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Senate Select Committee on Health
05/02/2015

BOXALL, Dr Anne-marie, Senior Policy Adviser, National Rural Health Alliance

GREGORY, Mr Gordon, Chief Executive Officer, National Rural Health Alliance

MOORE, Professor Michael, Chief Executive Officer, Public Health Association of Australia

ROOT, Ms Josephine, Policy Manager, Consumers Health Forum of Australia

STANKEVICIUS, Mr Adam, Chief Executive Officer, Consumers Health Forum of Australia

[12:20]

CHAIR: Welcome. Thank you very much for agreeing to appear together. That will really assist us in the timing of the day. Is there anything any of you wish to add about the capacity in which you appear today?

Prof. Moore : I am an adjunct professor at the University of Canberra.

CHAIR: The committee would like to invite you to make opening statements. We will start with Mr Stankevicius.

Mr Stankevicius : The Consumers Health Forum of Australia believes we as a community and with the government need to go back to the drawing board on health reform. Unfortunately, what we have seen over the past 18 months in particular is a debate very much focused on health financing and not a debate focused on health outcomes. I think the evidence that you saw before us today by other witnesses is a great example of that. Even individual practitioners now are very focused on financially managing their small and medium businesses and not able to focus on the health outcomes they can deliver for their communities, and that is really disappointing.

What we have seen is a lack of evidence from the government about why the changes need to be made. We have also seen a lack of evidence to support the solutions they propose to the problems they are identifying. We have also at the same time seen an avalanche of data and reports, particularly over the past 12 months, that would indicate that, counter to the government's view, the health system is not unsustainable. We already know from that data that Australian health consumers are paying much more out of their own pockets than health consumers in places like France and the UK. It is an increasing amount. With every report that comes out we again see the message reinforced and the data updated. You can look at Australia's health 2014. You can look at the report on government services from two days ago. You can look at the health expenditure bulletin from a few months ago. All tell us the same story. All tell us of the billions of dollars Australian health consumers are paying out of their own pockets.

We have also, though, seen a universal health system in Australia over the past 40 years that has delivered some of the best life expectancy outcomes in the world. So it is not as though the current system that we have is actually delivering us health problems; it is actually delivering us very good life expectancy.

Australia is a wealthy country. We all need to recognise that. As a result, it is reasonable that we spend a higher amount on health than perhaps some of our OECD partners. But our focus needs to be on primary health care. Our focus needs to be on how it is we can improve primary health care and how it is we can avoid the high-cost hospital admissions. Again, the panel before us was talking to you about the fact that the growth in cost has been in those hospital admissions; it has not been in primary health care. We would certainly support stronger efforts to improve primary health care rather than focusing on putting that price barrier between consumers and access to primary health care. We need stronger investment in this area, not price barriers that are going to push consumers away.

We also know—and, again, the previous hearing appearances would have told you—that health monitoring and maintenance is so important for health consumers. It is so important for them to reduce the likelihood that they will end up in hospital but also to manage effectively their health conditions so they do end up actually going to their GP less. Regular visits mean fewer emergency visits in the future. What we have seen by way of a response from the government to what they claim to be an issue of unsustainability is a range of models that do put in place barriers to accessing primary health care and that do increase the costs on the providers of primary health care to the point where they may need to make decisions about putting in place those financial barriers, if the government does not. That means we are going to end up having a serious impact on life expectancy in this country and a serious cost impact on hospitals.

While we do not agree with most of the health recommendations that were in the Commission of Audit report—if we want to go back that far—one of those we did agree with was that the health minister take 12 months to consult with stakeholders and develop a long-term plan for health reform in this country. What we are really disappointed about is that path was not taken—that that recommendation was not picked up. To think that we can do serious health reform by making a few policy changes in the financial space and expect that to deliver us a robust, effective, efficient and delivering health system is a fallacy. Serious discussions have to be had and serious decisions have to be made. We all need to be part of that discussion—not just providers, but people at this table and all the organisations that we work with and represent all have to be part of that discussion. We all know hard decisions will need to be made and we are all willing to have those discussions, but at this point we certainly have not been engaged in that process.

CHAIR: Thank you very much. Professor Mike Moore.

Prof. Moore : Thank you, Chair, and we appreciate the opportunity to be here. The fact that we can sit together at this table is no surprise to us, as we are part of a broadly coordinated coalition of health groups who have seen an approach that will undermine our universal healthcare system. We are working together with a wide range of groups and trying to see to what extent we can get a single voice to make it easier for government to understand what our thinking is about. It is part of the reason I asked the Rural Health Alliance, and Gordon Gregory will speak later. One of the other reasons for having Dr Boxall here is that she is the author of Making Medicare, which was published a couple of years ago. She has rather extensive knowledge in the area and has been a fantastic resource for a very wide range of groups which are interested in a universal healthcare system.

I have just one other side comment on the universal system. I was recently elected as the president-elect of the World Federation of Public Health Associations.

CHAIR: Congratulations.

Prof. Moore : Our approach is to encourage universal healthcare systems around the world, and how frustrating is that for me when my own government is busily undermining it. That is what we see happening here: an undermining of the universal healthcare system with suggestions that people should be paying what they can afford. We would argue that they do; that is why we have a progressive taxation system. Money is raised through the taxation system with the wealthier paying more in tax. Therefore when you have a universal healthcare system people can access that system without reference to the amount they can pay at any given time.

