Category: Accountability

27 January 2025

The health system has been in crisis for years and now NDIS is the same.
State and Federal governments are locked in crisis talks, and now the NDIS is over budget and looking to ‘transfer services’ to other parts of the health system.
Why does all this go on, and what is the solution?
The short answer is that there are many sources of health funding and the main policy objective of all of them is to transfer the cost to someone else, and if they are a private source, to maximise the profit.
This ‘transfer costs’ imperative means that no one is concerned about the overall cost, merely their bit of it.
The major players are still the State and Federal government. In simple terms the States look after the hospitals and the Federal government looks after non-hospital services.
Medicare is being starved and pays less and less to doctors relative to inflation. The private health funds pay what they have to, the CTP (Motor Accidents) and Workers comp systems are either private or use a private model and pay as little as they can get away with and the patient pays the gap, unless they decide that private health insurance is not worth the money, which in most cases is true, and get a bit of Medicare and pay the rest.

Examples of cost shifting are easy to find. The Federal government has let Medicare rebates to GP fall to 46% of the AMA fee. It was 85% when Medicare started, so many doctors simply don’t bulk bill and charge a fee. So people go to the Emergency Departments that are free, but funded by the States. A visit to the ED is 6x more expensive than a GP visit, but the Federal government has shifted the cost to the States, so they don’t care. When you go to the ED and get a script, the hospital used to give you all the drug course. Now they give you a few tablets and a script for a pharmacy outside. The script was needless, and generates the costs of the trip to the pharmacy, the pharmacists fee, the PBS Federal government contribution and the patients script fee. A lot of wasted time and money, but the State saved a bit. When you went to the ED, you used to be followed up in a hospital outpatient clinic where the consultant was paid a sessional fee and oversaw registrars checking the cases and learning. You could also just book and go to a specialist clinic. These have largely been stopped to save the State money. Now you go to the specialists’ rooms and the State saves money, but the total cost per visit is much more.

If you look at the overall efficiency of health systems, Medicare as a universal system has overheads of about 5% counting the cost of collecting tax generally. Private health insurance overheads in Australia are about 12%, Workers comp 30% and CTP over 40%. These figures are approximate and very hard to get, because the dogma is that competition drives down prices, when clearly the system is more efficient if there is a single paying entity. Interestingly, the Productivity Commission made no attempt to quantify these overheads when it looked at the cost of the health system- you may ask why. The point is if you take out profits, which are the same as overheads from the patients’ point of view, and make everyone eligible, you do not have to have armies of insurance doctors, investigators, lawyers and tribunals to see if the insurer has to pay or if it can be dumped on Medicare and the patient.
As far as foreign people using the system are concerned, universal Medicare for people living in Australia is administratively simple, and the cost of treating tourists who have accidents is cheaper than policing the whole system. Enforcement has quite high costs.

In terms of the cost of insurance, US schemes vary from 12-35%R, with the high costs ones being most profitable as they police payouts more thoroughly and naturally refuse more treatments. Note that the CEO of Unitedhealthcare in the US was recently shot, with the words ‘deny’ and ‘delay’ on the cartridges used. Surveys have shown that 36% of people in the US have had a claim denied. Claims are accepted here, but in a survey of my patients 60% of my scans and referrals of CTP patients were denied by NRMA. i.e, We accept the claim, but deny the treatment.

What Is needed is a universal system, free at the point of delivery.
What about over-servicing? The current system makes trivial problems of people with money more important than major problems of people without money. Underservicing is the major problem with ambulance ramping at EDs and long waiting lists.
In a universal system, which doctor is doing what is immediately accessible, with comparisons to every other doctor doing similar work. It is just a matter of checking up on the statistical outliers.

The problem is simple. The major political parties are given donations by private health interests to let Medicare die. Combine this with the Federal/State rivalry that makes cooperation very difficult and a reluctance to collect tax and you have the recipe for an ongoing mess.

The NDIS is an even bigger mess. It is a privatised unsupervised welfare system that arbitrarily gives out money and is subject to massive rorting.

The welfare system that looked after people with disabilities, both congenital and acquired by age or circumstance had grown up historically in institutions that were fossilised in their activities and underfunded to prevent expansion or innovation. People with disabled children looked after them with whatever support they could find. As these disabled cohorts reached middle age, their parents, who were old, were worried about what would happen when they died and wanted to lock in funding for their adult children before they died. They were an articulate lobby group with real problems and were quick to point out the flaws in the existing systems. They visited institutions that had no vacancies and thought that they had put their names on waiting lists. But no central list existed, and the institutions tended to give their beds to whoever came first when a death created a vacancy. ‘Just give us a package, and we will decide how to spend it’ was the parents’ cry. But then NDIS experts came in and interviewed people and gave away ‘packages’ based on an interview. A new layer of experts was created. District nurses or others who might have been able to think of more innovative or flexible options, or who could judge who in their area needed more than someone else had no input. People with real disabilities were given money, but did not know how to assess providers, so dodgy operators snapped up the packages, delivering dubious benefits. The government had no serious regulation or control system. Now the cost of NDIS has blown out, so the solution is to narrow eligibility and force people off the NDIS and onto other parts of the health system. Sound familiar? People with disabilities and their relatives are naturally worried; and rightly so. The lack of these services was why the NDIS was created. The answer is to have universal services. Set a standard, make it available and police quality in the system. Private interests may have a place, but there is no need for profits, non-profit organisations have been the mainstay of providers for years. For profit providers tend to cut costs, which in practical terms means either services or wages or both to concentrate on shareholder returns. The best way to allocate resources optimally is to empower the people actually doing the job, who also have the advantage of being able to see relative needs as they go about their routine work.

An interesting tome on the subject is ‘The Political Economy of Health Care’ by Julian Tudor-Hart, which looked at the changes in the British National Health System from when it started as an idealist post-war initiative run by those working in it with management overheads of about 0.5%, to when it was fully bureaucratised with overheads of about 36%. He was also responsible for the ‘’Inverse care law’ which is the principle that the availability of good medical or social care tends to vary inversely with the need of the population served. This inverse care law operates more completely where medical care is most exposed to market forces, and less so where such exposure is reduced.

The key point of that people have been taught that governments are hopeless and that you should pay as little tax as possible, so instead of good universal services being developed, a market has developed which is on its way to an American system.. People all agree that the US has the worst system in the developed world at delivering health care. But they overlook the fact that the US health system is the world’s best at turning sickness into money. That is what it was designed to do and that is why it is sustained and maintained. The same drivers are all here.

Note the Federal/State bickering in the article below (and weep).

My recipe for change is to have a Swiss style of government where the people can initiate binding referenda on governments and could simply answer a question like ‘Do you want to pay 5% more tax to have a universal health and welfare system?’ If a question like this got up against the doomsayers, we might have a chance. But of course the change to the constitution to get the referenda in the Swiss model is almost impossible to achieve, the Swiss having been discarded when the Australian Constitution was written in about 1900.

www.thesaturdaypaper.com.au/news/politics/2025/01/25/exclusive-albanese-shut-down-hospital-talks-pressure-states?utm_campaign=SharedArticle&utm_source=share&utm_medium=link&utm_term=VT5jI6Zo&token=Z3cA3Py