Health Care Systems Reform in Insurance vs Tax based System Australia

1
Health Care Systems Reform in Insurance vs Tax
based SystemAustralia

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

2
Initiatives

• Initiative that was introduced to meet challenges
• Health care Expenditure Case-mix funding
• Health care Expenditure PBS
• Viability of PHI Life time health cover, 30 tax
  rebate
• Strengthening the Medicare Medicare plus
• Workforce shortage workforce policy

3
Casemix funding

• Evaluation

4
Casemix funding

• Public hospital funding model based on the level
  and composition of output
• Aiming at providing explicit incentives for
  hospitals to improve efficiency
• Rationalize health care expenditure

5
Casemix funding

• Greater focus on cost and benchmarking
• Increased output to address waiting time concerns
• Increase shift of resources to efficient
  hospitals from those less efficient

6
Casemix funding Evaluation

• Efficiency
• Reduced length of stay
• Output
• Increased number of patients treated
• Decreased waiting time
• Quality
• No change in the readmission rate

7
Casemix funding Evaluation

• Northern Territory
• Casemix funding implemented in 1996/97 fiscal year

8
Casemix funding Evaluation

• Efficiency
• Length of stay is reduced through better
  scheduling of tests, discharge planning and
  review of need for hospitalization

Fiscal year 1993-94 1994-95 1995-96 1996-97
ALOS (days) 4.35 4.28 4.10 3.73
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Casemix funding Evaluation

• Output
• Weighted separation
• The sum of no of separations x cost weights for
  AN-DRGs
• number of bed days
• Product of average length of stay and number of
  separation

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Weighted separations
11
No of bed-days
12
Casemix funding Evaluation

• casemix funding has a substantial impact in
  lifting total casemix-weighted separations
• Decreased the total number of bed-days

13
Casemix funding Evaluation

• Quality
• Reduced quality premature discharge lead to
  higher readmission rate
• No impact on readmission rates

14
Readmission rates
15
Casemix funding Evaluation

• Victoria 1992/93 vs 1993/94 (before and after
  introduction of casemix funding)
• No of patients increased 5
• Total expenditure decreased 5
• Number of casemix weighted separations increased
  by 4.4

16
Casemix funding Evaluation

• Challenges
• Supply-side moral hazard
• Supplier induced demand
• Clinical diagnosis and procedures

17
Casemix funding Evaluation

• Conclusion
• Casemix funding reduce inefficiencies among
  hospitals and seek maximum returns for the health
  dollar

18
Private Health Insurance

• Initiatives in 2000
• Lifetime Health Cover Replace the community
  rate.
• Join the PHI lt 30 years of age and stay in PHI,
  pay a lower premium throughout their lives
• 30 Rebate Subsidy of 30 for all PHI fund
  members by Government in 1999

19
Private Health Insurance initiatives- Evaluation

• Membership increased from 30.5 to 42.9 of
  Australian from 1998-2004
• 27 increase in PHI fund reserves in 12 months
• Minimal or no increases in PHI premiums
• Decrease in overall claim rate
• What about the long term effect ?

20
PHI membership
21
Private Health Insurance initiatives- Evaluation

• What about the long term effect ?
• Membership aging increases the overall claim rate
  
• highly affected by the birth rate and the aging
  population.
• Is the Low premium rate sustainable ?

22
Private Health Insurance initiatives- Evaluation

• Is 30 rebate a huge cost to Government ?
• Government fund in total health expenditure
• 68.8 in 2001-2002
• 69.9 in 1990-2000

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Private Health Insurance initiatives- Evaluation

• These initiatives support the shift of Public
  service to Private service

No. of Hospitals 97-98 98-99 99-00 00-01 01-02
Public 760 749 748 749 746
Private 492 492 502 509 537
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Private Health Insurance initiatives- Evaluation

• These initiatives support the shift of Public
  service to Private service

Beds per 1,000 population 97-98 98-99 99-00 00-01 01-02
Public 3 2.9 2.8 2.7 2.6
Private 1.3 1.3 1.3 1.3 1.4
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Private Health Insurance initiatives- Evaluation

• These initiatives support the shift of Public
  service to Private service

Spending on hospital services / total expenditure 97-98 98-99 99-00 00-01 01-02
Public Hospital 29.7 29.6 28.5 27.5 27.4
Private Hospital 8.1 8.2 8 7.8 8
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Private Health Insurance initiatives- Evaluation

