevented by quality primary health care. Australian data show that there are around 33 hospitalisations per 1000 people per year or 10% of hospitalisations could be prevented by effective primary care (Source: Clinical Epidemiology & Health Service Evaluation Unit 2009. Potentially preventable hospitalisations: a review of the literature and Australian policies: Final report. Royal Melbourne Hospital, Melbourne).These primary care preventable hospital admissions are increasing in recent years, the majority related to chronic conditions.

The ACHR report suggests that the introduction of a co-payment will reduce all GP attendances, both those regarded as necessary, and those regarded as unnecessary. There are inadequate data to know how this will affect hospital admissions and presentations to hospital emergency departments. However the co-payment may increase rather than reduce overall government health expenditure.

The Public Health Association of Australia’s Primary Health Care Special Interest Group is concerned that the single study used to justify ACHR proposal was conducted in USA between 1971 and 1982. Thus data are over 40 years old, and the relevance of this today is questionable for Australia.

Data should be interpreted with Australian contextual factors in mind: accessibility and availability and health status of the community  particularly considering the diversity of health care settings in rural and remote areas (Source: Australian Institute of Health and Welfare 2012. Australia’s health 2012. Australia’s health series no.13. Cat. no. AUS 156. Canberra: AIHW).

The health care system in 1970s and 1980s USA is not adequately comparable with the health care system in Australia today. Nonetheless, it is notable that the study identified improved control of hypertension in those offered free care. This is important as hypertension is one of a set of chronic conditions including diabetes, high cholesterol and heart disease that are increasing with Australia’s ageing and increasingly overweight population. These conditions are particularly sensitive to the quality of primary health care (Source: Clinical Epidemiology & Health Service Evaluation Unit 2009.)

In the study reported, besides healthier blood pressure, people who received free care also had improved vision and dental health, and less serious symptoms. The ACHR proposal has selectively extracted data from this study – as we have – but its overall relevance to their proposal is seriously questionable.

Australia’s First National Primary Care Strategy was released in 2010, and cost control was one aim. Other priorities of this Strategy were improving access and reducing inequity, better management of chronic conditions, increasing the focus on prevention, and improving quality, safety, performance and accountability.

This Strategy could be improved and made more efficient and effective, but it is unlikely that co-payments will contribute to any of the Strategy’s priorities.

The final rationale given for introduction of a co-payment in the ACHR proposal is to encourage people to take responsibility for their health. Public Health Association of Australia’s Primary Health Care policy likewise states that maintaining good health is an individual and collective responsibility. This requires investment in comprehensive primary health care to promote social justice and equity.

We believe that the introduction of a co-payment for GP visits is a regressive move that has been inadequately researched.

Access to primary health care is a human right, as per the Declaration of Alma-Ata, and should be based on need and not on the ability to pay.

The ACHR proposal for co-payments for GP services has been made without considering other options to constrain our health expenditure, and encourage and enhance responsibility for health.

It could pose risk to the right to access to affordable quality health care in Australia.

• Dr Rosalie Schultz, Jo Walker and Andrew Waters are members of the PHAA PHC SIG. (Editor’s note: the co-authors of this article were inadvertently left off the first publication of this post and were added on 30 Jan).


Further reading

• Also worth reading is this analysis by former Director General of the Department of Health and Ageing, Professor Andrew Podger, now at the ANU.

Writing at John Menadue’s blog, Pearls and Irritations, Podger argues that the co-payment proposal does not address the central problems with the health care system, and advocates a move towards regional allocation of population-based funding:

“In the short to medium term, some notional health budget for the population in each region, with a soft cap, would assist allowing regions to negotiate agreements/contracts with doctors and other service providers within their notional budget cap to supplement or vary national fee-for-service prices, focusing in particular on the most appropriate support for the chronically ill and those at risk of chronic illness….”



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