ANCILLARY AND SPECIALIST HEALTH SERVICES: DOES LOW INCOME LIMIT ACCESS? Deborah Schofield

ANCILLARY AND SPECIALIST HEALTH SERVICES: DOES LOW INCOME LIMIT ACCESS? Deborah Schofield Discussion Paper No. 22 June 1997

National Centre for Social and Economic Modelling Faculty of Management University of Canberra The National Centre for Social and Economic Modelling was established on 1 January 1993, following a contract between the University of Canberra and the then federal Department of Health, Housing, Local Government and Community Services (now Health and Family Services). NATSEM aims to enhance social and economic policy debate and analysis by developing high quality models, applying them in relevant research and supplying consultancy services. NATSEM s key area of expertise lies in developing and using microdata and microsimulation models for a range of purposes, including analysing the distributional impact of social and economic policy. The NATSEM models are usually based on individual records of real (but unidentifiable) Australians. This base produces great flexibility, as results can be derived for small subgroups of the population or for all of Australia. NATSEM ensures that the results of its work are made widely available by publishing details of its products and research findings. Its technical and discussion papers are produced by NATSEM s research staff or visitors to the centre, are the product of collaborative efforts with other organisations and individuals, or arise from commissioned research (such as conferences). Discussion papers present preliminary research findings and are only lightly refereed. Its policy papers are designed to provide rapid input to current policy debates and are not externally refereed. It must be emphasised that NATSEM does not have views on policy and that all opinions are the authors own. Director: Ann Harding

National Centre for Social and Economic Modelling Faculty of Management University of Canberra ANCILLARY AND SPECIALIST HEALTH SERVICES: DOES LOW INCOME LIMIT ACCESS? Deborah Schofield Discussion Paper No. 22 June 1997

ISSN 1320-3398 ISBN 0 85889 623 0 NATSEM, University of Canberra 1998 National Centre for Social and Economic Modelling GPO Box 563 Canberra ACT 2601 Australia Phone: + 61 6 275 4900 Fax: + 61 6 275 4875 Email: Client services General World Wide Web site hotline@natsem.canberra.edu.au natsem@natsem.canberra.edu.au http://www.natsem.canberra.edu.au Core funding for NATSEM is provided by the federal Department of Health and Family Services.

iii Abstract Australia s public health system currently provides substantial funding to ensure that, among its other objectives, all families have access to hospital, medical and pharmaceutical services irrespective of their incomes. However, most ancillary health services are not similarly subsidised and there is some evidence that low income is a barrier to the use of these services. There is also evidence that low income might reduce access to specialist medical practitioner services which, while funded through Medicare, are less likely to be bulk billed than general practitioner services, and which therefore attract higher out-of-pocket costs. In this study the 1989-90 national health survey is used to examine whether there are indicators that low income reduces access to a range of ancillary services such as physiotherapy, optical services, chiropractic and dental services and specialist medical practitioner services. In addition, the potential impact of the private health insurance rebate on access to ancillary health services is examined.

iv Author note Deborah Schofield was a Research Fellow at the National Centre for Social and Economic Modelling when most of this project was undertaken and a Research Fellow at the Australian Institute of Health and Welfare when it was completed. Acknowledgments The author would like to thank the staff members from the professional associations as well as her colleagues from the Australian Institute of Health and Welfare who provided background information and data for this paper. In particular, Warwick Conn and John Harding are gratefully acknowledged for making available information on the patterns of employment of Australia s health workforce. The author would also like to thank Ross Saunders, Geoff Sims and Warwick Conn for refereeing the paper and Richard Percival and Lynelle Moon for providing helpful comments on an earlier draft. General caveat NATSEM research findings are generally based on estimated characteristics of the population. Such estimates are usually derived from the application of microsimulation modelling techniques to microdata based on sample surveys. These estimates may be different from the actual characteristics of the population because of sampling and nonsampling errors in the microdata and because of the assumptions underlying the modelling techniques. The microdata do not contain any information that enables identification of the individuals or families to which they refer.

v Contents Abstract Author note Acknowledgments General caveat... iii...iv...iv...iv 1 Introduction... 1 2 Inequality in access to ancillary and specialist health services... 2 3 The availability and cost of ancillary and specialist services... 3 4 Who uses ancillary and specialist services?... 7 4.1 Methodology and data source...7 4.2 Dental services...8 4.3 Physiotherapy services...10 4.4 Chiropractic services...11 4.5 Podiatry and chiropody services...12 4.6 Dietary services...13 4.7 Naturopath, herbalist and acupuncture services...14 4.8 Optometry services...15 4.9 Specialist medical practitioner services...16 4.10 Summary...18 5 Access to ancillary and specialist services the relationship with private health insurance... 19 5.1 Private health insurance rebate...19 5.2 Relationship between ancillary insurance, income and the use of ancillary services...21 5.3 Potential impact of the private health insurance rebate on the use of ancillary services...23 6 Summary and conclusions... 25 References... 27