• Total funding for health service through PHI (
  in million )

98-99 99-00 00-01 01-02
Total Benefits paid by membersnet premium Government rebate 4,843 5,186 6,191 7,036
Government Rebate 30 - - 2,030 2,110
Net Benefits paid 4,843 5,186 4,161 4,926
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Private Health Insurance initiatives- Evaluation

• ? ?Private Service
• ? ? Choices of Service
• ? ?Appropriate level of Care

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Pharmaceutical Benefits Scheme (PBS) Background

• One of the major national subsidy
• Cover all Australians on the purchase of medicine
• Nearly 2/3 of prescriptions are subsidized
• Pay more if want patented / branded drug
• Two groups of consumers general concessional
• Safety net on annual expenses

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Evaluation

• PBS has been successful in suppressing drug
  prices.
• Compare with the OECD countries
• Leakage ( prescribing outside PBS condition )

30
Price Ratio compare with OECD countries
31
Pharmaceutical Benefits Scheme (PBS) - Initiatives

• 12.5 price reduction for new brands after 1
  August 2005
• Generic drug already listed on PBS
• Price of medicines are linked in generic drugs
• Reduction flow on to all brands of that medicine
• Applied to combination medicines on a pro-rata
  basis
• Applied to the first new brand after 1 August
  2005 only
• (Once a patent medicine expires, other
  manufacturers can produce equivalent products)

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Evaluation

• Newly implemented, no actual figure !!
• Presumption from Australian Consumers Association
  
• If competition was allowed to function, it could
  be expected to reduce prices by 20 - 60
• Proposes tendering for generics.

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Pharmaceutical Benefits Scheme (PBS) - Initiatives

• Increase co-payment

Per prescription in 2000 Per prescription in 2006
General consumers AUD 21.90 AUD 29.50
Concessional consumers AUD 3.50 AUD 4.70
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Pharmaceutical Benefits Scheme (PBS) - Initiatives

• Threshold Adjustment

PBS Safety Net Threshold Contribution after reaching Threshold
General consumers 2000 AUD 669.70 2000 AUD 3.50
General consumers 2006 AUD 960.10 2006 AUD 4.70
Concessional consumers 2000 AUD 182 FREE
Concessional consumers 2006 AUD 253.80 FREE
35
Pharmaceutical Benefits Scheme (PBS) - Initiatives

• Positive effect in a short run
• Reduce the cost of PBS. Maintain its
  affordability
• Decrease contribution from Government
• Increase contribution from customers

36
Pharmaceutical Benefits Scheme (PBS) Increase
co-payment - Evaluation

• Intended to deter inappropriate use by patients
  and raise revenue.
• No effect on the those receiving sickness
  allowance, older long term allowee
• Pharmaceutical Allowance (PA) will be granted
  150 per year

37
Pharmaceutical Benefits Scheme (PBS) Increase
co-payment - Evaluation

• Will fail to greatly increase the patient
  copayment because 80 of PBS expenditure is on
  concession consumers.
• The copayment for the remaining 20 would soon
  become astronomical and would tend to drive
  people away from necessary medical care.
• It would not have changed the total cost of the
  PBS.

38
Pharmaceutical Benefits Scheme (PBS)
initiatives - Evaluation

• Average growth of expenditures on pharmaceuticals
  is 13.9 from 99/00-00/01
• Reasons suggested for growth
• Increasingly expensive new drugs being listed.
• Over-prescribing and leakage
• Consumer expectations
• Ageing of the population
• Aggressive marketing by the Pharmaceutical
  Industry

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Pharmaceutical Benefits Scheme (PBS)
initiatives - Evaluation

• Initiatives address the situation ?
• Increasingly expensive new drugs being listed
  (-ve )
• Over-prescribing and leakage (- ve )
• Consumer expectations (-ve )
• Ageing of the population (-ve)
• Aggressive marketing by the Pharmaceutical
  Industry
• (-ve)

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Evaluation

• Economic efficiency (cheapness )
• Allocative efficiency ( allocate resources where
  they are most needed )
• Dynamic efficiency ( flexibility to respond to
  changing circumstances.