Of course, our system is not perfect—nobody is suggesting it is perfect. All the organisations that I am aware of are quite comfortable about looking at healthcare reform, but the most important thing about it as far as we are concerned is that it does not happen in a way that is cherry-picking. What we have seen here in looking at Medicare with a cherry-picking approach is that you look at just one part of the system and start playing with that. All that happens when you cherry pick is that another part of the system blows out. In this case the most obvious is the shift from cost to the federal budget to the cost of the state and territory budgets. It is not just cost-shifting to the states and territories—that game has been going on for many, many years—but with cost-shifting you go to much more expensive systems. As our hospitals pick up more, and I am reiterating what Adam has said, the important thing is that we have a comprehensive reform package that does not suddenly mean that state and territory budgets blow out. The bottom line looks like it is going very well because that will be completely unsustainable. Of course, there are those who believe that it is just a system of trying to pressure the states and territories to increase the GST. In fact, many of us are going to a discussion today around the federation white paper on health, which actually raises these issues as well.

What we are interested in is sustainability; we are interested in the sustainability of the whole system. We do not think that it is broken. We do believe that it is already sustainable, we do believe that improvements can be made and we are quite comfortable at working with the government—we would like to be a critical friend—on how we reform our whole health system.

CHAIR: Is there anyone else seeking to make an opening statement? Mr Gordon?

Mr Gregory : I would encourage the committee not to be misled by this sign in front of me: I am actually Mr Gregory!

CHAIR: Oh, okay! Mr Gregory, thank you very much for correcting the record; we will do our best to keep it honest for the rest of the time!

Senator CAMERON: It's pretty good no matter what we do!

Mr Gregory : The NRHA welcomes this opportunity to speak about some of the rural and remote issues relating to Australia's healthcare system and we thank our friends at the PHAA and at CHF for inviting us to share the table with them.

We are very impressed by what we heard from the previous panel, particularly from Ian Kamerman, who gave you to understand some of the local realities of rural and remote health. What you will get from us—from the Rural Health Alliance—is, if you like, a high-level national picture, so permit me to read some of this into the record for the committee.

CHAIR: Thank you.

Mr Gregory : When the facts are added together step-by-step, the only conclusion is that federal, state and territory governments must do more to improve health outcomes and health services in remote and rural areas. Life expectancy at birth falls as one moves from capital cities to remote areas. Compared with major cities, the burden of disease and injury is 10 per cent higher in regional areas and 26 per cent higher in remote areas. The rate of potentially avoidable hospitalisations is up to three times higher than in cities and hospital stays are also typically longer.

Access to health professionals, including GPs, falls with increasing remoteness. A greater proportion of rural people postpone or put off seeing a health practitioner due to cost; diagnosis therefore tends to be later, and more specialised care is very rarely available locally. Rates of survival after a diagnosis of cancer fall progressively with the patient's distance from the capital city.

There is a healthcare deficit for people in rural and remote areas of $2.1 billion every year. This figure allows for the fact that rural and remote people use public hospitals at a higher rate than city people. A universal health insurance system, paid for progressively through the income tax system, is a great and important principle, but for a small proportion it is not a reality: no doctor, no Medicare.

Health risk factors are also worse in rural areas: there are higher rates of smoking, of dangerous levels of drinking, of sedentary lifestyles and of obesity, and the rural population is older and has a higher proportion of people living with a disability. On average, incomes outside the capital cities are 15 per cent lower than in capital cities and the rate of private health insurance is lower.

For all of these reasons and more, the alliance strongly opposes any additional barriers that might be erected between primary care and the people of rural and remote Australia. All of the recently proposed changes to Medicare would pose extra costs either to the doctor or to the patient. Rural doctors are proud of the care they give to members of their community and there are particular reasons why they would find it hard to pass on higher costs to their patients—and you heard about some of these in some detail from Dr Kamerman. The viability of rural medical practices may be reduced, with further consequences for access to health services.

Out-of-pocket costs are already higher in rural areas. On top of that, any given level of out-of-pocket cost is harder for rural and remote people to meet, given, as I said, their lower average incomes. In aggregate, families in rural and remote areas have 10 to 20 per cent lower incomes and pay higher prices for most goods and services, including those related directly to health and wellbeing. Out-of-pocket costs for rural and remote people include those for transport and accommodation away from home. The state and territory patient travel and accommodation schemes are poorly understood and promoted, and not sufficient to cover the real costs involved in travelling to and staying in major cities.

To improve the outcomes of Australia's health system for people in rural and remote areas, there are five essential areas on which to focus. Firstly, we need improved access to integrated primary care, especially for infants and children, and including better access to medications. Access to primary care is the reason why Medicare and health workforce issues are so important. Secondly, we need more effective consideration of healthy ageing and aged care, including a focus on the social determinants of health for rural people and special attention to the growing burden of dementia in rural and remote areas. Thirdly, we need sufficient resources and strong political leadership for action on the national Aboriginal and Torres Strait Islander health plan. This should include strong support for the community controlled health sector and comprehension of the importance of attracting and retaining more Indigenous people to health professions. Fourthly, we need practical integration of disability, aged and acute care perhaps starting with a regional model in which funds are cashed out. Fifthly, we need investment in regional universities through a number of federal agencies, including for broadband, undergraduate training places and research activity.

The alliance, like our colleagues, accepts the need to strengthen the integrity of Australia's structural budget position. We are concerned, however, that too much weight is being attached to cuts in Commonwealth government services and in special purpose payments to other governments. The structural budget deficit can be fixed through an appropriate balance between savings and revenue measures. Cuts to essential services impact most heavily on people who are already vulnerable whereas progressive taxation does not.

For the convenience of this committee and its staff, attached to this opening address is a set of summary statements related to Medicare in rural and remote areas. Thank you.

CHAIR: I thank you for your opening statements and for the submission of documentation to support it. It is very helpful for us. I wonder whether you were here this morning when we heard from the Royal Australian College of General Practitioners? They sense that there is a restriction to this newfound willingness from the new minister to engage in 'consultation', that it may only be a two-week period of further consultation. Can I ask for your reactions to that?