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1 1 Introduction Although there is debate in Australia about the appropriate mix of public and private health services, it is widely accepted that one of the government s key responsibilities is to ensure the integrity and efficiency of the health system and the wide availability and affordability of health services. To this end, taxpayer funded public medical insurance is provided through Medicare and the Pharmaceutical Benefits Scheme. These programs heavily subsidise the cost of basic health items medical practitioner services, hospital services and pharmaceuticals. Available evidence suggests that services included in these subsidy arrangements are accessible to people from all income groups. For example, a study for the National Health Strategy (1992a, p. 105) reported that universal coverage has been instrumental in removing barriers to access of health services and that access to basic health care services provided under Medicare is equitable. Scott (1996) found that doctor and hospital services remain equitably distributed by income even after accounting for need. 1 However, while access to basic health services may be generally equitable, there are indicators that access to other health services might not be so equitable and, in particular, that low income may be a barrier to their use. These non-basic health services include ancillary services (such as dental and physiotherapy services) and out-of-hospital specialist medical practitioner services. If access were much less equitable, then it would indicate that Australia s health system is, in effect, two tiered. The first tier would include the heavily subsidised health services that are accessible to the rich and the poor alike, and the second tier is the unsubsidised or less heavily subsidised services that are less likely to be accessible to the poor. 1 While access to basic health services may be broadly regarded as equitable, there is some evidence of inequality associated with access to specific services or with persons in specific locations. For example, people on lower incomes may wait longer for elective surgery because they are less likely than people on higher incomes to have private health insurance (National Health Strategy 1991, p. 164 6; Moon 1996, pp. 44 5), while Weston (1996) demonstrated that in some areas of Australia bulk billing even for the needy is limited.

2 Discussion Paper No. 22 In this context it is significant to note that people on lower incomes have been identified as having poorer health than those on higher incomes (see, for example, National Health Strategy 1992a, p. 105, and Taylor 1979). If low income is a barrier to the use of some health services it is likely that this barrier aggravates some of the existing disadvantages of low income groups. To determine whether there are indicators that Australia s health services are two tiered, this study examines the use of a range of ancillary health services and specialist medical practitioner services by people in different income groups. Medical insurance, be it public or private, has been one approach to improving access to health services. However, private medical insurance is a significant cost for many low and middle income earners (Schofield and Fischer 1997). To help reduce this cost, and hopefully to encourage more families to take out private health insurance, the government will introduce in July 1997 subsidies for the purchase of private health insurance by low and middle income groups (Commonwealth of Australia 1996). These subsidies, which will take the form of a tax rebate, will take into account ancillary insurance. 2 Inequality in access to ancillary and specialist health services There is a small but growing body of evidence that suggests that, although programs such as Medicare address potential inequality of access to basic health services, there is still serious inequality in terms of access to some health services. Qualitative research by ACOSS (1993, pp. 26 7, 31) concluded that people on low incomes had difficulty accessing ancillary services, particularly dental care. It also concluded that the costs of private physiotherapists, chiropractors and a range of natural therapists placed their care beyond the reach of most participants in the study. ACOSS s findings on dental care were echoed in a study for the National Health Strategy (1992a, p. 82) which reported that people on low incomes made disproportionally lower use of dental services.

Ancillary and Specialist Health Services: Does Low Income Limit Access? 3 A possible explanation for these findings was provided by McClelland (1991, pp. 7, 9) who noted that people on low incomes who used dental and specialist medical practitioner services were spending a significant proportion of their income on these services. Scott (1996) also found that people on low incomes were considerably less likely to use specialist medical practitioner services than were people on higher incomes. It was reported that the 20 per cent of people with the highest incomes (the top quintile) were 64 per cent more likely to visit a specialist medical practitioner than those in the bottom income quintile. In an earlier study Gibson (1983, pp. 79, 84), who focused on elderly Australians, reported that people with the highest incomes were more likely to use podiatry and dentistry services than people with the lowest incomes. Apart from income, geographic accessibility was also found to be a major problem, with services not being available in many areas. However, Gibson (p. 85) also reported that the poorer aged were not significantly less likely than those on higher incomes to use medical, optical or aural services. 3 The availability and cost of ancillary and specialist services If the costs of using privately provided ancillary and specialist medical practitioner services are high, these costs are likely to reduce access to those services. This is particularly likely to be the case where there are few free public services or where public ancillary health services have long waiting lists. An important indicator of the availability of public services is the ratio of the provision of services by the public and private sectors. To examine this ratio, data on public and private employment of health professionals from the 1991 census were examined. As table 1 shows, the proportion of each allied health profession employed by public bodies varies considerably across the professions. More than 95 per cent of chiropractors, osteopaths and dentists worked as private practitioners, indicating that these services might be least accessible to people on low incomes. By contrast, only about 50 per cent of physiotherapists and 16 per cent of dietitians were employed