41
MedicarePlus

• Evaluation

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MedicarePlus Background Information

• Initiators
• Commonwealth Department of the Health and Ageing
  (federal government)
• Funding
• Commonwealth Government of Australia
• Beginning, expected end and duration
• Announced on 18/11/2003
• Began from 2/2004
• Duration 4-year package, intended to run
  indefinitely

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MedicarePlusBackground Information

• Problems driving the reform
• Decrease in availability
• Primarily an issue for regional and rural areas
• Decrease in bulk billing rate
• Decline from 72 in 2000 to 68 in 2003
• Increase in cost to the user

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MedicarePlusInitiatives

• Bulk Billing incentive increases by 50 for
  regional, rural and remote Australia and all of
  Tasmania
• increase in bulk billing rate, and on the other
  hand, increase availability in RRMA
• A more generous safety net will cover all other
  individuals (threshold700) and families
  (threshold 1000)
• decrease cost from user
• Steps taken to increase the supply of doctors,
  and encourage those overseas trained to work in
  areas of shortage (regional and rural areas)
• Increase in availability of doctors in rural
  areas

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MedicarePlus Evaluation

• Bulk billing rate increase in 2004-2005

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Percentage of Services Bulk Billed,
Australia(Medicare Statistics, 2005)
47
MedicarePlus Evaluation

• Bulk billing rate increase in rural and remote
  areas in 2004-05

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Percentage of Services Bulk Billedby State or
Territory(Medicare statistics, 2005)
Bulk Billed
Change in Points
State or Territory December Quarter, 2005 December Qtr 2005 on Dec Qtr 2004
NSW 74.90 0.6
VIC 69.10 2
QLD 69.90 1.7
SA 69.70 2.4
WA 67.90 0.9
TAS 64.40 1.5
NT 74.40 0.8
ACT 56.10 1.2
Australia Total 71 1.3

Australian Government Department of Health and Ageing, February 2006 Australian Government Department of Health and Ageing, February 2006 Australian Government Department of Health and Ageing, February 2006
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MedicarePlus Evaluation

• Number of GPs from overseas increase in 2004-2005

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GPs by place of basic qualification, 2003-04 to
2004-05
Australia Overseas Grand Total
GPs
2003-2004 11486 5385 16872
2004-2005 11661 5612 17273
change on previous year change on previous year change on previous year
2003-2004 -0.80 3.60 0.60
2004-2005 1.50 4.20 2.40

Australian Government Department of Health and Ageing, February 2006 Australian Government Department of Health and Ageing, February 2006 Australian Government Department of Health and Ageing, February 2006 Australian Government Department of Health and Ageing, February 2006 Australian Government Department of Health and Ageing, February 2006
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MedicarePlus Evaluation

• Increase in availability in RRMA

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GPs by place of basic qualification and broad
RRMA, 2003-04 to 2004-05
Year Urban Rural Remote Rural Remote
Australia Overseas Australia Overseas
GPs
2003-2004 8758 3850 2728 1535
2004-2005 8836 4020 2825 1592
change on previous year change on previous year change on previous year
2003-2004 -1.10 1.40 0.40 9.60
2004-2005 0.90 4.40 3.50 3.70

Australian Government Department of Health and Ageing, February 2006 Australian Government Department of Health and Ageing, February 2006 Australian Government Department of Health and Ageing, February 2006 Australian Government Department of Health and Ageing, February 2006 Australian Government Department of Health and Ageing, February 2006 Australian Government Department of Health and Ageing, February 2006 Australian Government Department of Health and Ageing, February 2006
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MedicarePlus Conclusion

• Major conditions for success
• Bulk billing rate increase
• Qualified health care professionals come from
  overseas to work in regional and rural Australia
• Increase in the availability of doctors in
  regional and rural areas
• Safety net is a key structural improvement to
  Medicare, but still too fast to have statistics
  to prove its result. But since 1/2004, more than
  33,000 individuals and families were benefit from
  this plan

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Health Workforce - Evaluation
55
Increase in numbers of health workers between
1996 to 2001

• Australias Health Workforce Productivity
  Commission Position Paper

56
University intake (1996 2004)

• Medical school commencements of Australain
  citizens and permanent residents increased by 78
  (or more than 700 places) between 1996 2004
  (AMWAC 2004)
• Number of specialists training increased by
  around 700 between 2000 and 2003 (rise in 14)
  (AIHW 2005a)
• Nursing School commencements in 2004 were around
  8,800 (10 higher than in 2003)

