Health Care Systems Reform in Insurance vs Tax based System Australia

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Health Care Systems Reform in Insurance vs Tax
based SystemAustralia

• Florence Kwan
• Janice Yim
• Nora Kwok
• Molin Lin
• Rita Mak

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What is the existing major problems and
challenges confronting Australia?
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Australia Health Care System

• Service Delivery model
• Financing model
• Insurance model
• Problems and Challenges

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Australia

• Australia in general
• - 2006 estimate population20.3 million
• - growth rate 0.9
• - 80 lives in cities
• Australia a developed country with high
  standard of living

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Australia Health Care

• Three tiers of government in Australia
• The national government or commonwealth
• funding of health services
• The six State and two Territory governments
• Deliver most public services
• Local government
• environmental control measures and a broad range
  of community-based and home-care services
• The Australia Health Care Agreements are
  negotiated every five years between the
  Commonwealth and State government

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Australian Health Care

• Private sector
• large and vigorous in health services
• involved at all levels in funding and provision
• Non-government religious and charitable
  organisations
• a significant role in health services, public
  health and health insurance

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Health Services Delivery

• A mix of public and private sector
• Doctors
• Majority of doctors are self-employed
• a small proportion consists of salaried employees
  of Commonwealth, state or local governments
• salaried specialist doctors in public hospitals
  have rights to treat some patients in these
  hospitals as private patients, charging fees to
  those patients and contributing some of their fee
  income to the hospital
• others may contract with public hospitals to
  provide medical services

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Health Services Delivery

• Public hospitals
• established by government
• including those originally established by
  religions or charitable bodies but now directly
  funded by government
• most acute care beds and emergency outpatient
  clinics are in public hospitals
• in 1997, all hospital beds per 1000 population is
  8.3 and acute hospital beds per 1000 population
  is 4 (Source OECD 2000, WHO 2001)
• large urban public hospitals provide most of the
  more complex types of hospital care (ICU care,
  major surgery, organ transplants etc)

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Health Services Delivery

• Private hospitals
• owned by for-profit or not-for-profit
  organizations
• providing more complex, high technology services
  nowadays
• Others
• separate centers for same day surgery and other
  non-inpatient operating room procedures
• specialized mental health care in the public
  sector is provided in separate psychiatric
  hospitals, general hospitals and community based
  settings
• aged care system deliver by residential and
  community care

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FINANCING
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Financing

• There are two major national subsidy the
  Pharmaceutical Benefits Scheme (PBS) and Medicare
• Under Medicare, public hospital provide free of
  charge service to people who choose to be treated
  as public patients
• Medicare and the PBS cover all Australians and
  subsidy their payments for private medical
  services and for a high proportion of
  prescription medicines

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Pharmaceutical Benefits Scheme

• PBS subsidizes the purchase of medicine on its
  approved list for two groups general consumers
  and concessional consumers (holders of pensioner
  and other entitlement cards)
• General consumers make a co-payment of the first
  AUD 21.9 on each prescription
• Concessional consumers make a co-payment of AUD
  3.5 per prescription

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Pharmaceutical Benefits Scheme

• Pharmacists dispense generic drugs under the PBS
• Nearly third-quarters of prescriptions from
  community pharmacies are subsidized
• Consumers must pay more if they want patented or
  branded drugs
• Has a safety net to limit consumer annual
  expenses on pharmaceuticals covered under the PBS

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Pharmaceutical Benefits Scheme

• After reaching the threshold, general consumers
  pay for further prescriptions at the concessional
  co-payment rate, while concession cardholders
  receive all further prescriptions free

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Health care expenditure

• Health care expenditure with 8.5 of GDP
  increased to 9.3 of GDP from 1996 to 2001.
• It was relatively low as a percentage of GDP
  compared to comparable OECD countries in 1960s
  but increased from the 1970s

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• Approximately 71 of total health
• expenditure is provided by Governments
• (48 from the commonwealth and 22 from
• the States and Territories in 1999-2000)
• The reminder comes from individuals, health
• insurance funds, workers compensation,
• and third party insurance providers.

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Financing
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Financing Healthcare - Growth
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Health care expenditure by categories (as
percentage of total expenditure on health care),
1970-1997
Total expenditure on 1970 1975 1980 1985 1990 1995 1996 1997
Inpatient care() - 47.7 51.4 48.1 45.9 42.8 42.7 43.3
Ambulatory care - 21.6 22.5 20.4 21.9 23.2 23.4 22.7
Pharmaceuticals () - 9.9 8.0 8.1 8.9 11.1 11.4 11.3
Public health - 1.1 0.5 0.8 - 1.6 1.5 1.5
Investment () 8.2 11.0 7.6 7.7 6.3 5.7 6.0 6.5
Source OECD 2000
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Taxation

• Predominantly publicly funded health care system
  with 71.2 of revenue in 2000 coming from public
  sources
• Income tax is the main form of taxation and
  levied on individuals
• The rates in 2001 were below AUD 5400 no tax, AUD
  5401-20700 17, AUD 20701-50000 30, AUD
  50001-60000 42, and above AUD 60001 47
• From 1 July 2000, the States and Territories now
  receive 10 goods and services tax (GST)

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Main sources of health finance
Source of finance 1980 1985 1990 1995 1998 2000
Public Taxes (incl. statutory insurance) 60.6 72.0 68.3 66.7 68.9 71.2
Private Out-of-pocket Private insurance 17.0 18.5 15.5 9.5 16.5 11.6 18.0 11.5 17.0 9.8 16.2 7.1
Other 3.6 3.0 3.5 3.8 4.3 5.5
Sources Australian Institute of Health and
Welfare 1999 and selected years Australian
Institute of Health and Welfare
2001a
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Resource allocation