4 Discussion Paper No. 22 privately, indicating that these services might be more accessible to low income families. To examine the out-of-pocket costs for private services, the schedule fees for standard ancillary consultations were obtained from the professional association for each allied health service. (The dental association does not have a schedule of fees, but was able to provide average fees for Australia.) The fees for the services examined varied markedly (table 2). A standard dental visit was the most expensive at $54.90, while a standard visit to a dietitian was the least expensive at $28.00. Table 1 Employment sector of allied health occupations, Australia, 1991 Health sector Proportion Health occupation Public Private private no. no. % Chiropractors and osteopaths 10 1 470 99.3 Dental practitioners 250 5 990 96.0 Podiatrists 170 820 82.8 Physiotherapists 2 620 3 060 52.0 Dietitians a 1 029 497 15.9 a Data as at February 1990. Note: There were no data available on the public provision of services by natural therapists. Sources: ABS (1993); Dietitian s Association of Australia. Table 2 Schedule of fees for allied health professionals in private practice, 1996 Health service Schedule fee $ Dietitian 28.00 Podiatrist 34.00 Chiropractor 34.00 Physiotherapy 38.60 Dentist 54.90 Naturopath 40.00 120.00 a a The fees for a standard consultation with a naturopath vary markedly according to the Australian Traditional Medicine Society because the fee might include herbal medicines and are more expensive in metropolitan areas where overheads are higher. Note: A schedule fee refers to a standard session in New South Wales. For dental visits this is a single filling and for other practitioners it is a standard repeat consultation. Fees vary between states and for other types of consultations. In addition, these schedules of fees are a guide only, and health professionals are free to set their own rates. Sources: Dietitian s Association of Australia; Australian Physiotherapy Association; Chiropractors Association of Australia; Australian Traditional Medicine Society; Australian Dental Association; Australian Podiatry Association.

Ancillary and Specialist Health Services: Does Low Income Limit Access? 5 Fees for services other than standard consultations can be considerably more expensive than those shown in table 2. Initial consultations were often more expensive (for example, physiotherapist $48.30, dietitian $61 and chiropractor $68), although an initial dental consultation, at $30.40, was cheaper than an appointment with treatment. Even more expensive were specialised or long consultations. For example, a crown and bridge cost, on average, $793 in 1995, and a complete set of maxillary and mandibular dentures cost $962. Some associations include a schedule of fees with a reduced rate for concessional patients. However, the offer of concessional rates is normally at the discretion of each practitioner. This was not the case for dentists, who charge reduced rates for patients covered by certain government programs (such as Veterans Affairs payments), with these rates being set by the federal government. Turning to the second group of services considered in this study, Medicare subsidised services (private specialist medical practitioners and optometrists), an analysis of the private and public provision of these services showed that a high proportion of these practitioners work in private practice almost all optometrists (99 per cent) and most specialist medical practitioners (66 per cent). The remaining specialist medical practitioner services are provided free of charge through outpatient clinics at public hospitals. Because optometrist and specialist medical practitioner services are subsidised through Medicare at a rate of 85 per cent of the schedule fee with a maximum gap of $50.00 between the schedule fee and the benefit (Department of Health, Housing, Local Government and Community Services 1993), income should be less of a barrier than to the nonsubsidised ancillary services. However, relatively high out-of-pocket expenses for some of these services may still make them less accessible to low income earners. Commenting on out-of-pocket costs, McClelland (1991, pp. 7, 9) observed that a high proportion of income was outlaid by a small percentage of people on low incomes on specialist medical practitioner services as a result of specialists limited use of direct billing and their greater tendency to charge above the schedule fee. This pattern was also borne out by Medicare statistics for 1994-95, which indicated that out-of-hospital services provided by specialist medical

6 Discussion Paper No. 22 practitioners were less likely to be bulk billed than those provided by any other medical practitioners. Only about 40 per cent of out-of-hospital patients were bulk billed (table 3). Emergency medicine specialists, plastic surgeons and orthopaedic surgeons were the least likely to bulk bill (4 per cent, 14 per cent and 17 per cent of services respectively), while fertility and abortion specialists were the most likely (92 per cent of services). This compared with much higher average rates of bulk billing among general practitioners and optometrists (79 per cent and 93 per cent of services respectively). 2 Where a patient was not bulk billed, the average out-of-pocket cost associated with a visit to an out-of-hospital specialist medical practitioner ($16.12) was considerably more than for a visit to a general practitioner ($7.78) or an optometrist ($6.99). The highest average out-ofpocket costs were recorded for IVF specialists and nuclear medicine specialists ($28.47 and $24.26 respectively), although some specialties had relatively low average out-of-pocket costs (for example, $7.78 for clinical haematology services). Table 3 Fees for Medicare funded out-of-hospital health services, Australia, 1995 Health service Proportion bulk billed Schedule fee a Out-of-pocket cost a % $ $ Specialist medical practitioner b 39.7 63.53 16.12 Optometrist 92.9 46.83 6.99 General practitioner 78.5 26.21 7.78 a Patient billed services only. b Excludes services of pathologists, radiologists, dental practitioners and unclassified specialists. Sources: Australian Institute of Health and Welfare (1996b); Department of Health and Family Services, Medicare Statistics. 2 The data used do not identify whether the rate of bulk billing among people on low incomes was higher than among those on higher incomes, although there is evidence that this is the case (McClelland 1991, p. 60). Therefore, while it was possible to derive average out-of-pocket costs for all patients who are not bulk billed, it was not possible to derive the out-of-pocket costs for low income earners.

