Health | Ageing

Healthcare costs rising for individuals

While the costs of health care are split between state level, federal level and by individuals, individuals are facing the biggest rise in costs year-on-year, Bupa Health Insurance Managing Director, Dr Dwayne Crombie has told an audience in Perth.

At the event, titled Transformation of healthcare, Dr Crombie said, “Interestingly, the Federal Government is facing the smallest rise. States on average are somewhere in the middle.

“States spend a lot of their budget on health and keeping hospitals running. Individuals are getting more and more of the costs.”

Dr Crombie highlighted there was no crisis in federal spending on healthcare, with the fact that Australia is currently spending within the average range of other OECD countries.

He said the debate goes on concerning costs, “but more needs to go on how we’re actually spending it.”

One issue Dr Crombie drew attention to was the role of doctors and hospitals in controlling costs.

“In the last 12 months the cost of Medicare has gone up four per cent because doctors have actually gotten smarter about which item codes they charge for and they’ve figured out how to up-code in the system,” Dr Crombie said.

“So the price may not have gone up, and I can tell you the population hasn’t gone up four per cent, but that’s the kind of system you’re dealing with.

“If you do short-run things, you’re never going to make any difference as there’s a bunch of much smarter people sitting at the coal face trying to figure out how to optimise what they’re getting.”

Dr Crombie said the flaw here was the fee-for-service system.

“How do you change a system in which you pay people based on what they do? When you give someone a hammer and a bunch of nails and say you will pay them based on how many nails they hammer in,you’re going to get a lot of nails hammered in whether that’s the right thing to do or not,” Dr Crombie said.

“Doctors are no different than any other human. They will be incentivised to do a lot of activity.”

Compounding this issue, Dr Crombie said, was the failure of the public to realise who is in control of the costs. In a survey with BUPA clients, customers were asked who they believed had the biggest role in controlling healthcare costs.

“The most interesting figure was that 29 per cent of them said ‘private health insurers have the most important role in controlling cost’, 27 per cent said the Federal Government, a bit lower was state government,” he said.

“Interestingly, doctors and hospitals scored the lowest responsibility for cost, who actually have an unfettered right to provide services. That’s the hallmark of our system in Australia – clinical autonomy.

“We don’t believe in managed care. But you can see there is a bit of a conundrum. If you want the costs to be managed, but you don’t want me telling a doctor what to do, that’s fine.

“But if you are going to have a fee-for-service model where doctors and hospitals can pretty much do whatever they want, effective or not effective, we’re going to have find a way to sheet that responsibility to them in the way we pay for things.”

He said the fact the public “haven’t kind of joined the dots” regarding who is controlling the pricing is why it’s difficult to get political traction.

“We have a significant challenge to talk and educate people about the choices and those choices are possible. People are starting to talk about there might be different ways,” he said.

Other speakers at the event included Australian Health Policy Collaboration Director, Rosemary Calder; and Sir Walter Murdoch School of Public Policy and International Affairs Head of Health Policy Program, Associate Professor Francesco Paolucci.