The federal government’s Commission of Audit makes this assertion: “Co-payments send a clear price signal to all consumers that medical services come at a cost, which may reduce demand for unnecessary or overused services.”
This statement begs two important questions: How do we judge (prospectively) what services are “unnecessary”? What do we know about how price signals work?
The first question is the most concerning. We have all experienced worries about things that, with the benefit of hindsight, later seemed trivial. In most cases we could not have known in advance there was little to worry about.
So how do patients know when their health concern in “unnecessary”? Do we have any information about the percentage of Medicare-billed services judged to be “necessary”? If so, what were the criteria used to make that judgement?
If the implication is that the current number of Medicare services is “too high”, then what is the right number? If we discourage “unnecessary” services do we encourage more “necessary” ones and therefore have a better health system, or do we aim to deliver less services overall?
Studies of emergency department attendances have shown that, in most cases, people have a good idea about what service meets their need, and make selections that are at least as appropriate as the advice given by telephone triage lines dedicated to this purpose.
An Australian Institute of Health and Welfare report on GP services between 2000 and 2010 found the greatest increase in attendances during the time period was for vaccinations. This would normally be regarded as a measure of success.
So, if the Commission of Audit’s suggestion that current use of Medicare services is “excessive” is debatable, what about their assumption about the effectiveness of price signals?
My fellow MJA InSight author, Dr Aniello Iannuzzi, has drawn a comparison between the copayment and the carbon tax. Many would argue that the purpose of the proposed carbon tax was not just to raise revenue, but also to encourage industry and consumers towards less pollution — a price signal.
So did this price signal work? Despite widespread alarm about increasing electricity prices, how many in the general community have reduced their power use?
Those of us with the means continued to drive through our automatic garage doors, watch our large flat-screen TVs* or sit at our buzzing computers in buzzing air-conditioning. Our gardens are still lit by proximity-triggered lights and watered by powered sprinkler systems. We have bigger fridges, faster clothes dryers and hotter dishwashers.
Meanwhile, the impoverished and the elderly have reduced their power consumption by turning off more lights, huddling in bed under a quilt and watching a small TV. They will use little heating in winter or coolers in summer — economising as they always have.
Will another $7 in the burden of bills lead them to also cut back on essential medical care?
Effective strategies for either containing or funding health care costs are certainly required. What the government has proposed, however, is a questionable strategy based on questionable assumptions.
As a community, we need to think very carefully about where a copayment strategy will take us.
Dr Sue Ieraci is a specialist emergency physician with 30 years’ experience in the public hospital system. Her particular interests include policy development and health system design, and she has held roles in medical regulation and management.
* Disclaimer: the author has neither a garage door nor a flat-screen TV.