Prof. Moore : The former Minister for Health and his staff I heard people say he was very hard to reach and so forth. That was not my experience. We do not need to speak to the minister every time. We were able to speak to his appropriate staff and so on, and at the appropriate times speak to the minister. Just this morning, I had a meeting with the new chief of staff of the health minister. I do not see that in quite the same way. I have not heard whether they have put in place yet the way they are going to consult. The reality though is that a consultation process on reform of the health system cannot just be about Medicare. It has to be about the whole system. It is little about pushing down in one spot and things popping up in another.

Just looking at Medicare is going to create problems right across the system. It is actually going to take an effort, a comprehensive effort. Even if your only focus was about trying to improve the budget or decrease expenditure on health, trying to do it just on one element of the system simply will not achieve the goal. There is a huge amount of evidence there. What we really need to be looking at more than anything is how we can improve the primary health care system. Of course there are systems that can be improved and evidence around that. With regard specifically to the minister and the consultation process, the Public Health Association, and I imagine others, would like to be seen as a critical friend. We want to work with government to get better health outcomes for our people.

CHAIR: If you are going to seek those improvements and consultation based on evidence though, the first thing that needs to be acknowledged is the overwhelming evidence that putting a price signal on access to primary health has to be taken off the table. That has to be the first action of a government that is going to have any sort of evidence based discussion in the health space. Do you agree with that?

Prof. Moore : That is in our recommendations. We believe the co-payment in Medicare ought to be taken off the table. That should be the first step.

CHAIR: In your consultations with the chief of staff of the health minister this morning, what is your sense of the removal of that price signal?

Prof. Moore : When I have discussions with the chief of staff it is not for broadcasting. My comment there was simply that, yes, we do have access to the minister's office. That is the important thing. I put the perspective of the Public Health Association, and she listened.

CHAIR: We have had evidence this morning from the Rural Doctors Association of Australia that they also have had access to consultation, but none of that access to consultation resulted in policy decisions that were amenable to the outcomes of people in rural Australia. So consultation, as an exercise in friendly encounter, as opposed to evidence based, well-informed policy making, is a bit of a problem for this government, isn't it?

Prof. Moore : We would expect that to come through the Department of Health, largely to guide that, as well as the minister and the minister's office, of course.

CHAIR: Can I ask you then to characterise the level of consultation that you have had with the Department of Health?

Prof. Moore : We have had a series of meetings this year alone. We have a new secretary of the Department of Health. The Public Health Association, and, I think, Consumers Health Forum, and others, together have met with the new secretary. I have met with him twice. I have met with the department in the last two or three weeks—at least three or four times. And we are raising different issues. This is not the only issue we focus on, of course. What we believe is appropriate is a formal consultation process. In fact, this committee plays a role in the consultation process around Medicare. That is why we respond to the committee and we want to be involved in the process.

CHAIR: We appreciate your coming along. Do you have a forward schedule of ongoing consultation? Is there any sense that here is a six-month moratorium in sight for a fulsome conversation that is evidence based? Or do you have no schedule moving forward, except for a bit of goodwill and hope?

Prof. Moore : We have a new minister.

Mr Gregory : Let me speak on behalf of the National Rural Health Alliance, if I may. We agree with Michael's concept of the broad consultations that are necessarily across the board in relation to health, but if it were to be the case that something was done about a Medicare co-payment in the next two weeks, without consultation with us, we would be appalled.

I am agreeing that we wanted an ongoing way to be involved as a critical friend of the department and the minister about health reform. But we would like to be assured that there is nothing to be done about a Medicare co-payment ever, without consultation with us, never mind within two weeks, because we have a view and we have evidence and we have positions. So we want to be consulted. From our point of view in the National Rural Health Alliance, we have a good relationship with Fiona Nash's office. One of the things we are interested in is the extent to which the consultation promised by the government might take place through her office as distinct from through Susan Ley's office. We do not know. We have been contacted by Fiona Nash's office but we have been given no indication of their intention or the senior minister's intention to consult with the National Rural Health Alliance. We represent 37 national organisations with a strong interest in rural and remote health, so we want to be consulted, please.

CHAIR: We hear of some efforts at consultation being made, but they are a bit patchy from what we can figure out so far. Did you want to comment on that?

Mr Stankevicius : I think it is the lack of clarity. Going back to my comments, they have not yet characterised what the problem is. The first kind of 'problem' was the unsustainability of the health budget. I think we have all realised that that is stalking horse number 1.

CHAIR: I think it has been described as a myth and a lie and a couple of other things.

Mr Stankevicius : I think there are probably more charitable views I have heard. The next is the price signal, because apparently there is this army of people who are going to the GP unnecessarily.

CHAIR: Also characterised as a myth and a lie on a number of occasions.

Mr Stankevicius : Exactly. We also know that there are whole classes of people who do not go to the GP as often as they should in order to get the health care they need. Still, what is the problem here? The previous proposal was going to the Medical Research Future Fund, so we know that the issue also was not about saving the budget bottom line. Again, outline for us what the problem is and then we are all willing to come to the table and work out how to solve this problem. In April last year we brought together 15 health experts across the country, including Senator Di Natale, to discuss their ways and how we can get better bang for our buck in the health area. It is looking at things like getting rid of those 150 low-value procedures. It is about better international price comparison, not only for drugs but also for prosthesis and a whole range of other areas where Australia seems to be paying extraordinary amounts compared to the UK and the US.

CHAIR: Without an accurate characterisation of the problem, what we really have is damage control rather than consultation, because the problem has not been honestly articulated at this point. Is that a fair representation of where we find ourselves right now?

