Inquiry into the out-of-pocket costs in Australian healthcare

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1 Submission to the Senate Standing Committee on Community Affairs - References Committee Inquiry into the out-of-pocket costs in Australian healthcare May 2014 Out-of-pocket costs in Australian healthcare 1

2 INTRODUCTION Services for Australian Rural and Remote Allied Health (SARRAH) welcomes the opportunity to provide a submission to the Senate Inquiry into the out-of-pocket costs in Australian healthcare. SARRAH is nationally recognised as the peak body representing rural and remote allied health professionals (AHPs) working in the public and private sector. The primary object for which the SARRAH is established is to advocate for, develop and provide services to enable AHP s who live and work in rural and remote areas of Australia to confidently and competently carry out their professional duties in providing a variety of health services to rural and remote Australians. SARRAH s representation comes from a range of allied health professions including but not limited to: Audiology, Dietetics, Exercise Physiology, Medical Radiation Science, Occupational Therapy, Optometry, Oral Health, Pharmacy, Physiotherapy, Podiatry, Psychology, Social Work and Speech Pathology. These AHPs provide a range of clinical and health education services to individuals who live in rural and remote Australian communities. AHPs are critical for the management of their clients health needs, particularly in relation to chronic disease and complex care needs. SARRAH maintains that every Australian should have access to equitable health services wherever they live and that allied health professional services are basic and fundamental to Australians health care and wellbeing. SARRAH recognises rural and remote as a continuum of communities outside major metropolitan centres of Australia and is committed to ensuring that people living in these areas have equitable and high quality access to allied health services. COMMENTS AGAINST THE TERMS OF REFERENCE The following comments aim to specifically address the terms of reference of the Inquiry, whilst highlighting the need to recognise the important gaps in the provision of services in rural and remote communities. a. the current and future trends in out-of-pocket expenditure by Australian health consumers; People who live in rural or remote Australian communities experience poorer health outcomes on a wide range of health measures than those people who reside in metropolitan areas. The overall health status of people worsens on a continuum as they move away from metropolitan centres. Contributing factors include: Greater social and economic disadvantages such as reduced opportunities for education and skilled employment and higher costs of living; Poorer access to health services and a range of health professionals in particular AHPs; Higher levels of health risk behaviours such as smoking, binge drinking and lack of physical activity; Lower environmental factors including poorer housing, greater distances travelled and higher risk occupations; and Out-of-pocket costs in Australian healthcare 2

3 Higher proportions of vulnerable population groups, including but not restricted to Aboriginal and Torres Strait Islander people, people living with disabilities, people from culturally and linguistically diverse backgrounds and older people. Health care planning, programs and service delivery models must be implemented to meet the widely differing health needs of rural and remote Australian communities. This approach will contribute towards overcoming the challenges of geographic spread, low population density, limited infrastructure and the significant higher cost of health care delivery in the bush. A significant component of out-of-pocket expenditure for people residing in rural and remote settings is the cost of travel to access health services. These costs are higher with increasing rurality. Recommendation 1: Governments enhance their effectiveness towards implementing strategies creating equitable health services and reducing the gap in social inequity. b. the impact of co-payments on: (i) consumers' ability to access health care, and (ii) health outcomes and costs; A consumer s ability to access health services and improve the impact on their health outcomes is affected by many factors including income/socio-economic status, rurality, race and other social determinants of health. Furthermore, consumers who are disadvantaged, including those who reside in rural and remote communities as well as Indigenous Australians experience increased health adversity. Some examples of how co-payments have an adverse impact on consumers follow: Rural and remote hospital emergency services are predominantly staffed by General Practitioners, and consumers currently pay an out-of-pocket gap above the Medicare Benefit Schedule (MBS) rebate for most services provided. Health care services available in a rural hospital are often limited. For example, the lack of Magnified Resolution Image scanners and radiotherapy services result in adverse impacts on health outcomes followed by longer journeys to access such services. In the case of the latter, lengthy stays away from home can be up to 6 weeks for radiotherapy treatment. Alternatively, services may not be affordable and consequently consumers do not access appropriate treatments in a timely manner. Often consumers accessing the majority of health services are already paying more than the average Australian for their health care. A co-payment may result in more consumers not accessing the required health care and increasing the complexity and/or severity of future presentations as well as having an adverse impact on their longer term health and well-being. Rural and remote consumers generally have reduced access to pharmacy services, such as medication counselling and Home Medicines Review. This reduces the likelihood of medication adherence whilst increasing the risk of medication misadventure and avoidable hospitalisation. Out-of-pocket costs in Australian healthcare 3

