Co-payments, Choices and Coverage: Meeting the Challenge of Health Financing for Consumers Dr Sharon Willcox, Health Policy Solutions Catholic Health Australia National Conference 27 August 2013
OUTLINE 1. Co-payments the magnitude of the issue 2. Causes of co-payments 3. Choices and coverage how do consumers make informed decisions about health spending? 4. Policy responses to co-payments 2
AUSTRALIAN CONSUMERS ARE PAYING DIRECTLY FOR ALMOST ONE-FIFTH OF ALL HEALTH SPENDING Out of pocket costs as share of total health expenditure (%) 50 45 40 35 30 25 20 15 10 5 0 3
IN 2009 EVERY AUSTRALIAN SPENT $1,075 ON HEALTH, THE FIFTH HIGHEST LEVEL OF CO-PAYMENTS 2,000 Per person out of pocket expenditure (A$) 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 4
CONSUMER CO-PAYMENTS HAVE ALMOST DOUBLED BETWEEN 1999 AND 2009 1200 1000 1,075 981 800 600 583 548 400 200 0 Australia Weighted average Per person out of pocket expenditure (A$) 1999 Per person out of pocket expenditure (A$) 2009 5
CO-PAYMENTS: WHY DO THEY MATTER? Annual Commonwealth Fund surveys (and ABS surveys) 2011: 30% of Australians reported costs as a barrier to visiting a doctor, getting tests, filling prescriptions or skipping doses 2010: 8% of Australians reported serious problems paying or unable to pay medical bills in the past year 2008: 40% of Australians with a chronic condition and below average income reported costs as a barrier 6
UNDERSTANDING THE CAUSES OF CO-PAYMENTS Tackling excessive co-payments requires understanding how and where they occur. Are high co-payments predominantly due to: Coverage decisions are co-payments mainly occurring for health services that are not publicly subsidised? Gap payments what share of co-payments is due to growing gaps for publicly (or privately funded) services? To develop policy solutions, it is also important to understand the distribution of co-payments. How do they affect: People with a chronic illness? Older people? Privately insured and non-insured? Other groups (e.g. rural)? 7
MOST (BUT NOT ALL) CO-PAYMENTS OCCUR OUTSIDE THE PUBLIC COVERAGE PROGRAMS Area of spending Consumer co-payments ($ million) All other medications $8,013 Dental services $4,564 Medical services $2,814 Aids & appliances $2,536 Other health practitioners $1,775 Benefit-paid pharmaceuticals $1,574 Private hospitals $1,347 Public hospital services $1,159 Patient transport services $365 8
CO-PAYMENTS OUTSIDE THE PUBLIC COVERAGE PROGRAMS One-third of all co-payments are for all other medications - $8 billion annually The AIHW reports that in 2010-11: 63% of this spending was for over the counter medicines (e.g. vitamins) 20% was for under co-payment prescriptions (where the price was less than the PBS co-payment) 11% was for private prescriptions (non-pbs listed medicines) Some consumer spending on other medications and other health practitioners will be for complementary and alternative medicine (CAM) 9
CONSUMER SPENDING ON COMPLEMENTARY AND ALTERNATIVE MEDICINE (CAM) A 2005 national telephone survey (Xue et al, 2007) found that 69% of adults used some type of CAM, with consumer co-payments estimated at $4.1 billion annually. This included: 46% of the population used some type of clinical nutrition Users of specific types of CAM averaged 8.8 acupuncture visits annually, 8.4 chiropractic, 6.7 homeopathy, 6.3 Western massage therapy, 5.3 Chinese herbal medicine The estimated number of total visits to CAM practitioners over 12 months was 69.2 million compared with 69.3 million visits to medical practitioners Analysis of the 2004-05 National Health Survey (Armstrong et al, 2011) found that complementary medicines: Were frequently used by people with arthritis or osteoporosis 10
MAKING INFORMED CONSUMER CHOICES Given the size of consumer co-payments, a key policy issue is whether there is sufficient information to enable consumers to make informed choices about: What health services they will use? (including their effectiveness, quality and accessibility) How much they will pay for these services? What share of the population know about or have ever used information produced by: The National Prescribing Service? Consumers Health Forum? The National Health Performance Authority? Privatehealth.gov.au (the PHI comparison site) (versus iselect, Comparethemarket, Helpmechoose, Canstar),? Other sites??? In the health sector, what are the equivalents of: Choice Product Review Whistle Out??? 11
CO-PAYMENTS AS GAPS IN PUBLICLY OR PRIVATELY FUNDED SERVICES Co-payments vary within and across publicly and privately funded health services, depending upon level of government/private subsidy and extent of above-fee billing PBS fixed per item co-payments and annual safety net Does not cover off-prescription uses of some medicines Does not cover high use of under co-payment medicines MBS protections include: Bulk-billing Original Medicare safety net pays 100% of schedule fee of out-ofhospital medical services after annual threshold reached Extended Medicare safety net pays 80% of the cost of out-ofhospital medical services after annual threshold reached PHI regulation includes no or known gap payments, but the insured population can still experience high co-payments (over and above the costs of buying PHI): Average co-payments across people with hospital insurance (not users) was $440 (45-64 year olds) or $1,171 (65-84 year olds) 12