Ancillary and Specialist Health Services: Does Low Income Limit Access? 7 4 Who uses ancillary and specialist services? To determine whether low income 3 presented a barrier to the use of ancillary and specialist medical practitioners services, the use of each service was analysed across a range of income groups. 4.1 Methodology and data source The use of health services was estimated as the proportion of persons in each income group who used each health service. The estimate was age adjusted using least squares means from a series of regression models that modelled the relationship between the use of health services with age and income. This was done so that the results were not distorted by the clustering of the aged in the lower income groups. The data source used in the study was the 1989-90 national health survey (NHS) conducted by the Australian Bureau of Statistics (ABS 1990). The NHS is a sample survey of about 55 000 persons and contains a large number of important variables on socioeconomic and health service use. It includes persons of all ages, but excludes persons in institutions such as nursing homes. The NHS includes information on the use of a considerable number of ancillary health services as well as specialist medical practitioner services. The survey indicates whether each respondent had visited a physiotherapist, chiropractor, podiatrist, chiropodist or optometrist in the two weeks prior to the survey, or a dietitian, naturopath, herbalist or acupuncturist in the 12 months prior to the survey. 4 The survey also recorded the time since the last dental visit. However, it did not include 3 Low income was defined as persons in the bottom third of family incomes (with 33.9 per cent of persons in the $0 to $19 999 income range). Family income rather than individual income was used as it provides a better indication of available financial resources. To derive family income, information on personal income (income ranges) for the reference person and spouse of each family was used. The midpoint of the income range was used as an estimate of personal income and the sum of incomes for the reference person and spouse was used as a measure of family income. 4 The information on the use of these services is self-reported and there is the possibility of misreporting. For example, it is possible that some respondents might have said that they had attended a dietitian when they had actually seen a nutritionist.

8 Discussion Paper No. 22 visits to speech pathologists or occupational therapists. This is a significant limitation as a high proportion of these health professionals are in public employment (66 per cent of speech pathologists and 74 per cent of occupational therapists (ABS 1993)), and it would have been useful to be able to compare the use of these services with the use of health services mainly in the private sector. Visits to specialist medical practitioners were also recorded in the NHS. However, this information was not entirely reliable as the survey recorded only whether the most recent doctor visit in the two weeks prior to the survey was to a specialist medical practitioner. Accordingly, if a respondent visited both a specialist medical practitioner and a general medical practitioner, and the most recent visit was to a general practitioner, the visit to the specialist medical practitioner was not recorded. (This is important because persons who reported visiting a specialist in the previous fortnight commonly (29 per cent) reported making two or more doctor visits. This will certainly have resulted in a net underestimate of the use of private specialist medical practitioner services, and may produce bias in the distribution of the use of these services.) 4.2 Dental services An analysis of information on dental visits in the NHS showed that there was a marked positive relationship between income and dental visits. People from the lowest income families reported just over half the incidence of dental visits over a six months period that persons from the highest income group reported 21 per cent and 38 per cent respectively (figure 1). The apparent income barrier to dental services is probably directly related to the cost of dental care, as over 95 per cent of dentists work in private practice and their fees are the highest of any ancillary health service (see table 2). The availability of public dental services can be expected to be substantially reduced with the immediate cessation of the Commonwealth Dental Programme leading to a cut in expenditure on public dental services of $112.8 million in 1997-98 (Commonwealth of Australia 1996, p. 149).

Ancillary and Specialist Health Services: Does Low Income Limit Access? 9 Figure 1 Proportion of persons who visited the dentist in the six months prior to interview, by family income, Australia, 1989-90 40 35 30 25 20 15 % 0 9 10 19 20 29 30 39 40 49 50 59 60 69 70+ Annual family income ($'000) Note: The results are age adjusted. Data source: ABS (1990). Gaughwin et. al. (1996) reported that there is empirical evidence that inadequate dental care among children from low income families results in poorer dental health (measured by such factors as untreated decayed tooth surfaces and missing teeth) than among children from higher income families. Accordingly, income barriers to dental care have been linked to poor dental health. The results of this study are also consistent with findings reported by ACOSS (1993), the Australian Institute of Health and Welfare (1996a) and the National Health Strategy (1992a), which also found that dental services were less accessible to people on low incomes. The Australian Institute of Health and Welfare (1996a, pp. 174 7) suggests that not only do people on low incomes visit the dentist less often, but they are also more likely to wait until a dental problem emerges, losing the benefits of early detection from regular checkups and preventive care. In addition, patients attending a public dental clinic may have a further wait for treatment. It was found that 21 per cent of public dental patients waited more than six months for a dental checkup and 11 per cent waited more than six months for an appointment to treat an existing problem.