• Annual budget cycle and an annual conference
  between the Commonwealth and the States where
  revenue sharing is negotiated
• Grants to the States for health care are
  earmarked via four avenues
• Medicare benefits
• Pharmaceutical Benefits Scheme
• Australian Health Care Agreements
• Residential care for the elderly

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Insurance
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Medical Insurance

• Medicare
• National and compulsory
• Private Health Insurance (PHI)
• Voluntary

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Medical Insurance

• Medicare
• Administered by the Health Insurance Commission.
• Tax funded. Levy of 1.5 on taxable income

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Medical Insurance

• Medicare
• Providing free or subsidized health services
• For emergency, elective and continuing care from
  public hospital
• Also covers certain pathology, psychiatry and
  optometry services

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Medical Insurance

• Medicare
• Government sets the Medicare Benefits Schedule of
  fees.
• Rebate by Medicare is based on of the Schedule
  fee.
• Health practitioners are free to charge above the
  Schedule fee, but the benefit payable remains
  constant.

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Medical Insurance

• Medicare In hospital services
• Provides different levels of coverage for public
  and private patients.
• Public patients receive treatment by doctors
  nominated by hospital fully covered.
• Private patients in public or private hospital
  have a choice of treating practitioner.
• Medicare benefit of 75 of the schedule fee is
  payable.
• Some / all of costs excess of the schedule fee
  can be covered by PHI.

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Medical Insurance

• Medicare Choices of payment method
• Bulk billing practitioners bill Medicare
  directly
• Patient pay account in full and make claim on
  Medicare
• Patient pays balance owing and claims Medicare
  cheque for practitioners

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Medical Insurance

• Private Health Insurance (PHI)
• Provides 11 of total National Health Care
  Funding
• Government regulates
• gt40 PHI funds registered.
• Most of them open to everyone. Some only offer to
  employees of a particular firm.
• Decline membership from 50 to 30.5 from the
  period 1984-1998

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Medical Insurance

• Private Health Insurance Coverage
• Provides choice of doctor, choice of hospital and
  choice of timing of procedure.
• Meeting the demand of those not covered by
  Medicare, such as dental, optical, physiotherapy
  and podiatry services.

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Medical Insurance

• Private Health Insurance community rate
• Charge everyone the same premium regardless of
  health status and claims history. Ensure the aged
  and chronically ill are not priced out of PHI
• To support community rate by reinsurance system
  redistribute the costs of claims across all PHI
  funds

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Problems and Challenges
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Problems and Challenges

• Raising health expenditure
• Financial viability of Private Health Insurance
  funds
• Shortage of health care worker

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Raising health care expenditure

• Total expenditure has increased on average each
  year since 1970
• Spend 8.5 of GDP increased to 9.3 of GDP from
  1996 to 2001

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Raising health expenditure

• Rapid ageing population
• Increased use of public sector services
• Higher community expectations
• Increase use of expensive technology

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Raising health care expenditure

• Ageing population
• Improvement in life expectancy since 1970s
• Number of aged over 65 is predicted to rise from
  2.4 million people to 5 million
• Increasing from 12 of the population in 2001, up
  to around 21 of the population in 2031

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(No Transcript)
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Raising health care expenditure

• Ageing population impact of health service
• Health service demand will increase with growing
  proportion of the aged
• Studies found that health expenditures are
  concentrate in the last few months of life

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Raising health expenditure

• Increased use of public sector services
• Proportion of population with private health
  insurance fell after the introduction of the
  Medicare
• Putting pressure on public sectors

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Raising health expenditure

• Higher community expectation
• Consumer dissatifaction in Australia with some
  aspects of the health care system, such as
  consumer costs and hospital waiting list had
  risen over the last decade (Hall 1998-99)
• Emergence of active and vocal consumer groups.
• All Australian states have developed consumer
  rights and complaints procedures

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Raising health expenditure

• Increase use of expensive technology
• Public health policy expert International report
  indicate that technology is actually accounting
  for two-thirds of the price pressure in health
  care

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Viability of Private health insurance

• PHI fell from over 60 in 1983 to 30.1 in 1998
• Up to 45.1 after policy intervention
• Still have about a 15 drop in participant

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Viability of Private health insurance

• High premium cost and annual increases
• High co-payment for medical components
• Competition with a free, good quality public
  system
• Community rating

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Shortage of health care workforce

• Growth of demand for medical services
• Ageing workforce
• Changes in participation (as measured by hours
  worked per week)

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Shortage of workforce

• 14 non-information and communications technology
  professions on the Australian Government
  Department of Employment and Workplace Relations
  national skill shortage list

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Shortage of staff
Percent reporting serious shortages of AUS CAN NZ UK US
Nurses 23 30 11 22 31
Pharmacists 26 33 14 27 14
Specialists or consultation physicians 11 26 7 17 16
Trained managerial staff 5 12 0 6 3
Lab technicians 3 9 0 17 4
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Nursing shortage

• Continuing decrease in number per 100,000
  population from 1202 in 1997 to 1191 in 2003
• 50 of nurses work part time in 2003 (up from
  46.8 in 1993)
• Percentage of nurses over the age of 45 continues
  to increase (17.5 in 1986, 30.3 in 1996, 37.3
  in 1999, 41.7 in 2004)

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Thank You

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