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Issue #1740      July 20, 2016

Mediscare and Medisense

Ross Gittins’ Sydney Morning Herald article could not be more wrong when he says – “The real winners of the Mediscare campaign are doctors and the medical industry” – SMH July 6, 2016.

Freezing the Medicare rebate was never about budgetary savings or cost control in the health system. The cost to the health system of a “dumbed down” GP system was always going to be much higher in terms of the flow-on costs to the taxpayer and the community. Freezing the rebate is about ending universal Medicare bulk billing.

It is political rather than economic tool. It is about ending the right of all Australians to bulk billing, reducing Medicare to a second class system for the poor, and increasing GP dependence on alternative revenue streams such as pathology companies or private health insurance. Freezing the GP rebate is an ideological measure, not an economic one.

Ross Gittens’ article misses the key economic role of GPs in the health system. GPs are not just a low cost way of delivering health care in the community. GPs are also the gatekeeper to the health system – including writing scripts for often very expensive drugs, referrals for expensive blood tests, x-rays, CT or MRI scans and expensive specialist care.

A good GP keeps a tight hold on the gate and only sends through those that require higher level care. This is not just to save money, but because it is in the patient’s own best interests not to go through the gate and the dangers of bad drug reactions, over exposure to damaging effects of radiation or the anxiety and harm of unnecessary or over investigation. And if GPs are under-paid or under-supported, they are more than likely to simply wave patients through the gate.

Patients want to know that the doctor has time for them and won’t fob them off with a prescription or further investigations just because they are too busy or “time poor”.

Let’s look at costs in the health system. The GP fee is $36 bulk billed or $70 for a long consultation. but the costs of a CT scan or MRI is more like $400 and the cost of a routine blood test around $400 and a specialist is around $300. But the cost of specialist investigations runs in the thousands of dollars and that is before we look at the cost of hospitalisation or surgery. The cost of an ambulance because there is no GP available eg nursing homes or those bed-bound at home, is $700 and the cost to the ED is $400 and thousands of dollars a day if the patient is admitted to hospital.

So underpaying GPs and putting them in an economic position that encourages waving patients through the gate – or allowing GPs to become increasingly economically dependant on third party payments such as pathology rentals, does not make economic sense. Also there is no longer an arms length arrangement and the incentive to the doctor becomes to refer as much as possible to those paying rent in their clinic.

It is a downward spiral of more referrals, blood tests, xrays etc or simply dump the sick on the emergency department of the closest public hospital. It is also the missed opportunity cost of a consultation cut far too short and where a proper diagnosis and early intervention could be made with tremendous benefit to patient, savings to the health system and benefit in terms of work productivity.

Not letting patients through the gate, involves time spent assessing the patient thoroughly and then time to convince the patient and allay their anxieties. It is not just the missed opportunity cost of a consultation cut far too short and a proper diagnosis is made and early intervention started.

And it’s not just a Medicare rebate freeze that is in play here. There has been a whole raft of changes in health policies and regulations over recent years to undermine Medicare – including measures to deregulate pathology collection centre licences five years ago and so that GPs can swipe the credit card with the Medicare card.

This has further muddied the waters by reducing the convenience factor of Medicare bulk billing over direct billing of the patient, and increasing the dependence of primary care on alternative income streams such as pathology rentals. (Most medium to large GP Centres are now dependent on lucrative rentals from pathology companies which is a far from ideal situation.)

So for the government to control health costs by starving GP rebates is a false economy and does nothing to contribute to cost control. It simply wrecks the system. We need to get back to basics by paying GPs a fair rebate that rewards them spending time with the patient and keeping a firm hold on the gate – which is also in the patient’s interest. Let’s not forget also that just one CT scan is not just $500 but also exposes the patient to radiation equivalent of 300 xrays and that technically just one xray radiation equivalent can initiate cancer.

It maybe counter intuitive for non-medical economists, but the better you pay the GP and the more time the doctor spends with the patient, the less referrals for blood tests, prescriptions, radiology and specialists. Paying the GPs a decent rebate means putting the gate back on its hinges and far greater savings for the health system – which is what Medicare was brought in to do.

The real winner of the Mediscare campaign was Medicare and an open and very timely referendum on health costs – and the people have spoken.

There are only three sources of funding for health care: 1) taxpayer funded universal public health scheme where running costs are extremely low and all Australians are covered, 2) a privatised system where individuals bear the burden of high and potentially ruinous health costs and 3) the privatised US style system run by insurance companies which currently costs around 18% GDP in the US including around 15% in administrative costs and a further 15% or 20% for shareholder profits.

The election result shows that the people want any future government to fix Medcare – and this begins with a fairer bulk billing rebate that rewards the GP for spending more time with the patient rather than waving them through the gate - and which does not drive our GPs into the hands of third party providers including pathology companies or the private health insurance industry.

*Dr Con Costa is National vice president of the Doctors Reform Society

Next article – Smilely-faced monopolists

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