10 Discussion Paper No. 22 ACOSS (1993, pp. 26 7) graphically illustrated the difficulties that people with low incomes find in accessing dental care. The following comments were made by sole parents: I finally got it together to do something for my own health. I went to the dental hospital and was told it would be months. I just gave up. For example, I was quoted $1600 for root canal therapy and crowning for one tooth. I have already, unnecessarily lost a major tooth on that side due to being unable to pay for a crown and to lose a second one positioned as it is will render my mouth useless for chewing. Dental care is the first thing that goes as a single mum. I haven t had dental care in ten years. They don t bother to save your teeth in the public system. If you could afford a private dentist he d work to save your teeth. 4.3 Physiotherapy services As figure 2 shows, there is no clear relationship between physiotherapy and income. The groups least likely to have physiotherapy were middle income earners the incidence being 1.1 per cent of people earning from $30 000 to $39 000 a year. However, overall low family income groups were somewhat less likely to have physiotherapy than were high income groups. Figure 2 Proportion of persons who visited a physiotherapist in the two weeks prior to interview, by family income, Australia, 1989-90 2.5 2.0 1.5 1.0 0.5 0.0 % 0 9 10 19 20 29 30 39 40 49 50 59 60 69 70+ Annual family income ($'000) Note: The results are age adjusted. Data source: ABS (1990).

Ancillary and Specialist Health Services: Does Low Income Limit Access? 11 One reason why income may not appear to be such a barrier to the use of physiotherapy services is the relatively high proportion of physiotherapists (about 50 per cent) who provide services from within the public health system (that is, at no direct cost to the user). In addition, a reasonably high proportion of private patients are treated without incurring out-of-pocket costs as their treatment is paid for through workers compensation and insurance related to motor vehicle accidents approximately 35 per cent of private physiotherapy caseloads (Australian Physiotherapy Association, pers. comm., August 1996). Unfortunately, the NHS does not identify which patients incur out-ofpocket costs, limiting this study s ability to identify income barriers to treatment for patients who must pay for their own treatment. 4.4 Chiropractic services An analysis of the use of chiropractic services by different income groups revealed a pattern similar to that of dental care. People on low incomes were about half as likely to visit a chiropractor as those on the high incomes (figure 3). The lowest incidence was among people with family incomes of $10 000 to $19 999 a year (1 per cent), the highest incidence being among those with family incomes of $60 000 to $69 999 a year (1.9 per cent). Figure 3 Proportion of persons who visited a chiropractor in the 2 weeks prior to interview, by family income, Australia, 1989-90 2.0 1.8 1.6 1.4 1.2 1.0 0.8 % 0 9 10 19 20 29 30 39 40 49 50 59 60 69 70+ Annual family income ($'000) Note: The results are age adjusted. Data source: ABS (1990).

12 Discussion Paper No. 22 These findings are consistent with those of ACOSS (1993) which reported that access to chiropractors by low income earners was limited. They were seen as helpful health care practitioners, yet unaffordable. This result is not surprising as, like dentists, almost all chiropractors work in private practice and out-of-pocket costs are considerable at $34.00 per standard treatment. 4.5 Podiatry and chiropody services There was a slightly higher use of podiatry and chiropody services in the two weeks prior to the NHS survey among high income earners (1.4 per cent of persons with family incomes of $60 000 to $69 999 a year) than among low income earners (1.2 per cent of persons with family incomes of $0 to $9999 a year). It can be seen from figure 4 that the lowest reported use of podiatry and chiropody services was among families with incomes of $30 000 to $39 999 a year (1.0 per cent). The relatively small increase in the use of podiatry and chiropody services as income increased is surprising as over 80 per cent of podiatrists work in private practice. The explanation for this finding may well be that there is little public awareness of podiatry services, with Figure 4 Proportion of persons who visited a podiatrist or chiropodist in the two weeks prior to interview, by family income, Australia, 1989-90 1.4 1.3 1.2 1.1 1.0 0.9 0.8 % 0 9 10 19 20 29 30 39 40 49 50 59 60 69 70+ Annual family income ($'000) Note: The results are age adjusted. Data source: ABS (1990).

Ancillary and Specialist Health Services: Does Low Income Limit Access? 13 podiatrists representing only 0.4 per cent of the health workforce in 1991 (Australian Institute of Health and Welfare 1996a, p. 140). Accordingly, even patients who can afford to attend a private podiatrist might not seek treatment because they do not know that it exists. It is therefore possible that low income is a barrier for low income earners who do need treatment and are aware that it is available. There is also only limited access to publicly provided services, in that these clinics are not universally available, being limited to aged pensioners and diabetics. 4.6 Dietary services The pattern of use of dietary services was found to be the reverse of most other ancillary services included in this study (figure 5). Persons from low income families were more likely to visit a dietitian (1.7 per cent of persons with family incomes of $0 to $9999 a year) than high income earners (1.4 per cent of those with family incomes of more than $70 000 a year). People with family incomes of $30 000 to $39 999 were the least likely to use the services of a dietitian (0.7 per cent). There are two probable reasons for the higher use of dietary services by people with low incomes. The first is the relatively low proportion of dietitians in private practice (16 per cent). This is the lowest proportion Figure 5 Proportion of persons who visited a dietitian in the 12 months prior to interview, by family income, Australia, 1989-90 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 % 0 9 10 19 20 29 30 39 40 49 50 59 60 69 70+ Annual family income ($'000) Note: The results are age adjusted. Data source: ABS (1990).