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University Intake (2005)

• Significant boost to university places in 2005
• Nursing 1,494
• Allied Health Health Science 1,237
• Pharmacy 227
• Dentistry 78
• Medical School increase 246 in 2005
• But cant be seen in the workforce until 2008

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Immigration on Overseas Trained Doctors (OTDs)

• In the mid 1990s,
• No restriction on the no. entering AUS
  permanently and no control on where they
  practice.
• -gt OTDs Maldistribution of workforce
• Recommended that the number of OTDs entering AUS
  permanently be limited to 200 per 100,000
  population (MWDRC, 1992)

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To reduce entry of OTDs for permanent stay

• Use Skilled migration categories, the points
  awarded to doctors were reduced
• Medical qualifications (including from UK,
  Ireland, South Africa and Canada) were no longer
  given automatic unconditional registration for
  general practice
• -gt Required to complete the AMC examination

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5-Year Overseas Trained Doctor Scheme (OTDs)

• Developed in 2003, to provide assistance and
  incentives to attract doctors to rural and remote
  locations
• Survey of Doctors Working in Rural and Remote
  Locations Under Australias 5-Year Overseas
  Trained Doctor Recruitment Scheme
• No information given on the country of origin of
  OTDs

Survey of Doctors working in rural and remote
locations under Australias Five-Year Overseas
Trained Doctor Recruitment Scheme AMWAC Report
2004.1
61

• In 1998, 10,408 (21.3) were OTDs
• 39 qualified in UK,
• 28 Asia, 12 New Zealand, 21 Others
• Of 1,901 rural and remote OTDs
• 56 qualified in UK or Ireland,
• 15.6 Asia, 9.6 New Zealand, 18.8 Others

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Issue Highlighted

• Main Reasons for applying
• - Dissatisfied with lifestyle and/or medical
  practitioner in
• country of origin
• - To become a permanent resident or citizen of
  Australia

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OTD Satisfaction on their working condition
64

• Future Career plans of OTDs ?
• - 52.1 plan to stay at their present location
  after 5-year contract completed,
• 34.1 plan to move to another location
• 13.8 undecided
• Reasons for move- Family considerations (eg.
  Childrens education, spouses career needs)
• - Isolation and environmental factors (e.g.
  social isolation, geographic location)
• - Medical practice issues (e.g. poor location
  facilities)

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• Suggestions for improving the Scheme
• - Streaming processes, provide more support to
  newly arrived doctors and improved communication
  systems
• - More educational support, and supervision for
  gaining fellowships
• - Financial Considerations, e.g. assistance with
  early-entry accommodation
• - Increase program flexibility (e.g. ability to
  change States within 5-year Contract)

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Conclusion
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Conclusion

• The Australian health system is widely regarded
  as being world-class
• Australians are satisfied with their health care
  system
• - enjoy good health
• - most have ready access to health services
• - high quality services
• - public make fair payments
• - share the fiscal risks of ill-health
• Podge and Hagan, 2000r

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Conclusion

• Three basic goals of health care system reform
• - equity fair payment, fair access to and use
  of services and equity of outcomes
• - efficiency value for money
• - quality high standards and good health
  outcomes

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Conclusion (Contd)

• The health care system enjoys both political and
  public support
• There is dissatisfaction with particular parts of
  the health care system and among particular
  population groups
• There is no strong demand for radical change

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Conclusion (contd)

• Health care system evolved slowly and
  incrementally for several reasons
• - a federal system of government
• - a bicameral Parliament
• - responsibility for health care divided
  between
• levels of governments
• - a pluralist health care field including a
  large
• private sector
• Ongoing process

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References

• www.medicareaustralia.gov.au
• www.aihw.gov.au
• www.health.gov.au
• www.healthinsite.gov.au
• www.aph.gov.au
• New challenges, new solutions, Australian
  Consumers Association, July 2002
• http//www.reformmonitor.org/
• http//www.health.gov.au/internet/wcms/publishing.
  nsf/Content/medicarestatistics-1
• www.buseco.monash.edu.au/centres/che/pubs/wp92.pdf
  
• http//www.health.vic.gov.au/discharge/paper.htm
• Xiao J, et al (2000) An assessment of the
  effects of casemix funding on hospital
  utilisation A Northern Territory perspective
  Australian Health Review 23(1) 122-136.

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Thank you!