Mr Stankevicius : Yes, and it has been focused on the finances.

CHAIR: Mr Gregory?

Mr Gregory : Yes, it is.

Mr Stankevicius : It has been focused on the finances rather than focused on how we can build a health system that actually delivers further increases in life expectancy. Michael and I were talking very publicly a few weeks ago about the avalanche of obesity that is happening in this country. How is that we can actually arm primary care to respond better to the challenges that obesity is going to bring to our health system. They are the ones that are going to be clogging up our hospitals if we do not actually do something now about it.

CHAIR: They will not be paying $100 to go to the doctor, or $60 if they are a concessional patient—

Prof. Moore : Which is also part of the reform process. The fee-for-service process has actually been about episodic treatment, which has actually worked very well. But as we see a huge increase in chronic diseases particularly associated with obesity, but also tobacco and alcohol, we need to question if our system is working appropriately for that style of treatment. Most observers are saying, 'No, it is not.'

Senator McLUCAS: Thank you to all your organisations for your evidence. Professor Moore, you talked about universality. It is not a word that has been part of the dialog around these changes as proposed by the government. But it was a big part of the debate originally. You make the comment, and I made it myself earlier, that you are the head of the global public health organisation—

Prof. Moore : To be. I am the vice president at the moment, but president to be of the World Federation of Public Health Associations.

Senator McLUCAS: I made the comment earlier that we are looking at America, which is trying really hard to cobble together a Medicare type health system in their country at the same time that we are essentially pulling ours apart. Can you tell the committee why universality is such an important and integral part of Medicare? Also, do you think that the introduction of a co-payment in fact removes universality?

Prof. Moore : I think that what we in public health associations see worldwide is that access to good health care is a human right, and, as such, we should be doing everything we can to ensure that there is equity of access. In our submission we distinguish between equality and equity. I think that is a very important issue. We have actually taken that distinction from the report to the World Health Organisation on the social determinants of health, which, of course, a Senate committee has also reported on. What we are interested in is a system whereby, independent of what you have paid, you have reasonable access to high-quality health care. That is not to say that everybody has to be able to get the best heart surgeon every time. It has to be reasonable access to somebody who has an appropriate standard of qualification. We are not arguing that we do not have a private system operating next to it. In fact, in our submission we raised the issue of the $7 billion that might be saved through the private health insurance rebate. But if we suggest you play with that, we too are cherry-picking. That is why it has to be comprehensive. I wonder if Dr Boxall would like to add something to that discussion?

Dr Boxall : The universality aspect of the debate has been lost. In my view it is one of the critical aspects of it. We have been talking a lot about the impact on patients of the potential changes, which is right, but the potential changes also have a big impact on our health system if they are implemented. One of those is that threat to universality. High bulk-billing rates have been pursued by both sides of government for a long time, and there is a reason for that. It is because it essentially functions as a safety net. Whilst some people may be able to afford to pay more, and they do, through the taxation system, bulk-billing is seen as a universal benefit. So if we are undermining a system and scaling back bulk-billing and making it a targeted system, we then need to be very sure that the safety nets we have in place are effective, and that is something that we are not entirely sure about at the moment, and we have evidence that people are falling through the safety nets.

The other side of the universality debate is that it is one of the main reasons people support Medicare. People feel that they are making a universal contribution through the tax system, and they feel that they need a universal benefit—

Senator McLUCAS: There is an ownership.

Dr Boxall : and bulk-billing is that benefit. It is not the MBS rebate that they feel is the benefit; it is bulk-billing rates. So people feel that high bulk-billing rates are an essential part of the system—a symbolic aspect of the system. Making bulk-billing targeted will actually, over time, I believe, undermine public support for Medicare.

Mr Stankevicius : And we all know, and we have seen, ever since I have been hanging around this space, for 25 years now, survey after survey, poll after poll, some public but most very private, right across the spectrum, saying that people overwhelmingly support increases in Medicare levies or increases in taxes if they can be assured that they will be directed to health care. So if governments of any colour go to the public and say, 'We're going to charge you a bit more for your Medicare surcharge but we can guarantee that it will go to health care,' there is overwhelming support. NDIS funding was a good example of that—

Senator McLUCAS: Exactly.

Mr Stankevicius : and I think that that reflects part of that social contract that Anne-marie is talking about, that says, 'We're willing to stump up a bit more because we see the social value in maintaining or building this kind of system.'

Senator McLUCAS: If the government was going to do that, they would have to make a case that the system was somehow broken, and I do not know that they have made that case yet.

Mr Stankevicius : I think, though, as Michael kind of alluded to, that if we are talking about a health financing debate, then everything is on the table, and at the moment all we are doing is talking about whacking users of the system or putting a price barrier between consumers and service providers, whereas the much more progressive way to do it is to actually have a robust discussion about the way in which the Medicare surcharge or levies are done.

Senator McLUCAS: We had really interesting evidence from one of our doctors just a moment ago who made the point that she does not feel skilled enough to ascertain what your income is. She can diagnose your health problem, but she does not know what your income is.

CHAIR: I had rather she got the training to diagnose my health problems than my financial capacity to pay!

Mr Stankevicius : Again, much like we have said about many conditions over the decades, diseases are not income-targeting. Just because you are poor does not mean you will have a chronic illness, but just because you are rich also does not mean that you will not have a chronic illness. So concession card holders are one group that absolutely needs to be protected because they have a whole range of other economic impacts on their lives, but we are saying that there is a whole class of people out there with chronic illness who are not concession card holders who are regular users of health services who need to be regular users of health services to monitor and maintain their health conditions—

CHAIR: And so that they can continue to work and continue to live a full life.

Mr Stankevicius : exactly: so that they can continue to be productive members of society—who will be impacted on by these proposals.