4 Cost of medications is already a significant issue in Australia. Consequently any increase in medication co-payments will affect vulnerable populations such as those on low incomes and patients with chronic medical conditions taking multiple medications. To deal with increased costs, patients often reduce or stop taking their medicines which can have serious health consequences leading to increased visits to a General Practitioner and/or hospitalisations. There is a relationship between consumer cost sharing, medication adherence and lower clinical/health and economic outcomes. Well managed chronic disease ultimately decreases the overall national health burden, with a large proportion of governments health budgets currently being spent on preventable conditions. Government policies and systems that place an emphasis on supporting good quality primary health care will ultimately result in a cost-benefit to all Australians rather than having a health system where only those who can afford it are accessing the required coordinated health care. Recommendation 2: Government should not extend its co-payment policy because it will further decrease the ability of disadvantaged Australians to access the required health care services particularly those people who reside in rural and remote Australia. c. the effects of co-payments on other parts of the health system; Consumers who reside in rural and remote communities experience barriers in accessing health services as outlined earlier in this submission. For example, consumers have to pay significant extra costs for travel and accommodation to access specialist services. Another area where co-payments have an impact is where consumers must have a referral from a General Practitioner for a consultation with certain allied health professions working in private practice and to access funding under the MBS. In many rural and remote communities this structured process blocks access to services where there is no General Practitioner to initiate the referral for the consumer to access these AHP services or alternatively no private AHPs available locally. Both scenarios impact adversely on the consumer s options for appropriate and timely health care services. Recommendation 3: Government amend its policy to allow consumer s direct access to MBS funded AH services to facilitate coordinated and well managed care reducing the burden on the MBS by eliminating the requirement for a referral from a General Practitioner. d. the implications for the ongoing sustainability of the health system; SARRAH supports the World Health Organisation s view of world s best practice health system which is one that is led by Primary Health Care (PHC), where the focus is on health promotion, illness prevention, early intervention, and acute and chronic disease management in the community. PHC must be viewed as the foundation principles for achieving the best and most equitable health and well-being for people across all communities within a nation. Out-of-pocket costs in Australian healthcare 4

