Can the Coalition’s copayment policy be repaired?

A deal on GP copayments will still compromise the structure of our health system, without any benefit for patients or the budget, writes Stephen Duckett.

The prospects for the Coalition’s $7 original copayment plan are not looking good. Clive Palmer previously said Palmer United Party senators would join Labor and the Greens to block it in the Senate, though he has since indicated that he might be willing to compromise.

Health Minister Peter Dutton has also hinted that he is prepared to modify the proposal, and has spoken with Australian Medical Association president Brian Owler to see if there is a middle road.

But how could the plan be salvaged, and what would it mean for patients and the budget?

The Government’s original proposal was to charge fees to all patients, for the first time in decades. No-one would be exempt. Pensioners, people who don’t have a job, and all other concession card holders would have to pay a $7 fee for their first 10 GP visits and for pathology and x-rays.

Basically, the plan is to move from universal coverage to universal fees.

Any compromise would probably involve winding this back a bit. It might involve exempting pensioners, or lowering the new, mandatory fees. That might sound like a moderate, middle road. But it remains radical and misguided. While the government’s proposals have not been passed, the budget has been a success in one regard. It has shaped the debate so it is about copayments going up – no one is talking about the people for whom copayments are already too high.

One reason the co-payment is having such a bad time politically is that it is seen as unfair. Although wealthy people pay more on out-of-pocket costs in absolute terms than poorer people, poorer households pay a much higher proportion of their income than wealthier households. Some poorer households pay very high proportions indeed. In one in 10 of the poorest households that pay out-of-pocket costs, those fees eat up more than 20 cents in every dollar of disposable income.

As a result of high out-of-pocket costs, families are missing out on health care. Many people already miss out on health care because of cost: 5 per cent skip GP visits, 8 per cent don’t go to a specialist, 8 per cent don’t fill their prescription and 18 per cent don’t go to the dentist.

In addition to problems of fairness, the $7 policy is probably bad economics as well. The government’s modelling however has been pretty crude: all that’s been announced so far is that there will be about 1 per cent fewer visits, that’s a drop of about a million visits.

But it’s which visits are reduced that is crucial – if they are the wrong ones, health costs could go up instead of down. A GP visit costs government, as a conservative estimate, about $100, taking into account possible pathology tests or x-rays. If a person doesn’t go to a GP and their condition deteriorates, they may end up in a hospital emergency department (which costs at least three times as much as a GP visit), being admitted to hospital (50 times the cost) or both.

If patients make the wrong judgment call about whether to see a GP just once in every 50 times about whether they should see a GP, and they end up in hospital, then any system savings have vanished. Other costs, such as additional days off work because of worsening conditions or hospital admissions make the economics look even sicker. On top of that, some modelling suggests that waiting times in hospital emergency departments will blow out because of increased demand shifted from GPs.

Despite putting patients at risk, new fees won’t help the budget bottom line. Any revenue gained is squirreled away in the Medical Research Fund.

Even a watered-down co-payment increase would leave us with all these problems and risks. It would stop some people getting care they need, it could lead to higher health care costs, and it won’t improve the budget situation.

Universal fees will also have a more insidious impact. They would be a fundamental change to Medicare, effectively abolishing bulk-billing. They would recast Medicare as a ‘safety net’. That’s not what Medicare is.

Medicare’s predecessor, Medibank, replaced a mish-mash of schemes which were meant to be safety nets, but they didn’t work. Many people had no coverage against the cost of health care at all. Medibank and Medicare fixed this mess and we joined the rest of the developed world (other than the United States) by implementing a universal health scheme.

This is now under threat. If Medicare is no longer for everyone, we will have torn up a big part of our social contract. Medicare has been very popular, probably because of its universality. People on Struggle Street, on variable incomes, know that they are covered whether they are marginally under or marginally above some magical cut-off.

A compromise deal on co-pays will compromise the structure of our health system. Since there is no benefit for patients or the budget, PUP senators and other crossbenchers should maintain their opposition to mandatory copayments and resist the end of Medicare as we know it.

Stephen Duckett is the director of the Health Program at Grattan Institute. View his full profile here.