Out-of-pocket costs are creating health problems for less well-off patients, write Angela Beaton, Tim Usherwood, Stephen Leeder and Lesley Russell
OUR recent study for the Menzies Centre for Health Policy found that Australian doctors believe their patients are experiencing increasing financial hardship – with serious consequences for their health, and even death. These findings highlight the imperative of dealing with the rising out-of-pocket costs that discourage patients from complying with treatment and medication regimes and force many Australians to choose between paying essential costs – rent, electricity and food – and accessing health care.
Despite the universal coverage of Medicare, increased rates of bulk billing, free public hospital care and subsidised prescription medicines, Australians face some of the highest co-payments for health care within OECD countries. These co-payments have risen as a proportion of total medical costs faster in Australia than in any comparable country over the past ten years.
More than one in every six dollars spent on health care is paid directly by consumers. That amounts to more than $15 billion a year, more than double the amount covered by private health insurance. Out-of-pocket costs comprise 17.7 per cent of health spending in Australia, a higher proportion than in thirteen out of twenty OECD countries, including the United States.
This growing financial burden is borne disproportionately by those who can least afford it, severely compromising the ability of people with chronic illnesses to get the treatment they need, undermining the equity of Medicare, and giving short shrift to the Australian notion of a fair go. Not only are these payments high, but the way we attempt to compensate for them, through a complex and confusing series of safety nets, is inefficient and discriminatory. Yet the issue receives little political or policy attention.
Our research highlights the seriousness of the consequences. In a recent survey of general practitioners practising in western Sydney, most reported encountering patients whom they perceived to be experiencing economic hardship, and they thought that the problem had grown worse over the preceding twelve months. The shocking finding is that the majority of GPs believed that at least some of their patients had either experienced a deterioration in health, been admitted to hospital or died as a consequence of their failure to take their medicines as prescribed because of cost.
Our survey didn’t explore the details of issues like patients’ admission to hospital or death, and there are no Australian data to show that increased co-payments lead to these adverse outcomes. But previous research has shown that there was a substantial and sustained drop in the number of PBS prescriptions filled following the 21 per cent increase in PBS co-payments in 2005, highlighting the impact that cost can have on use of medications.
There is international evidence to show that increases in out-of-pocket payments disproportionately reduce adherence among low-income patients, particularly for those with chronic conditions. A recent US study found higher hospitalisation rates and increased length of hospital stays for elderly patients within a year of co-payment increases. The effects were magnified among people living in areas of lower income and education and among people who had hypertension, diabetes, or a history of heart attack.
What can GPs do about the economic problems of their patients? Most patients seem willing to talk to their doctor about their financial difficulties; in other cases, doctors realise there are problems when patients ask for consultations to be bulk-billed, for a delay in payment, or are reluctant to take medications or see a specialist because of cost. That’s encouraging, and our research shows that GPs try to be responsive. But the options they have to help patients manage their illness and its costs are limited.
General practitioners most commonly offered assistance to their patients in several ways. They can bulk-bill consultations and making referrals to bulk-billing specialists. They can provide drug sample packs free to patients. Or they can change medications to reduce the cost to the patient (for example, by prescribing combination or generic medicines where possible). Less commonly, GPs prioritise medications for their patients, offer a referral to a social welfare or assistance agency or give their patients money to purchase essential medicines.
The direct dispensing of sample packs raises several concerns about the how medicines are used by patients, particularly if drug samples are supplied with limited labelling and inadequate instructions about dosage, administration, storage and possible adverse effects. And sample packs are obviously not a sustainable option over years of chronic illness.
Australian policy makers need to recognise the fact that out-of-pocket costs and co-payments result in perverse incentives, with the net effect of shifting the cost burden from the affluent and healthy to the poor and sick. The poor spend a higher proportion of their household income on health care costs, and sick people, on average, are poorer. When people are not able to access needed care, their health deteriorates; the result is an increased in expense for the individual, the health care system and the economy as a whole. This inequity is further compounded by the current focus on fee-for-service and the way the Medicare safety net works to the benefit of the well-to-do.
Australia invests heavily in the management of chronic illness, funding specific primary care services and hospital-based programs and providing subsidies for expensive prescription medicines. But much of this effort is potentially undone by the inability of a significant number of patients to afford the co-payments for their multiple medicines.
A policy response is needed – perhaps based on the Closing the Gap PBS co-payment measures which are in place for Indigenous Australians with or at risk of chronic illness, and which commenced on 1 July last year. In the absence of such an approach, the delivery of real health care reforms that also represent real value for taxpayers will founder. •
Angela Beaton is a research fellow at the Menzies Centre for Health Policy at the University of Sydney. Tim Usherwood is a general practitioner, professor and head of the Department of General Practice, Sydney Medical School – Western, at Westmead Hospital. His clinical practice is at a community-controlled Aboriginal medical service in western Sydney. Stephen Leeder is a professor of public health and community medicine and director of the Menzies Centre for Health Policy at the University of Sydney. Lesley Russell is a research associate at the Menzies Centre for Health Policy and the US Studies Centre at the University of Sydney and a senior fellow at the Centre for American Progress in Washington, DC.
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