Universal Health: An Australian Perspective

I am addressing this issue from the perspective of someone who lives in a country where there is universal healthcare. I am looking at the benefits and the pitfalls of this system. I have the advantage of remembering what was in place prior to the introduction of the first scheme known as Medibank and the evolution into the present system known as Medicare. Personally, I think that the govt should not be in the business of health insurance because the regulations are causing greater out of pocket expenses than if we had the right to be privately insured and covered 100% for our medical costs, which is not allowed under the present system. There are in fact a lot of out of pocket expenses for people who are chronically ill.

Prior to the introduction of Medibank by the Whitlam government people had the responsibility of getting health insurance cover, or not having it. The doctors looked after the very poor in the community by giving their services pro bono. If a patient could not pay the bill then the doctor would more likely write the account off instead of calling in the debt collector. Also, we had a government run public hospital system and low income people could go to these hospitals for emergency treatment. They could attend the hospital clinics. If my memory serves me correctly there was an income test at the time so that people who could afford to pay fees were charged. The remainder were not charged for services provided. I remember that the Whitlam government pulled the same kind of campaign that we are seeing in the USA – there were claims of the poor not getting access to services. I remember one case where it was claimed that the woman could not give birth in a hospital – the truth of the story was that she failed to book into a hospital for the birth of her baby!!!  Well, we could not stop Whitlam going ahead with this legislation and Medibank was born.

The intention of the Whitlam government was in fact to destroy the health funds here in Australia. We had some very big ones and yes they had a large surplus available to pay out for claims. The Whitlam government wanted to get a hold of that surplus. The majority of these health funds were not for profit enterprises, consisting of friendly societies and mutual benefit societies, and they were not public enterprises out to make a large profit. When Medibank was introduced, thousands upon thousands of people dropped their health insurance. This meant that for those who remained the pool was smaller and the premiums went up. It was a no win for those who remained privately insured. At the same time there was an increase in the demand for the services in public hospitals with the emergency departments rapidly becoming the source for people to go when they had colds or other minor problems.

The other intention of the Whitlam government was to force doctors into becoming salaried employees, and to force upon them a lower fee level. The doctors resisted this attempt to force them to become employed by government and they have on the whole retained their independence. However, it is the public, people like myself who have been the losers as a result of the regulations that control the fees and the refunds available for an ordinary consultation, as well as the consultation with a specialist. Up until the 1980s we could get a 100% refund for our fees paid to the GP. Under the original Medibank scheme we could get 100% refund for services rendered through our health insurance plan. However, under the Hawke-Keating government this was taken away from us.

The Medicare scheme which is now in place is Mark2 for universal health. The new regulations introduced the Medicare levy that was to be paid by everyone. The levy consists of 1.5% of taxable income, and the government has the right to increase that levy if they desire to do so. Everyone earning a taxable income pays the levy, but people who are unemployed and on the pension do not pay the levy. This means that the middle class taxpayer bears the burden of paying for those who are unemployed, have a disability, or are able bodied and refuse to work, and for pensioners. This group of people are eligible for a health care card. However, some people remain ineligible for the health care card because of the existence of the income test which renders them ineligible to be recognized if they have a disability. The income test is on household income not on personal earnings. As well as the Medicare levy, the government has in place the scheduled fee, which means that Medicare will only rebate 85% of the scheduled fee, rather than 85% of the fee that has in fact been paid. 

The way that this system works is that people with chronic illness end up with a lot of out of pocket expenses if the doctors insist upon them having to pay the full fee. Most doctors will not bulk bill their patients, however, if one has a problem due to unemployment the doctor will agree to bulk billing that patient sometimes. These days they have an EFTPOS system so that the request is automatic. In the old days the used to have to submit paperwork with the patient signature for the service provided (like the old days with credit cards). The majority of doctors will not bulk bill the patient. Instead the patient is expected to pay the full fee up front. Sometimes a doctor will allow a person to take away the bill and submit it, then when the cheque arrives, the patient can then pay the remainder of the bill. Usually, where the patient has to submit the bill to Medicare in these circumstances the co-pay must be made upfront.  This amount can be anywhere from $10-250 or more depending upon the service provided.

As you can see a person with a chronic illness can in fact end up with a lot of out of pocket expenses because the patient can only get back 85% of an out of date and unrealistic scheduled fee. To give an example, a visit to a specialist can cost $110 if not on the health care card. That money must be paid up front. The amount given back by medicare is something like $69, which means that the out of pocket expense is quite high.

On the other hand a patient rarely has to pay for pathology tests or for optometry. In both cases the scheduled fee covers the whole amount of the service, except where the government refuses to pay for the actual test. An example of this refusal is the Thin Prep test which for women is a test that better detects cancer of the cervix than the Pap Smear. This means that when a woman gets a Pap Smear and the Thin Prep is ordered at the same time, the pathology laboratory will charge $40 for this particular test…yet another out of pocket expense that we are required to pay if we are being vigilant in checking for this particular type of cancer. This is a lot for someone who has no income. If one has to go to the Opthalomologist and is not employed but does not have a health care card, the out of pocket expenses are also very high. The fee charged was over $200 yet the scheduled fee was extremely low. The same happened with the Skin Specialist, where some people are charged in excess of $500 for services renedered.