CHAIR: Mr Gregory, do you want to make a comment there?

Mr Gregory : I wonder if it might be useful to make explicit the notion that we are actually talking about universality not as a black or white thing but as a black, white and grey thing—that is, that there are degrees of universality. I think what we are all saying, as forcefully as we possibly can, is: we do not want access to primary care to be any less universal than it currently is. That way of coining it actually suits the rural health alliance because we make the case that there are some people who do not have access at all to a doctor. We have half a million people in remote and very remote areas, and many of them do not have access to a doctor at all. So we are trying to keep our finger in the dike, but there are already some leaks in relation to people in quite remote areas.

Prof. Moore : The other element about the price signal of the people that miss out is this: I think one good example is self-funded retirees, many of whom are not on the pension—they are looking after themselves and have worked very hard to do so—who have a chronic disease, and the large costs associated with a chronic disease can be really debilitating to arrangements that they have made over many years.

Dr Boxall : We know from research that has been done at Sydney university in the past that having a concession card does not protect people, in some circumstances, with chronic disease from high out-of-pocket costs or from it being a real burden on access to care. We do have evidence that a concession card does not solve the problem by itself.

CHAIR: The hearing today has clarified for us that when the government says it is a $5 co-payment the doctors are saying, 'No; even with a concession card, it will be a $60 co-payment.' For chronically ill people, that will be a devastating impact on their access to health care.

Mr Stankevicius : Absolutely. Michael and I heard, in a forum just earlier this week, from some researchers who are working very closely in the mental health field, that life expectancy for people with chronic mental illness is actually worse than for our Indigenous population. Those people will, again, not necessarily be on a concession card, but will need very regular contact with primary healthcare providers in order to manage their conditions.

CHAIR: We did hear evidence at the Townsville hearing to that effect—about the need for ongoing monitoring, particularly for people who are managing mental illness with excellent medication but who need it regularly attended to.

Mr Stankevicius : The thing we saw coming out of our research early last year was the increasing number of people who are now accessing their life savings and accessing their superannuation in order to pay for significant ongoing health conditions, particularly chronic health conditions. In a New York Times article I read this week, medical debt was the largest reason for people to go into bankruptcy in America. If this is the health system we are aspiring to have, we are heading for a great big train wreck.

CHAIR: I think Professor Duckett gave us evidence about pre-Medicare garnisheeing of wages for people who sought health care. Australians today, who have had 40 years of Medicare, cannot believe there is such a world, but that is exactly where this government seems to be steering us.

Senator DI NATALE: I suppose I am tempted to go over old ground and get you to restate why you think this is the wrong direction to be heading, but perhaps, in the spirit of trying to be a little more constructive—let us assume we have a new Prime Minister next week who wants to invite you along to a forum on healthcare reform—what are the two or three key things you think need to occur in this space?

Mr Gregory : There needs to be an understanding of the need for different types of services—sometimes nuanced, sometimes quite distinct—in rural and remote areas. We know that one model does not fit all. Let me be like yourself and acknowledge credit where credit is due. There are already special programs, as you well know, for rural and remote health. We acknowledge them. There is money for the RFDS. There are special programs like MSOAP and so forth, but what we are saying to the government is that it is not enough. We know far more about the service models that will work in more remote areas, and we need to identify them, have confidence in them and fund them in an ongoing way. The keys are things like flexibility and ensuring that in rural and remote areas we do not deal with health, disability and aged care as if they were separate empires, because they are not. It is the same busy, active, wonderful clinicians who are working in all three of those areas, as you well know. So we need to get much more serious about integrating health care with acute care, with aged care and with disability care. Of course, this is ultimately a challenge to governments to do something that we have been talking about for donkey's years—that is, a so-called joined-up government approach to health services. There is nowhere where it is more critical, or indeed where it would be more productive, than in rural areas, because it is the natural way of rural communities. Everything is related to everything else with the small numbers in rural areas. We have to allow for that in the health services, the aged care services and the NDIS.

Dr Boxall : There are lots of options for savings in the health system. Most of them are not politically easy, but I think the time for low-hanging fruit has well and truly passed. There is no shortage of options to find ways to make the system more effective and more efficient. One of the ones that already exists is identifying things on the MBS which are less effective or not effective. There is a process in train. The government is already doing that, but a lot more investment in that process will make a huge difference.

Senator DI NATALE: We are talking about the MSAC process for reviewing the MBS. That is only scratching the surface though, isn't it?

Dr Boxall : It is—and there is a lot more that could be done. To me, that is a very obvious way. It is already using an existing process; it should be ramped up.

Senator DI NATALE: Yes.

Dr Boxall : Another option is a campaign that has begun, called Choosing Wisely, and that is educating healthcare professionals and patients about making sure that only the most necessary tests are ordered and we do not do a battery of tests every time someone walks in the door with a cold.

Senator DI NATALE: Just on that, specifically, that is effectively voluntary and it is trying to engage the medical profession in a conversation that is important. But my concern there—and I still think it is a worthwhile initiative—is you are still going to get doctors and a subset of health professionals who will continue to order tests for which there is no basis and which add no value, except that they cost a hell of a lot of money. How do we overcome that barrier?

Dr Boxall : That is a supplement to anything else, I agree; that is all going to happen. It is a process of education, so it is something starting as people are in medical education now or in education as health professionals. It also needs a public awareness campaign. If people are ill, they are in a position of uncertainty and they want to know they have had every test under the sun so they feel safe and confident. So people need to be educated that having a vitamin D test, for example, when there is very little risk of you having a vitamin D deficiency, is not actually going to help you. So public awareness and health professional awareness are an important part of that campaign.