DISTRIBUTION OF CO-PAYMENTS We do not have good information readily available about the distribution of co-payments for particular groups Analysis of the 2003-04 Household Expenditure Survey commissioned by the NHHRC found that health co-payments were a higher share of total household spending for: Health Card holders Low income households Older households A 2009 survey of older Australians (McRae et al, 2013) found a strong relationship between the number of chronic conditions and consumer co-payments People with 5 or more chronic conditions spent about five times as much as those with no chronic conditions Each additional chronic disease added 46% to the likelihood of health costs creating a severe financial burden 13
POLICY RESPONSES TO CO-PAYMENTS It depends! 1. Improving safety nets: NHHRC recommended a review of the scope/structure of safety nets to improve simplicity and integration But, by definition, safety nets are about covered services (which is not where most of the co-payments arise) Nonetheless, there would be value in: Having an automatic system for the PBS safety net, as occurs now for the MBS, so that the onus is not on consumers to keep records and track their PBS spending Integrating the MBS and PBS safety nets this is complex as it will involve choices about: What should be the threshold for each safety net? (in order to continue to protect people who have high use of either the MBS or PBS) How would a joint threshold be set? (and what are the implications for government spending) 14
POLICY RESPONSES TO CO-PAYMENTS 2. Extending coverage for evidence-based services (and disinvesting for non evidence-based services): Extending access to allied health items under MBS (although not specifically linked to evidence-base) Constant reviews of new items for inclusion on the MBS and PBS (including oncology drugs for which consumers often face high co-payments prior to coverage) MSAC is undertaking MBS reviews of existing items including: obesity surgery, colonoscopy, ophthalmology, Vit B12 and Vit D testing, but much harder/slower to disinvest on the MBS Current CW review of whether the PHI rebate will continue to be provided for a range of natural therapies (but PHI will still be able to cover natural therapies that do not attract the government rebate) 15
POLICY RESPONSES TO CO-PAYMENTS 3. Targeting particular services or consumers: Various proposals have attempted to deal with high costs of particular groups or services including: Medicare Gold free public and private hospital care for over 75 year old people Denticare universal access to package of basic dental services DisabilityCare will cover the costs for eligible people 65 of services including specialist disability services, aids & equipment, personal care, home and vehicle modifications 4. Improving information and fostering community debate Consumers need better information to make decisions about the relative costs and benefits of individual services At a whole of community level, there needs to be discussion of where and how public subsidies should be targeted, e.g. High cost cancer drugs that are not curative? Managing chronic disease in the community? Improving access in rural areas? 16
POLICY RESPONSES TO CO-PAYMENTS 5. Reducing costs (and potentially co-payments) of health services: Grattan Institute (2013) found potential savings of $1.3 billion annually if tougher negotiations on pharmaceutical pricing, including paying less for generic drugs CW government has capped benefits for some services under the Medicare Extended Safety Net (in response to evidence that showed that benefits were being converted to higher fees) There remain substantial and growing gaps for specialist services (in hospital services not covered under the MESN) neither governments nor health insurers appear to have made much progress in reducing costs / improving affordability of specialist services Some incentives by CW to increase bulk billing for MRI and diagnostic imaging 17
POLICY RESPONSES TO CO-PAYMENTS 6. Consumer health budgets and other options In aged care and disability care, we are now seeing the introduction of personally controlled budgets where consumers have more choice about the services they will use and pay for with a public subsidy Doggett (2009) has proposed allowing health consumers greater choice to trade off subsidies across different parts of the health system (e.g. pay for non-emergency hospital treatment but get higher rebates for primary care services) The implementation of DisabilityCare may provide some lessons for introducing personal care budgets in health 18