14 Discussion Paper No. 22 of private employment among health service providers included in this study and indicates that obtaining dietary services at no cost is much easier than for other services. The second reason is that people on low incomes may also have a greater need of dietary services. First, they are more likely to be overweight. This is particularly the case among women from low income families. About 38 per cent of women from low income families are overweight compared with 26 per cent of women from high income families (Mathers 1994, p. 79). Second, poverty is considered the most difficult barrier to better nutrition, and those people with the least disposable income are at the greatest risk of poor nutrition (Lester 1994, p. 250). Third, people with low incomes have a higher incidence of diabetes than people with higher incomes including people who can manage their condition by diet alone (Meadows 1995). 4.7 Naturopath, herbalist and acupuncture services In this study the services of naturopaths, herbalists and acupuncturists were combined as natural therapies because the number of respondents who had visited a herbalist or acupuncturist was too small for separate analysis. The analysis of the use of natural therapies indicated that Figure 6 Proportion of persons who visited a natural therapist in the 12 months prior to interview, by family income, Australia, 1989-90 4.0 3.8 3.6 3.4 3.2 3.0 2.8 2.6 2.4 % 0 9 10 19 20 29 30 39 40 49 50 59 60 69 70+ Annual family income ($'000) Note: The results are age adjusted. Data source: ABS (1990).

Ancillary and Specialist Health Services: Does Low Income Limit Access? 15 people with the lowest incomes were the most likely to use these services (about 3.8 per cent). The use of the natural therapies declined as income increased (figure 6), with people from families earning from $60 000 to $69 000 using the fewest services (2.6 per cent). However, the use of these services among persons in the highest income group was second only to the use by people with the lowest family incomes. These results are somewhat unexpected in that people in these professions are almost exclusively in private practice and these services are relatively expensive (see table 2). These findings seem to contradict those from an ACOSS focus group which reported that access to homoeopathy and herbalists was limited because they were unaffordable (ACOSS 1993, p. 27). However, it may be that people with low incomes feel a greater need of (or greater preference for) these health services than people on higher incomes. 4.8 Optometry services While there is a positive relationship between the use of optometry services and income (figure 7), the pattern is much less pronounced than for some other ancillary services (most notably, dental services). About Figure 7 Proportion of persons who visited an optometrist in the 2 weeks prior to interview, by family income, Australia, 1989-90 2.4 2.3 2.2 2.1 2.0 1.9 1.8 1.7 % 0 9 10 19 20 29 30 39 40 49 50 59 60 69 70+ Annual family income ($'000) Note: The results are age adjusted. Data source: ABS (1990).

16 Discussion Paper No. 22 1.9 per cent of people with the lowest family incomes visited an optometrist in the two weeks prior to the NHS compared with 2.3 per cent of people on the highest incomes. The relative equality of use of optometry services probably results from Medicare funding of optometry services and the high proportion of optometry services that are bulk billed (93 per cent). The slight trend towards higher use among people on higher incomes might result from the associated cost of frames and lenses rather than optometry costs. 4.9 Specialist medical practitioner services An analysis of the use of specialist medical practitioner services by income indicated that people with low (and middle) incomes were considerably less likely to use these services than were people with high incomes (2.9 per cent of persons with family incomes of $0 to $9999 a year compared with 4.9 per cent of persons with family incomes of more than $70 000 a year) (figure 8). The pattern of specialist use, however, is interesting in that there is relatively little difference in the use of specialist medical practitioner services between the low and middle income groups, with a sharp increase in use by the top two income groups. These findings are consistent with those of McClelland (1991) Figure 8 Proportion of persons who visited a specialist medical practitioner in the two weeks prior to interview, by family income, Australia, 1989-90 5.0 4.5 4.0 3.5 3.0 2.5 2.0 % 0 9 10 19 20 29 30 39 40 49 50 59 60 69 70+ Annual family income ($'000) Note: The results are age adjusted. Data source: ABS (1990).

Ancillary and Specialist Health Services: Does Low Income Limit Access? 17 and Scott (1996) who reported that people with lower incomes had a lower use of specialist medical practitioner services than people with higher incomes. The positive relationship between the use of specialist medical practitioner services and income contrasts with the pattern of use of general medical practitioner services. The poor are more likely to visit a GP than the more well-off after adjusting for the effect of age (21.5 per cent of persons with family incomes of $0 to $9999 a year compared with 17.2 per cent of persons with family incomes of more than $70 000 a year (ABS 1990). These opposing patterns are of particular interest because the use of both general medical practitioners and specialist medical practitioners are subsidised through Medicare. The apparent poorer access for people on low incomes to specialist medical practitioners than to general medical practitioners probably results from three main factors. First, specialist medical practitioners are much less likely to bulk bill than general medical practitioners (40 per cent and 79 per cent respectively). Second, out-of-pocket costs associated with non-bulk billed specialist medical practitioners are considerably higher than those associated with general medical practitioners ($16.12 and $7.78 respectively). Third, patients on lower incomes might be referred to outpatient clinics for specialist medical practitioner treatment, where treatment is provided free of charge. There is some evidence that the limited use of private specialist medical practitioners by people on low incomes is counterbalanced by their greater use of outpatient services. A survey of general medical, arthritis and cardiology outpatient clinics in six hospitals (National Health Strategy 1992b, pp. 94 7) indicated that people in the lowest income group in this study (less than $12 000 a year) represented about 45 per cent of outpatients while people in the highest income group (over $50 000 a year) represented only about 5 per cent. This is an important consideration as some earlier studies have not noted this alternative source of treatment by specialist medical practitioners.