The other aspect of it is much more rigorous testing of new technologies that we introduce. We can do lots of whiz-bang things but we need to weigh up whether there is a benefit in doing lots of whiz-bang, high-cost things for a very small proportion of the population or whether we should invest more in primary care, where we are going to get much better outcomes for the population. That is a value judgement that governments need to make.

One more thing is changing the scope of practice for health professionals. It is very contentious, but there are ways of getting people with lesser training to do things—perfectly competent people who can provide services at a high quality but at a lower cost.

Senator DI NATALE: Do you have anything to say about private health insurance?

Dr Boxall : Probably not here, because it is a very lengthy debate. But I will say one thing about private health insurance in relation to Medicare. It has been a longstanding problem for Australia to manage a universal healthcare system that is funded through taxation as well as a private health insurance system on top of that that is partially funded by government. It is a problem that no government has successfully managed to solve since the introduction of Medibank. There has been tinkering around the edges, but it is well overdue for a thorough reconsideration.

Senator DI NATALE: Thank you.

Mr Gregory : Can I add that the balance between preventive health measures and others is quite wrong in Australia. We need to spend more of our time, energy and resources on preventive health. One very clear example is smoking. We have not succeeded in reducing the rate of smoking in rural areas as we have in city areas. We need to know why this is, we need to know better, because there is probably no single initiative more important than stopping people smoking—and they are still doing it in rural areas in high numbers.

Prof. Moore : And of course in Indigenous communities, although the government has been working quite seriously on prevention of smoking in Indigenous communities. To take your question, Senator Di Natale, 'What would you say to a new prime minister,' I would say, 'First of all, Prime Minister, the health system is not in crisis. I know you think the budget system is in crisis, and that is a separate debate. But the health system is not in crisis.'

Senator CAMERON: You have all said the same. Your answers are exactly the same.

Prof. Moore : And we accept that co-payment 2 was actually a little bit better than co-payment 1. It did at least recognise the problems around pathology. It did at least recognise the importance of a co-payment with regard to the full range of social service card holders; we accept that. However, if we really want to proceed and go forward, No. 1, the co-payment must come off the table. No. 2, looking at reform should be done at arm's length and it should be comprehensive. No. 3, it should take into account the social determinants of health in a way that is consistent with the report of the Senate community affairs committee; and, to be a comprehensive, independent, systematic assessment of the whole health system, it must include representatives of vulnerable populations, such as Aboriginal and Torres Strait Islanders and others. Of course, whatever we do must also include the states and territories. That is actually what the challenge is.

CHAIR: Thank you.

Mr Stankevicius : I want to say that all of my answers have been stolen! Following up on Michael's last point, though, I think the people who use the system and the people who pay for the system as taxpayers are the ones who so far have not been comprehensively involved in the consultations on changes. That is the first thing I would say. Health consumers are the ones who know why they go to the doctor. The doctor might think something very different when they get there, but the consumers are the ones who have the reason in their head as to why they choose a hospital over an after-hours service and over waiting until the next day to try to get in to see a GP. There is a whole range of factors that are behavioural in the way in which people use health services which I do not think health policy planners understand enough of in order to make the right choices for planning the future of our health system. That would be my No. 1.

The Productivity Commission said about a year ago that there are 700,000 admissions to hospital we could avoid every year by better community intervention three weeks before the hospitalisation.

Prof. Moore : That would save a lot of money.

Mr Stankevicius : At an average of $5,000 per hospital visit, we are talking billions of dollars. So further investigating how we can do that is, I would say, one of the number one challenges. We know that keeping people out of hospital is actually keeping them healthier as well. But, again, it goes back to Michael's critical point about that state and territory divide with the Commonwealth. These things are not always going to hit the Commonwealth's budget bottom line first; they would probably hit the states and territories first. Therefore, the incentive for the Commonwealth to kind of get involved in that kind of savings activity is not as strong as it should be, to be quite honest.

The point I would make is what Anne-marie mentioned, which is actually doing the low-value, no value procedures. There is also the other one I mentioned, which is international comparisons. We have done it with drugs. Adam Elshaug, from the University of Sydney, has done some analysis of the top 10 prosthesis used in both the public and private sectors and has come up with $250 million to $400 million a year in savings if we did better international price comparisons with the US and the UK.

So there are a number of areas we could tackle and make significant cuts—not just shaving the top off—in health expenditure without putting that price barrier between providers and consumers and without having a serious impact on our health outcomes—which, after all, is what this debate should be about.

CHAIR: Noting the time, I think we need to move on now. I hope Ms Root has been reasonably covered there.

Ms Root : The only one I would add is the issue of futile care. We have talked about low value and no value but we also need to have a conversation in this country about when care is futile. There is a growing interest in the medical profession and in the community broadly around not always doing everything we can possibly do. There is a balance between quality of life and interventions, and we do not necessarily need to do everything to everybody. Not everybody needs to go to an ICU. If we know they are going to die, we need to have a process that helps that happen in a much more civilised way, I suppose is what I would say. So I would just add futile care to the discussion.

Senator CAMERON: That is an interesting point, because that brings in the palliative care versus euthanasia argument. When you boil that down to economic issues and moral issues, I do not think the committee is going to engage in that, to be honest. It is an issue that politicians have to engage in. There is of course the issue of prolonging life unnecessarily.

Mr Stankevicius : Absolutely. The data is increasingly showing that ordinary high amounts of expenditure—

Senator CAMERON: It is interesting that you are the only ones who have raised that as an issue. I know how controversial—

Prof. Moore : I do not think that we are suggesting something like voluntary active euthanasia; we are talking about good palliative care that does not have additional unnecessary treatment. I think we would all be on the same wavelength on that.

