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Senate Select Committee on Health
05/02/2015

COSTA, Dr Con, President, Doctors Reform Society

WOODRUFF, Dr Tim, Vice President, Doctors Reform Society

[15:47]

CHAIR: I now welcome representatives of the Doctors Reform Society. Good afternoon and thank you for joining us, Dr Costa and Dr Woodruff. I invite you to make a brief opening statement.

Dr Costa : I am the national president of the Doctors Reform Society. I am a GP of about 30 years from Sydney.

Dr Woodruff : I am the vice president, and I am a rheumatologist. I do not practice general practice—I gave that up many years ago!

Dr Costa : I would like to start off by saying just briefly that my experience in general practice is one of underservicing rather than the arguments of overservicing. I particularly draw your attention to the 150,000 or 200,000 people in nursing homes around Australia. Currently, many GPs do not do house calls, much less visit nursing homes. It is hard work: you are taking care of very old people. Many of them are very high care; they are on six or seven different tablets, and quite toxic medication—particularly in combination. They have poor kidney function, they suffer from very bad heart disease, diabetes and dementia, and yet it seems to be considered okay that they get visited once a month for the doctor just to write up their prescriptions. Clearly, that is grossly inadequate and it is a huge problem in Australia. When we talk about a co-payment we really should think how that would impact on such an underservicing situation.

On top of that, we should mention the people who are dying—the terminally ill. It has been shown that in Sydney a sizeable minority of these do not even have a GP. I do not personally know of any GPs—I am sure some do—who participate in palliative care in the home, much less do house calls. So we can see that there is a problem. We are not denying there is a problem; we are just saying that bringing in a co-payment is going to make it worse for these people, as well as worse for Medicare and the Australian population as a whole.

The five dollar cut and freeze on the Medicare rebate is just more cost-cutting on primary health care. To us, it is designed to destroy universal bulk-billing; it will lead to an explosion in primary health costs and then public pressure to allow private health insurance funds to cover the gap. This was actually the health policy of the Liberal Party in 1993 under Hewson, where it was quite clear that they wanted private health insurance to cover the gap. This would effectively be a US two-tier system: expensive costs, reduced primary care—we will go on to that later on—and people going without. I would draw your attention to the measles epidemic in United States at the moment as an example of what happens when you do not cover the whole population. We are all at risk. It will end up being an unsustainable system with health costs around 16 per cent of GDP.

Can I briefly remind the committee of the benefits of Medicare when it came in: it spread doctors out to the outer suburban areas, poorer rural areas, smaller towns and created expanded GP care whereby Australians had a GP, not just the rich in the lower North Shore or the Eastern Suburbs and where the working people were cut out from having a family GP. Many working women, not just rich women, now have personal health checks and a family doctor for their children. So if we lose universal bulk-billing, we lose all of that and we go back to the pre-Medicare days where you only get that if you are wealthy.

The second thing is that Medicare is cheap, cheap, cheap. It costs $37 to see the GP versus $70 to $75 for the AMA, and the only reason that is held back at $70 to $75 is because of competition from Medicare bulk-billing. This thriftiness goes across all items and all disciplines, including pathology and radiology. Before Medicare and bulk-billing, the most common reason for going bankrupt and going to jail in South Australia was failure to pay your medical bills.

The other thing you should not forget is that universal bulk-billing is the biggest controller of health costs in primary health care: you lose universal bulk-billing and you get an upward explosion of health costs. It will not stay at $75, the AMA rate; it will be much higher.

If we are clear on all those things, we get a picture of why it is important to maintain the universality. To us, the co-payment is really a Trojan Horse for the private health insurance funds. It does not really matter whether it is $7. It does not matter if it is $5. It does not matter if it is the $6.15 of the AMA. It does not matter if you are charging it to everybody or just to the wealthier people. It is a Trojan Horse. To us Medicare, despite no support now for about 30 years by successive governments, which has allowed it to languish, remains incredibly popular. Sure, we need some more public policy initiatives—we need to get better care for people in nursing homes and the dying, and doctors to do house calls and get supported by nurses and provide a much more holistic GP service and keep people out of hospital—but still it has remained remarkably robust and remarkably popular. So having failed to wear down the walls of the Medicare stockade, we feel that a co-payment is a Trojan Horse.

Let us be quite clear: the private health insurance funds are very, very keen to get into primary care—some would say it has already started. We have heard stories of the private funds paying fees or some sort of payments to practices in Queensland, and all that is lagging behind is the public policy or the government policy to allow it to happen more openly. This is a great concern for us.

A co-payment for seeing the GP is not about sustainability of the health system; it is about making bulk-billing unsustainable and reducing care to the needy, including the nursing homes and the dying, unless they have got private health insurance. The co-payment is the Trojan Horse: a way of getting into the castle, into the stockade, to take over.

The AMA co-payment is equally unacceptable: it is still a co-payment. It will still encourage doctors to move away from bulk-billing. The practicalities of collecting $6.15 would not make it worth it and already, in actual fact, when you think about it the AMA fee is $70 to $75—I am not sure exactly what it is—which in effect is already $36 co-payment. So the hypocrisy of the AMA talking about introducing a $6.15 co-payment, when their members are already charging a $36 co-payment, is a bit difficult to accept.