Personally, I believe that the government should not be involved in either setting the fees or in rebating people who need these services, at least in the way that it is happening now. It was far better when we could opt out of the government system at least for services not rendered at a hospital.

Services such as Dental, Physiotherapy (Physical Therapy), Podiatry, Chiropractic, Psychology, Speech Therapy, Dietician etc. are not covered by the Medicare scheme. If you require these services then you either pay totally out of pocket (if not covered under Workers’ Compensation or Third Party Insurance) or the fund will pay back something as determined in the actual fund agreement. In other words for some of these services some funds will pay back more than others, but all funds have limits upon what they will pay per family member in a single year. The funds will pay back on Optical but there is a limit on how much they will cover for the lenses and frames per year (or every 2 years). There is also a limit on the other types of services. If one needs a lot of physiotherapy therefore, the out of pocket expenses can get very high. Another example is orthotics which now cost more than $600 but the fund will only pay up to about $250.

If one needs an x-ray or scan of some sort then it is paid by Medicare and nothing is rebateable through the health funds. Most x-ray places are willing to do a deal with charges. If you are unemployed you can be charged at a lower amount, and only have to pay the co-pay on the spot, then making a claim to Medicare for a cheque to be sent to the service provider. If requested by the doctor the x-ray place will only charge at the Medicare fee where appropriate. However, there are some catches that need to be pointed out, and again this is due to government interference. If one needs a bone density scan, and is under 60, then Medicare can refuse to pay for the service provided. You have to be able to say that you have had fractures from a fall to be in the category where Medicare will pay for the scan. It is far better to start the scanning before there is a real problem than to scan when it is too late and the woman is heading for osteoporosis.

There are at least two other sides of this universal health issue. One other side is medical services provided at the hospital. It is good to know that when there is an emergency that one can go to the hospital for emergency treatment and not pay a bill. Australia has a system of public hospitals where the doctors, nurses and other staff are funded by the State government. Australia also has a system of private hospitals. These are good hospitals too. The best hospitals are those that mix private and public together, but they do suffer when government cuts the budget for the public section. There is a lot of stress on most of these hospitals, and in the past, where the budget has been inadequate there has been hospitals close to bankruptcy. In fact in NSW a few years ago the area health services did go bankrupt. In the defense of the staff in these area health services, they had been under a lot of pressure due to the lack of funding. They had to put up with companies contacting them asking for payment of their bills and they did not have sufficient funds for what were routine requests. However, despite this situation the public hospitals have continued to provide a service at times when they have been stretched to the limits. If people can afford to use a private hospital for giving birth, and for other elective surgery then they should be encouraged to do this rather than putting pressure on the public system. Our public hospitals are good and they are mostly diligent with their jobs, but there have been times when there have been errors that have cost lives, and there have been times when ambulances have been turned away from the emergency departments because of the overstretching of these services – inadequate funding usually means not enough beds and staff in emergency departments of the hospitals.

Another side of the universal health coin is pharmaceutical. In Australia we have the PBS which is the government scheme of rebating the pharmaceutical companies for the purchase of drugs on the free list. We call it a free list, yet it is not free. We have to pay. People on the health care card and Veterans Affairs have a co-pay of $5 per script. For the rest of us, even when unemployed the co-pay is $32.90 and rising every year. If the script is not on the free list then the person must pay for the drug. This can be very costly, for example, Lyrica which is prescribed for nerve pain cost more than $100 for the script. A cancer drug that is not on the free list will cost even more money (which explains why some will fight to have the item placed on the free list even as the govt resists the request). Australia has its own version for Therapeutic Drugs and one cannot get a drug unless it has been tested and approved by the Therapeutic drugs adminstration (I have no real objection to such a delay because the FDA is not always a good guide on some drugs).

The reality for some Australians is that Universal Health could be described as a real joke since the out of pocket expenses can be very high when someone has a chronic illness. One would think that the notion of a safety net scheme would afford some protection, but you have to be spending over $1000 before reaching the safety net each year, and this only covers the free list and not other drugs that you require that are not on the free list. If the greatest expense is the drugs not on the free list, then the safety net is of no value. However, it is useful to reach that safety net.

In conclusion, it is better for the market to regulate itself as much as possible without this form of government interference. We did not need universal health in the first place. What it has meant in the long term is that doctors who were greedy have been caught abusing the bulk billing system. I do not feel sorry for those who have been caught being dishonest. What it has also meant is that doctors refuse to bulk bill because they were not getting their money in a timely fashion – they have other expenses to pay just like everyone else. This means that people who can ill afford to pay the full account up front are forced to pay over $55 for an ordinary consultation and over $90 per consultation for a specialist. In other words people now have more out of pocket expenses than before the introduction of Medibank and Medicare.