Senator CAMERON: I am obviously on a different wavelength. I support euthanasia if that is a person's choice.

Ms Root : What I am saying is that there is a view that people say, 'I want everything done,' and I think it requires consumers as well as health professionals to understand when that is not actually going to do any good. So this is not about voluntary euthanasia and it is not about making an economic argument. But it is about consumers having a better understanding and health professionals being equipped to have the conversation with them.

Senator CAMERON: Yes, I understand that. I do not think I want to go down that path.

Ms Root : So I just wanted to clarify that my comment—

Senator CAMERON: Yes, I understand, but there would be lots of different arguments and views. Has anyone actually had any discussions with government where we have clarified whether the budget papers are still the driver of the cuts in health—that is, the establishment of a medical research fund—or is it a budget emergency? Is it sustainability? Does anyone know what this is about yet?

Mr Stankevicius : I have not had any discussions personally with the department or ministers that would say that, but from what you see in the media I think it depends on which perspective you are looking at it from. It would appear that the former health minister has different reasoning, I suppose, from the Treasurer, who appears to have different reasoning from the Prime Minister, depending on which angle and, I think, which audience it is. That is again what I was saying at the beginning, and the senator clarified it: we have not properly characterised the problem yet, so how do we know what the solution is?

Senator CAMERON: The problem, from what I hear from lots of people, is that it is ideology. It is about cost cutting. It is about austerity. It is about more privatisation of aspects of medicine, because the budget papers are clear: all the savings from health are going into this research fund. Has anyone disavowed that position to you?

Prof. Moore : No, remembering that this is a medical fund, not a medical and health fund. On budget night, I actually put that very question to the then Secretary of the Department of Health, who said it was a government decision that it be a medical fund, not a health and medical fund, which we also find extraordinarily narrow in its concept.

From what we can work out, the fund will only feed into medical research as interest—so just the interest will be paid. My shallow understanding of budgets is that therefore the $2 billion will actually sit on the government's bottom line and, insofar as that is true, will assist in not having them go into the red, addressing their great fear that they might have some kind of deficit despite their AAA credit rating.

Senator CAMERON: It is interesting just to go back to the budget every now and again and have a look at the headline issues, such as getting rid of the Australian National Preventive Health Agency. I would have thought that would cost the community in the longer term, rather than save money.

Mr Stankevicius : I think the last time we were in front of you we were talking about exactly that bill. Actually, no, it might have been the community affairs committee. Sorry, it was at the table. When we were last at this table, we were talking about that and the Health Workforce Australia (Abolition) Bill.

Prof. Moore : I put a huge amount of work and effort into getting that bill up and supporting the agency. It actually reflects a lack of understanding of the long term. Mr Gregory raised the issue about prevention, and governments pay lip service, basically to prevention, but governments of whatever colour have basically stayed around two per cent of expenditure being on prevention—I am using Institute of Health and Welfare figures. It went up a little bit under the previous government and actually when Tony Abbott was health minister. That was almost entirely around HPV immunisation, which was a very good prevention measure. But, apart from that spike, by and large prevention has been around 1.8 per cent, and we would like to see governments seriously think about it. There is a variation in states and territories. Some states are spending quite a bit more than that, but the average is still in a similar area.

Senator CAMERON: There have been submissions to the inquiry that indicate that, as a percentage of GDP, our health spending is just under the OECD average, so sustainability is not the issue. We will have Treasury here this afternoon. Have any of you looked at the budget papers? I cannot find how Treasury can argue unsustainability. There are assertions made about unsustainability, but I have seen no evidence. Have any of you seen any evidence on unsustainability?

Prof. Moore : Looking at your program, you are talking to Dr Duckett later today. He is actually the person with the best understanding on this; a better understanding than any of us. We would basically rely on his figures. As you are speaking to him, it would be really worthwhile asking him about the evidence.

Mr Stankevicius : I would also point you to the most recent Health expenditure bulletin, for 2012-13 I think it was. That showed for the first time since the institute has been collecting the data that the rate of Commonwealth contribution had dropped. That is the Australian Institute of Health and Welfare Health expenditure bulletin for 2012-13. The Treasury has been predicting a particular trajectory for expenditure. This showed that perhaps there is a blip in that and we do not know whether it is a one-year blip or a longer term blip, but it certainly showed the Commonwealth's trajectory had dropped, state and territory contributions had increased and of course individual health consumers out-of-pocket costs had increased.

Senator CAMERON: The other argument I have seen is that in world comparative terms Australians actually do pay a significant part of their health as a co-payment.

Senator MOORE: We have in our submission a graph that shows the proportion that Australians spend compared to other countries. People in the United States spend a lot more, but Australia is right down that end of the scale of OECD countries. That is on page 12 of our submission.

Senator CAMERON: Mr Stankevicius, your submission goes to an area that I have responsibility for—that is, the Department of Human Services—the potential privatisation of Medicare payments. Can you outline to me what you see the concerns there are?

Mr Stankevicius : I think there is a range of protections that we would want to be putting in place to ensure that personal information is being protected and that the point of contact with whatever service provider and the privacy of those kinds of relationships are being protected. One of the things that we have been most concerned about is that a few providers that have been raised as ones that have a large number of shopfronts across the country and therefore might be able to basically replace the service provision model are not necessarily set up to meet the needs of everyone in the population. If you think about Australia Post, for example, none of the post offices I have ever been to have a counter that is low enough for people in wheelchairs or for people with walking sticks so they can actually rest there to have their conversations. We all know that, particularly with the changing nature of rebates that we are seeing and that we have been talking about today, some people need to have those longer conversations with people at the counter. 'I have had this done. I am not sure how much I can claim.' 'How much I will get back? Will it go into my bank account?' 'Actually, you need to refill in this form again.' 'Sorry you cannot hear me.' 'You'll need to speak a bit louder.' Or if it is an Australia Post shopfront, the person next to you could be getting their currency exchanged and someone else could be picking up a parcel, and all of a sudden they are hearing very private conversations about a hysterectomy, about how many times someone has to see their gynaecologist and the fact that they filled out the form incorrectly. There is a whole range of concerns about the way in which that outsourcing model might apply. It is not just a transactional service when it comes to Medicare.

