1. Health Care Systems Reform in Insurance vs Tax based System Australia Florence Kwan Janice Yim Nora Kwok Molin Lin Rita Mak

2. What is the existing major problems and challenges confronting Australia?

3. Australia Health Care System Service Delivery model Financing model Insurance model Problems and Challenges

4. Australia Australia in general - 2006 estimate population:20.3 million - growth rate: 0.9% - 80% lives in cities Australia – a developed country with high standard of living

5. Australia Health Care Three tiers of government in Australia –The national government or commonwealth funding of health services –The six State and two Territory governments Deliver most public services –Local government environmental control measures and a broad range of community-based and home-care services The Australia Health Care Agreements are negotiated every five years between the Commonwealth and State government

6. Australian Health Care Private sector –large and vigorous in health services –involved at all levels in funding and provision Non-government religious and charitable organisations –a significant role in health services, public health and health insurance

7. Health Services Delivery A mix of public and private sector Doctors –Majority of doctors are self-employed –a small proportion consists of salaried employees of Commonwealth, state or local governments –salaried specialist doctors in public hospitals have rights to treat some patients in these hospitals as private patients, charging fees to those patients and contributing some of their fee income to the hospital –others may contract with public hospitals to provide medical services

8. Health Services Delivery Public hospitals –established by government –including those originally established by religions or charitable bodies but now directly funded by government –most acute care beds and emergency outpatient clinics are in public hospitals –in 1997, all hospital beds per 1000 population is 8.3 and acute hospital beds per 1000 population is 4 (Source: OECD 2000, WHO 2001) –large urban public hospitals provide most of the more complex types of hospital care (ICU care, major surgery, organ transplants etc)

9. Health Services Delivery Private hospitals –owned by for-profit or not-for-profit organizations –providing more complex, high technology services nowadays Others –separate centers for same day surgery and other non-inpatient operating room procedures –specialized mental health care in the public sector is provided in separate psychiatric hospitals, general hospitals and community based settings –aged care system deliver by residential and community care

10. FINANCING

11. Financing There are two major national subsidy : the Pharmaceutical Benefits Scheme (PBS) and Medicare Under Medicare, public hospital provide free of charge service to people who choose to be treated as public patients Medicare and the PBS cover all Australians and subsidy their payments for private medical services and for a high proportion of prescription medicines

12. Pharmaceutical Benefits Scheme PBS subsidizes the purchase of medicine on its approved list for two groups: general consumers and concessional consumers (holders of pensioner and other entitlement cards) General consumers make a co-payment of the first AUD 21.9 on each prescription Concessional consumers make a co- payment of AUD 3.5 per prescription

13. Pharmaceutical Benefits Scheme Pharmacists dispense generic drugs under the PBS Nearly third-quarters of prescriptions from community pharmacies are subsidized Consumers must pay more if they want patented or branded drugs Has a safety net to limit consumer annual expenses on pharmaceuticals covered under the PBS

14. Pharmaceutical Benefits Scheme After reaching the threshold, general consumers pay for further prescriptions at the concessional co-payment rate, while concession cardholders receive all further prescriptions free

15. Health care expenditure Health care expenditure with 8.5% of GDP increased to 9.3% of GDP from 1996 to 2001. It was relatively low as a percentage of GDP compared to comparable OECD countries in 1960s but increased from the 1970s

16. Approximately 71% of total health expenditure is provided by Governments (48% from the commonwealth and 22% from the States and Territories in 1999-2000) The reminder comes from individuals, health insurance funds, worker’s compensation, and third party insurance providers.

17. Financing

18. Financing Healthcare - Growth

19. Health care expenditure by categories (as percentage of total expenditure on health care), 1970-1997 Total expenditure on 19701975198019851990199519961997 Inpatient care(%)-47.751.448.145.942.842.743.3 Ambulatory care-21.622.520.421.923.223.422.7 Pharmaceuticals (%) -9.98.08.18.911.111.411.3 Public health-1.10.50.8-1.61.5 Investment (%)8.211.07.67.76.35.76.06.5 Source: OECD 2000

20. Taxation Predominantly publicly funded health care system with 71.2% of revenue in 2000 coming from public sources Income tax is the main form of taxation and levied on individuals The rates in 2001 were below AUD 5400 no tax, AUD 5401-20700 17%, AUD 20701-50000 30%, AUD 50001-60000 42%, and above AUD 60001 47% From 1 July 2000, the States and Territories now receive 10% goods and services tax (GST)

21. Main sources of health finance Source of finance198019851990199519982000 Public Taxes (incl. statutory insurance) 60.672.068.366.768.971.2 Private Out-of-pocket Private insurance 17.0 18.5 15.5 9.5 16.5 11.6 18.0 11.5 17.0 9.8 16.2 7.1 Other 3.63.03.53.84.35.5 Sources: Australian Institute of Health and Welfare 1999 and selected years; Australian Institute of Health and Welfare 2001a