5 The National Rural Health Alliance, of which SARRAH is a member, states that there is a total rural health deficit in rural and remote areas of at least $2.1 billion a year. This equates to a shortage of 25 million services, and it includes the rural MBS deficit which has now reached $1 billion a year. 1 Health Workforce Australia emphasises that whilst the rural and remote sectors have some issues in common, there are also some stark differences. The biggest, for example, is the relative absence of medical practitioners in remote areas. Remote health is predominantly reliant on the core workforce of Aboriginal and Torres Strait Islander health workers, remote area nurses with support from a range of multi-disciplinary health professionals such as allied health professionals who fly in fly out (FIFO) or drive in drive out (DIDO). 2 As mentioned earlier in this submission SARRAH contends that access to allied health services should be equitable across Australia. Inequitable access to MBS funded allied health services and other Australian Government programs such as the Helping Children with Autism and Better Start is contributing to poorer health outcomes for non-metropolitan Australians. Recommendation 4: Government provide greater equity in programs and incentives available to support AHP s practising in rural and remote Australia. e. key areas of expenditure, including pharmaceuticals, primary care visits, medical devices or supplies, and dental care; Oral health is a critical element in the multi-disciplinary team delivering PHC services. Consumers direct out-of-pocket expenses were 58.1% of the $7.9 billion spent on dental services in compared to 27.2% or $2.1 billion funded by governments 3. The average out-of-pocket expense for individuals using dental services in was $203 per service. This places enormous financial burdens on patients from lower socioeconomic backgrounds, including rural, regional and remote families. Of the $2.1 billion in government funding on dental services in , state and territory governments provided a total of $700 million. Private Health Insurance currently funds only 14% of total dental expenditure in Australia. 1 National Rural Health Alliance Inc, 2011, Fact Sheet 27: The extent of the rural deficit, March 2011, Accessed from: sheets/fact Sheet 27 %20the%20extent%20of%20the%20rural%20health%20deficit_0.pdf, 27 April National Rural and Remote Health Workforce Innovation and Reform Strategy (2013), Accessed from: https://www.hwa.gov.au/sites/default/files/hwa13wir013_rural and Remote Workforce Innovation and Reform Strategy_v4 1.pdf, May Chrisopouloss S and Harford JE, 2013, Oral health and dental care in Australia: key facts and figures Cat. No.DEN224 Canberra. Australian Institute of Health and Welfare. Out-of-pocket costs in Australian healthcare 5

6 Recommendation 5: Government increase its financial contribution towards the provision of dental services particularly in rural and remote communities. f. the role of private health insurance; The limited availability of private health services in rural and remote Australia directly affects the capacity of private health insurance to assist consumers residing in those settings with their out-of-pocket health costs. Australia s health care system fails to promote equitable workforce structures and allocations to rural and remote regions, particularly in relation to allied health private practice. This situation directly contributes to market failure and the inability to sustain allied health private practices in the bush. g. the appropriateness and effectiveness of safety nets and other offsets; SARRAH acknowledges the government s attempts to partially meet consumer out of pocket expenses through the use of safety nets and other offsets. However, current policies do not address the existing inequities and burden placed on rural and remote Australians in accessing healthcare services. h. market drivers for costs in the Australian healthcare system; The Australian Institute of Health and Welfare research shows that for: Hospital services, there is a strong increase in the number of public hospital separations and expenditure with the remoteness of the patient s residence, especially in relation to overnight and acute hospital separations. Australians living in the most remote areas of the nation accounted for over twice the per person expenditure levels on these services compared with Australians living in major cities. Almost all MBS services, such as for general practitioners and specialists, the opposite trend is present - with service usage levels being highest for residents in the more urban areas and lowest for those in regional and remote areas. 4 Current access to appropriate health services for people in rural and remote Australia would be enhanced by improving the infrastructure required to adequately support quality e-health systems and processes such as telehealth. For example: Providing access to an effective National Broadband Network with appropriate information and communication technology solutions. Funding models of care to improve service linkages to local communities such as hub and spoke models. 4 Australian health expenditure by remoteness: a comparison of remote, regional and city health expenditure (2011); Accessed from detail/?id= , May 2014 Out-of-pocket costs in Australian healthcare 6

7 i. any other related matter. SARRAH will continue to advocate for governments to address consumers inadequate access to AHP services, through implementing initiatives that address the underlying causes of workforce maldistribution in the bush. The primary barrier to addressing the lack of AHP services in the bush is insufficient workforce numbers to meet community needs. This is largely about insufficient jobs being available in rural and remote areas, rather than recruitment and retention problems in the first instance. For example, when an AHP who is employed or contracted to deliver services in rural and remote settings leaves a position, funding is generally withdrawn and reallocated to another service area. CONCLUSION SARRAH strongly supports this inquiry into out-of-pocket costs in Australian healthcare and will continue to develop and support initiatives that adequately address the needs of rural and remote communities and AHPs in partnership with government and other stakeholders. Consequently, SARRAH would welcome the opportunity to elaborate on this submission. Out-of-pocket costs in Australian healthcare 7

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