18 Discussion Paper No. 22 4.10 Summary The analysis of the use of ancillary and specialist health services indicates that some services were more heavily used by people on higher incomes than those on lower incomes. Most notable were dental, chiropractic and out-of-hospital specialist medical practitioner services. The difference in access between high and low income groups was probably the result of high out-of-pocket costs as these services are mainly provided through private practices. There was also some indication of a positive relationship between income and the use of podiatry and optometry services. However, this was less marked than that observed for dental, chiropractic and out-ofhospital specialist medical practitioner services. There was little clear evidence that the use of physiotherapy increased with income, but there was evidence that people on low incomes made the greatest use of dietary services and natural therapies. The pattern for dietary services may be explained by the high proportion of this health profession in public employment. The explanation for the physiotherapy pattern of use may be a combination of relatively high rates of public employment and the significant proportion of private patients whose costs were covered by an insurer. These findings do suggest that there are some ancillary and specialist health services which, because of their high out-of-pocket costs, fall into a second tier of health services that are less accessible to people with low incomes. However, those services provided largely through the public sector did not fall into this less affordable second tier. Two issues arise from these findings. The first is the possible shift of accessible services into the less accessible second tier as public funding is cut and the provision of private services becomes more common. This trend should be monitored over the next 5 10 years. The second is the identification of policy directions that might counter low income barriers to the use of ancillary and specialist services. There are three obvious options that could be considered. The first is to increase the public provision of services; the second is to subsidise the provision of private services directly (through a mechanism such as

Ancillary and Specialist Health Services: Does Low Income Limit Access? 19 Medicare); and the third is to indirectly subsidise services through private health insurance incentives. There has been some debate about the efficacy of providing more publicly funded services which, based on the results of this study, might be expected to reduce income barriers to the use of health services. For example, Gibson (1983) suggested that these services may suffer from funding limitations resulting in long waiting lists and Gibson, Goodin and Le Grand (1985) added that a tendency to centralise public services might create locational disadvantages. Gibson (1983) indicated a preference for publicly funding private practitioners and asserted that there is evidence that this option could be expected to improve equity of access. The third option is worth considering further as a private health insurance rebate is being introduced in July 1997. The potential impact of this policy on income barriers to the use of health services is discussed next. 5 Access to ancillary and specialist services the relationship with private health insurance 5.1 Private health insurance rebate From the analysis in chapter 4, it appears that in 1989-90 income was a barrier to accessing some health services. This was particularly the case for dental, chiropractic and out-of-hospital specialist medical practitioner services and, to a lesser extent, for podiatry and optical services. In this section, the possible impact of the federal government s incentives to take out private health insurance covering ancillary services on the use of these services is examined. On 1 July 1997 the federal government will introduce a private health insurance rebate (Department of Health and Family Services 1996). The rebate will vary across different family types, and different types of insurance will attract different rebates (table 4). The rebate will be available to single people with taxable incomes of up to $35 000 a year and to couples and families with dependants with a combined family taxable incomes of up to $70 000 a year.

20 Discussion Paper No. 22 Table 4 Annual rebates for private health insurance Family type Hospital Ancillary Comprehensive $ $ $ Single 100 25 125 Couple 200 50 250 Family with dependants a 350 100 450 a Families with dependants includes both couples with children and sole parents. Source: Department of Health and Family Services (1996). In addition, high income earners (that is, singles with income over $50 000 a year, and couples with combined incomes of more than $100 000 a year) without private health insurance will be charged an additional 1 percentage point on their Medicare levy (Department of Health and Family Services 1996). This will add a minimum of $500 a year to the levy. The private health insurance rebate is aimed particularly at low and middle income earners. Accordingly, it also targets the income groups with the lowest incidence of ancillary insurance. In 1990, only about 25 per cent of people with family incomes under $20 000 a year had ancillary insurance. The proportion rose to 44 per cent of people with a family incomes between $20 000 and $39 000 a year (table 5). By contrast, 71 per cent of people with the highest family incomes had ancillary insurance. Table 5 Proportion of persons with ancillary private health insurance, Australia, 1989-90 Family income Insured Uninsured % % 0 to $19 999 24.7 75.3 $20 000 to $39 000 44.0 56.0 $40 000 to $59 000 59.8 40.2 $60 000 or more 71.0 29.0 Source: ABS (1990).