Senator CAMERON: In terms of evidence based policy, no-one has come here and argued that there is any evidence for this policy framework that the federal government is putting forward. Have you seen any evidence based policy or analysis that would justify what the government is doing?

Mr Stankevicius : If the objective is to improve health outcomes, we have not seen any evidence that would suggest that the proposals in relation to rebates or co-payments would improve health outcomes—none whatsoever; in fact the opposite.

Dr Boxall : Essentially it is all about constraining health expenditure, and there are a range of different mechanisms for doing that. Imposing co-payments or cost sharing on individuals is one of many, but it is one of the least effective mechanisms in the long run. It does actually reduce expenditure, obviously, because it imposes a financial barrier to people accessing care, but its long-term impact does not make good economic sense.

Senator CAMERON: Is it the same for rural areas?

Mr Gregory : We are not aware of any such argument as you asked for.

Mr Stankevicius : It compounds one of the examples that we gave from one of our consumer consultation forums last time. We were talking to a woman who has a mental health issue. She has to go and see her psychologist regularly in Melbourne. She is from rural Victoria. The cost that she hands over to see her psychologist is $200 per visit. The cost of her actually accessing that health service ends up costing her over $600, because to travel each way from where she lives to where she can get that service that she so desperately needs, to maintain her health, is more than $200 each way in addition to the actual cost of the service. That is the exacerbation we are going to see.

Senator CAMERON: That goes to this whole issue that Australians are making a significant contribution, outside of the Medicare levy, to their health anyway.

Mr Stankevicius : I think the last time I saw some stats or reporting on the patient transport schemes, they are still expecting people who are going from rural New South Wales, for example, into Sydney for an operation to be able to find accommodation for $40 a night. I think that was the last I saw. You cannot even get a YHA bed for $40 a night in Sydney.

CHAIR: You would probably need hospitalisation after you had stayed in something that cost you $40 a night!

Mr Stankevicius : So there is a level of unreality, I think, in what it is we are expecting consumers, particularly rural and regional consumers, to put up with to access mainstream health services.

Senator CAMERON: What message should we give the Treasury boffins this afternoon, because they will come in with all their economic and fiscal arguments on this?

Prof. Moore : Compare the out-of-pocket expenses for Australians on that graph. It shows that, compared to New Zealand, compared to Germany—Germany is not exactly the poorest-performing economy on earth—Australians are spending much more out-of-pocket expenditure on health.

Senator McLUCAS: We have asked this question of the department previously, and the department has pointed out to us to at one point we were comparing apples and oranges because, between the countries, they are saying, the grocery list of the list of things that are included in the out-of-pockets are different, country by country. The other point that they have made—and I am interested in any comment you might have—is that Australians use complementary medicines at a higher rate than other nations. That is their argument to respond to your table, Professor. Do you want to comment on that?

Prof. Moore : It is challenging research, but the table comes from the Institute of Health and Welfare and we specifically choose to take things from evidence based along those lines. I am sure they spend as much time as they can to try and deal with those sorts of confounding factors. But comparisons between countries are always challenging, of course.

Senator McLUCAS: Of course.

Mr Gregory : Let me give just one simple example relating to the person from country Victoria who has to pay so much money to go to Melbourne to see a psychologist. The Rural Health Alliance, for which we work, currently has a package, which we are promoting, to make rural mental health services better. One element of that package is that currently, under ATAPS, telehealth with a psychologist is not eligible. If Medicare were to be changed so that it were, then the savings would be enormous. That is one small element of how you can redesign a service to fit the needs of both the Treasury and the gentleman or the lady from northern Victoria.

Senator McLUCAS: And in the knowledge that telehealth in that circumstance is quite efficacious.

Mr Gregory : Yes.

Mr Stankevicius : I cannot remember the exact list in my head—I have got it somewhere—of those comparisons about out-of-pocket costs. I know in the top three are PBS medication—so people paying out of their own pocket for PBS medication—

Senator McLUCAS: The co-payment.

Mr Stankevicius : and aids and appliances, which neither level of government actually currently subsidises. If you need to buy a wheelchair in this country, and you talk to some of our millionaires who are in wheelchairs, even they are astonished about the tens of thousands of dollars they have to pay for a reasonable standard wheelchair, and no government is subsidising that anywhere in a lot of cases.

CHAIR: If you want to provide us with that information, I am sure the secretary would be happy to receive it.

Mr Gregory : Out-of-pocket costs as calculated do not include the costs of transport and accommodation, so this 19 per cent, which makes Australia already higher, does not include the extra costs of rural people having to take transport and stay somewhere down in the city or the regional centre. It is not included.

Mr Stankevicius : Or private health insurance rebates. Those figures do not—

CHAIR: We have people paying their Medicare, they are paying their BUPA or some associated—they are out-of-pocket, and now they have to pay at the gate as well.

Prof. Moore : Can I just clarify please: the graph I have is actually from Stephen Duckett, it is not from the Institute of Health and Welfare. I thought I had better clarify that.

CHAIR: Thank you. We will clarify it with Dr Duckett after the break. Thank you very much for your submissions to us and for your evidence here today. We look forward to continuing to hear from you, especially if some of the consultations dry up in two weeks.

Proceedings suspended from 13:25 to 13:47