22. Resource allocation Annual budget cycle and an annual conference between the Commonwealth and the States where revenue sharing is negotiated Grants to the States for health care are earmarked via four avenues  Medicare benefits  Pharmaceutical Benefits Scheme  Australian Health Care Agreements  Residential care for the elderly

23. Insurance

24. Medical Insurance Medicare : National and compulsory Private Health Insurance (PHI) Voluntary

25. Medical Insurance Medicare : –Administered by the Health Insurance Commission. –Tax funded. Levy of 1.5% on taxable income

26. Medical Insurance Medicare : –Providing free or subsidized health services –For emergency, elective and continuing care from public hospital –Also covers certain pathology, psychiatry and optometry services

27. Medical Insurance Medicare: –Government sets the Medicare Benefits Schedule of fees. –Rebate by Medicare is based on % of the Schedule fee. –Health practitioners are free to charge above the Schedule fee, but the benefit payable remains constant.

28. Medical Insurance Medicare: In hospital services –Provides different levels of coverage for public and private patients. –Public patients receive treatment by doctors nominated by hospital – fully covered. –Private patients in public or private hospital have a choice of treating practitioner. –Medicare benefit of 75% of the schedule fee is payable. –Some / all of costs excess of the schedule fee can be covered by PHI.

29. Medical Insurance Medicare : Choices of payment method –Bulk billing – practitioners bill Medicare directly –Patient pay account in full and make claim on Medicare –Patient pays balance owing and claims Medicare cheque for practitioners

30. Medical Insurance Private Health Insurance (PHI) –Provides 11% of total National Health Care Funding –Government regulates –>40 PHI funds registered. –Most of them open to everyone. Some only offer to employees of a particular firm. –Decline membership from 50% to 30.5% from the period 1984-1998

31. Medical Insurance Private Health Insurance : Coverage –Provides choice of doctor, choice of hospital and choice of timing of procedure. –Meeting the demand of those not covered by Medicare, such as dental, optical, physiotherapy and podiatry services.

32. Medical Insurance Private Health Insurance : community rate –Charge everyone the same premium regardless of health status and claims history. Ensure the aged and chronically ill are not priced out of PHI –To support community rate by “reinsurance system” – redistribute the costs of claims across all PHI funds

33. Problems and Challenges

34. Raising health expenditure Financial viability of Private Health Insurance funds Shortage of health care worker

35. Raising health care expenditure Total expenditure has increased on average each year since 1970 Spend 8.5 % of GDP increased to 9.3% of GDP from 1996 to 2001

36. Raising health expenditure Rapid ageing population Increased use of public sector services Higher community expectations Increase use of expensive technology

37. Raising health care expenditure Ageing population –Improvement in life expectancy since 1970s –Number of aged over 65 is predicted to rise from 2.4 million people to 5 million –Increasing from 12% of the population in 2001, up to around 21% of the population in 2031

39. Raising health care expenditure Ageing population: impact of health service –Health service demand will increase with growing proportion of the aged –Studies found that health expenditures are concentrate in the last few months of life

40. Raising health expenditure Increased use of public sector services –Proportion of population with private health insurance fell after the introduction of the Medicare –Putting pressure on public sectors

41. Raising health expenditure Higher community expectation –Consumer dissatifaction in Australia with some aspects of the health care system, such as consumer costs and hospital waiting list had risen over the last decade (Hall 1998-99) –Emergence of active and vocal consumer groups. –All Australian states have developed consumer rights and complaints procedures

42. Raising health expenditure Increase use of expensive technology –Public health policy expert: International report indicate that technology is actually accounting for two-thirds of the price pressure in health care

43. Viability of Private health insurance PHI fell from over 60% in 1983 to 30.1% in 1998 Up to 45.1% after policy intervention Still have about a 15% drop in participant

44. Viability of Private health insurance High premium cost and annual increases High co-payment for medical components Competition with a free, good quality public system Community rating

45. Shortage of health care workforce Growth of demand for medical services Ageing workforce Changes in participation (as measured by hours worked per week)

46. Shortage of workforce 14 non-information and communications technology professions on the Australian Government Department of Employment and Workplace Relations national skill shortage list

47. Shortage of staff Percent reporting serious shortages of: AUSCANNZUKUS Nurses2330112231 Pharmacists2633142714 Specialists or consultation physicians 112671716 Trained managerial staff 512063 Lab technicians390174

48. Nursing shortage Continuing decrease in number per 100,000 population – from 1202 in 1997 to 1191 in 2003 50% of nurses work part time in 2003 (up from 46.8% in 1993) Percentage of nurses over the age of 45 continues to increase (17.5% in 1986, 30.3% in 1996, 37.3% in 1999, 41.7% in 2004)

49. Thank You Q & A