Is Medicare sustainable? and, Is this question helpful or not?

Transcription

1 Is Medicare sustainable? and, Is this question helpful or not? Stephen Duckett AHHA Roundtable 30 th Anniversary of Medicare Canberra January 2014

2 Agenda Policy memes Some facts about costs and health status Some non-solutions Some solutions 2

3 The problem Health spending is unsustainable Health costs are out of control Or are they? 3

4 Cost per Head International average Best performing quadrant above international average Worst performing quadrant above international average (more PYLL=worse) Potential years of life lost

5 Australia is in the good quadrant USA OECD average Canada Don t forget this is an average: there is considerable within country variation Australia 5 5

6 Initially stable, health care now increasing as GDP share Projected to grow to 12.4% of GDP in

7 Health major component of government spending (and spending growth) per cent change above CPI, to

8 Hospitals major component of public health spending (and spending growth) 100 per cent change above CPI, to Hospitals Other Private health insurance Pharmaceuticals Primary care and medical services GDP NFS $bn spent in , in $2012 8

9 Almost 2/3 rds of real health spending increases came from factors other than population growth, ageing, and inflation Breakdown of total real spending growth in health ( to ) Millions of dollars $16,000 $14,000 $12,000 $10,000 $8,000 Other Health inflation (beyond CPI) Ageing Population growth $6,000 $4,000 $2,000 $0 -$2,000 Public hospitals Medical services Medication Private hospitals Research Community health Dental Other Sources: AIHW; ABS; DOHA 9

10 Death rate for conditions amenable to health interventions is going down 250 Amenable mortality per 100,

11 Self reported health status is improving Per cent of population reporting fair or poor health status

12 Sustainability panic Is a distraction, avoiding dealing with the inevitable Often leads to panic type solutions 12

13 The story so far Health spending is increasing as share of both GDP and government budgets We are getting something in return Should we do something or nothing? 13

14 The story so far Health spending is increasing as share of both GDP and government budgets We are getting something in return Should we do something or nothing? But a glacier not a tsunami: careful changes are what is needed not big bang shifts 14

15 Some non solutions Shift costs to consumers Privatise or perish Reduce services 15

16 Netherlands Denmark Luxembourg United Kingdom New Zealand Sweden Italy France Germany Austria West Europe average Belgium Spain Ireland Canada Australia Portugal Switzerland Greece United States Australia is already at the high end in terms of out-of-pocket share Per cent health expenditure 100% 80% 60% 40% 20% Other private (including private health insurance) Out of pockets Public 0% 16 16

17 Low income households spend a higher proportion of income on health than high income households $ 17 17

18 The objects of policy One dimension of access Financial Timely Geographic 18 18

19 Sensible solutions Reorienting the system Eliminating waste Focussing on efficiency which isn t the same as budget cuts, especially in the context of unmet demand Efficiency means both technical efficiency and social efficiency doing things right and doing the right things Aligning incentives 19

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21 There is a significant difference in revision rates for different prostheses Data source: Australian Orthopaedic Association. National Joint Replacement Registry

22 Simple benchmarking suggests cost variations could be large Deviation in cost per separation (weighted by DRG) $10,000 $8,000 $6,000 $4,000 $2,000 $0 -$2,000 -$4,000 -$6,000 Lowest-cost hospital ($4000 per weighted sep cheaper than average) 22

23 Benchmarking hip replacements 1: state comparisons Average cost of hip replacements by hospital, STATE A B C D E F Range Median $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $/separation >$10,000 difference between average cost in best and worst performing State 23

24 Benchmarking hip replacements 2: comparing hospitals that have high volumes of hip replacements Cost of hip replacements in the six highest-volume hospitals, High volume hosptials Admissions Average A B C D E F $0 $10,000 $20,000 $30,000 $40,000 $50,000 $/separation Scale does not seem to be driving results 24

25 So where to from here? Sustainability panic vs hard yards: where you start might determine where you end up Australia has a good health system in international terms That doesn t mean that we can t improve it Improvement means just that sensible change sensibly implemented With this, Medicare will be sustainable stephen.duckett@grattan.edu.au 25