Ancillary and Specialist Health Services: Does Low Income Limit Access? 21 5.2 Relationship between ancillary insurance, income and the use of ancillary services Using the Super Extras ancillary insurance option offered by Medibank Private 5, Australia s largest private health insurer, as an example, the possible impact of the rebate on the cost of ancillary insurance was examined. Super Extras cover is offered at a yearly advance-pay rate of $653.60 for families and $326.80 for singles (Medibank Private 1995). Accordingly, the rebate would cover about 8 per cent of the total cost of this type of ancillary insurance for single people and couples without children, and 16 per cent for families with children. For people who retained or took up private health insurance, their outof-pocket costs would be reduced considerably for a range of ancillary services, including those considered in this section. The insurance benefit substantially reduces the cost of podiatry and chiropractic services and halves the cost of dental treatment (table 6). Optical benefits cover frames and lenses that are in addition to the $6.99, which is the average remaining cost of the consultation. Ancillary insurance does not cover specialist fees. The reduction in the cost of treatment by allied health professionals offered by ancillary insurance might well reduce the income barrier to the use of these services, particularly for those with low incomes. Table 6 Effects of ancillary insurance on the costs of health services Health service Out-of-pocket cost Insurance benefit Remaining cost Annual limits per person $ $ $ $ Podiatrist 34.00 22.00 12.00 200 Dentist 54.90 27.00 27.00 0 a Chiropractor 34.00 22.00 12.00 300 Optometrist 6.99 180 Specialist medical practitioner 16.13 a There are limits on dental care such as dentures, crowns and bridges. Source: Medibank Private (1995). 5 The Super Extras ancillary insurance option was used as it covers all of the health services analysed in this chapter. Cheaper ancillary insurance is also available, such as Medibank Private s First Choice option; however, of the services studied, only dental and optical services are covered.

22 Discussion Paper No. 22 To test if this was the case, the use of health services by ancillary insurance status and income was examined. For this analysis two tests were used to determine whether having ancillary insurance improved access to health services. The first was whether people with low family incomes and ancillary insurance made greater use of health services than did uninsured people with low family incomes (horizontal equity of access). The second was whether people with low family incomes and ancillary insurance had access to these services similar to that of insured people with higher family incomes (vertical equity of access). The first test found that ancillary insurance was associated with higher use of health services. As table 7 shows, insured people with the lowest family incomes were about 25 per cent more likely to attend an optician, 35 per cent more likely to attend a podiatrist, 40 per cent more likely to attend a specialist medical practitioner, 50 per cent more likely to attend a dentist, and 80 per cent more likely to attend a chiropractor than were uninsured people with the lowest incomes. It was also found that people with ancillary insurance and the highest family incomes were Table 7 Use of health services by ancillary private health insurance status and family income, Australia, 1989-90 Family income Health service $0 19 000 $20 000 39 000 $40 000 59 000 $60 000+ Specialist medical practitioner Uninsured 2.58 2.18 2.47 3.66 Insured 3.99 3.91 3.89 4.76 Dentist Uninsured 19.15 19.60 22.94 25.77 Insured 29.32 30.88 32.14 37.72 Optician Uninsured 1.76 1.44 1.39 1.62 Insured 2.23 2.72 2.83 2.70 Chiropractor Uninsured 4.73 4.96 5.51 5.30 Insured 8.60 8.47 7.99 8.34 Podiatrist Uninsured 1.09 0.95 0.99 0.97 Insured 1.47 1.30 1.49 1.63 Note: The results are age adjusted. Data source: ABS (1990).

Ancillary and Specialist Health Services: Does Low Income Limit Access? 23 considerably more likely to use these health services than were the uninsured with the highest incomes. However, while ancillary insurance was seen to provide greater access to these health services for people on low incomes, the income barriers were by no means overcome. Using the second test (whether people with low incomes and ancillary insurance made similar use of these services as the insured with higher family incomes) it was found that the insured with high incomes made greater use of services than the insured with low incomes. For example, insured people on the highest family incomes were about 10 per cent more likely to attend a podiatrist, 20 per cent more likely to attend an optician, 20 per cent more likely to attend a specialist medical practitioner and 30 per cent more likely to attend a dentist than were the insured with the lowest family incomes. This remaining income barrier might well be the result of the out-ofpocket costs that remain after insurance benefits have been paid. These would still be considerable. For example, a single filling would still cost about $27.00. 6 It should be noted that the out-of-pocket costs are a greater barrier to the use of services for those with low family incomes than for those with higher incomes. This is because these costs represent a much higher proportion of low family income. For example, $27.00 represents 9 per cent of the weekly disposable (after-tax) income of the 20 per cent of families with the lowest incomes, but only 2 per cent of the weekly disposable income of the 20 per cent of families with the highest incomes (with disposable income calculated at November 1995) (NATSEM 1996). 5.3 Potential impact of the private health insurance rebate on the use of ancillary services The finding that the insured use ancillary services more than the uninsured (see section 5.2) suggests that the private health insurance rebate might have some positive effects on access to ancillary services. The main improvement would be in horizontal equity of access, as any low income families who take up private health insurance as a result of 6 It could be the case that other factors (not included in this study) are at work for example, location of services relative to income, and differences in propensity to use available services among different income groups.