Dr Woodruff : I was just going to talk a little bit about what we can do, because there is plenty to do. I am not an expert on efficiency—you have just had an expert on efficiency, Dr Duckett, talking and you have read his submission—but there are things there that we can do both outside the MBS and within the MBS that can achieve the savings that we need to fund any good reforms of the system, and they are being totally ignored by the government. We need to act on them. We need to pressure the government to consider that there are genuine ways to save Medicare, save money and save patients. We do not need to destroy Medicare.

We believe that the reason this is not happening is purely ideological. Dr Costa talked about the issue of private health insurance as the Trojan horse in this whole story of it coming into two-tier primary healthcare access. We have to look at the history. When the coalition was in government under Prime Minister Howard, the government took two steps forward and one step back in their attempt to destroy Medicare as public health insurance and replace it with a two-tiered system. They won very convincingly on the first, and that is that we have two-tiered access to elective surgery. It has been combined with a huge growth in elective surgery because hospitals can do it in private and do it reasonably safely, but they have won that battle very convincingly. People wait three years, as you know, if they cannot afford private health insurance for a lot of elective surgery which would get them back as working, productive people. It is economically stupid, the way we are running the system at the moment, but that is how it is.

They tried to let bulk-billing go away and let the bulk-billing rate down to 68 per cent, as you know. Then Mr Abbott at the time did a huge backflip and effectively gave GPs a $40,000 pay rise for a full-time GP. That worked, and the bulk-billing rate has gone up. They only did that because of pressure from the community scaring them, worrying them about even losing the 2004 election. So the history is very clearly there that this is the agenda, and this is why the economic arguments that are put forward for efficiencies are being ignored and policies that simply do not make sense, either economically or morally, are being pursued. We have a battle on our hands to address that.

CHAIR: Can I go to the commentary that you have put on the table this afternoon with regard to private health insurance. In your submission you made some very clear claims about that, but I would like your reaction to statements from the media release from the Australian Health Care Reform Alliance which I think articulated similar issues. My question is: is this what you mean and is this what you are concerned about? They say:

The changes merely cut GPs’ incomes in a variety of ways, inevitably forcing them to pass on the costs to consumers, including those with Concession Cards. This will pave the way for private health insurance to cover GP fees, signalling the death knell of universal health care. Once GP fees are insurable, it will inevitably mean fees will go up even further and soon a two-tier system will emerge. This may mean more readily available care for those with insurance (as in the Medibank Private trial in Queensland and elsewhere this year) but consequently slower and poorer care for those without, typically those on lower incomes, other vulnerable groups and Aboriginal and Torres Strait Islander people …

We need to look no further than Australia's dental system for clear-cut evidence of what a two-tier system looks like: it is mostly private, mostly expensive, and its public element is under-funded and has long waiting periods for limited care.

Dr Woodruff : Absolutely. This is exactly what we are talking about. This is the situation with that Medibank trial in Queensland, which the Senate has checked out under the legislation proposal previously. They are guaranteeing early access as well as waiving the co-payment—the 'we need a price signal' idea that the government is misleading the population about. They are going to abolish the price signal with the government's blessing. How hypocritical can that be? Price signals are not relevant to this government.; Price signals are only for the disadvantaged and the poor; rich people do not appear to need price signals. Anyway, price signals when you have co-payments are a crazy idea because we have a price signal for somebody on $30,000, which is exactly the same as the price signal for politicians on $200,000 and for millionaires. How can that be a valid price signal? It just does not make sense.

And so one of our concerns and one of the things that we would like to pursue is that we should abolish these so-called price signals and we should look at even the Pharmaceutical Benefits Scheme where we have price signals—$35 or $36 a prescription, which is an enormous price signal for someone on $30,000 a year, especially if they are on three drugs a month. They will eventually, perhaps, get to the safety net—it is quite a big safety net—and people will be denying themselves prescriptions and the evidence is there from the Commonwealth fund on people postponing prescriptions, filling out prescriptions, in the first half of the year. Before they get to a safety net, they will be saying, 'Look, the fridge has broken down. What do I do?' It may be different for a tablet or medication that they desperately feel they need, but a lot of the medication we use is not something that you get a benefit from like that. For example, the statins which we pay ridiculous prices for—the cholesterol-lowering agents—nobody feels any benefit from them. It is a long-term plan.

Dr Costa : What we are saying is: once you stop universal bulk-billing and there are price rises, there will be tremendous pressure from the public, especially from those with private insurance, to have their private insurance cover the gap. That is how we see the Trojan horse working. It is a bit funny that we have a co-payment on the PBS and yet we continue to pay for a generic statin $42 a script when the same statin in New Zealand is only around $3 and in Great Britain around $2. There seems to be a thing where we need parsimony amongst the users and savings amongst the public, whereas we are quite happy to hand over billions of dollars unnecessarily to drug companies. There is a mismatch here that we do not understand.

CHAIR: We keep hearing about the need for a much more integrated, cohesive and comprehensive review of the system rather than these three announcements, which Dr Duckett indicated was a pretty radical pace of announcements and which we have had without any significant consultation with key people. What degree of consultation has your organisation had with either the former minister or the new minister?

Dr Woodruff : None.

CHAIR: None?

Dr Costa : We have not been contacted.

CHAIR: How many doctors do you represent?

Dr Costa : We are not a large organisation. We are fewer than a thousand doctors nationwide. However, we believe we have very strong support around Australia and we are often thought of as an alternative voice to other sections of the medical profession. I would say that our opinion should be sought.

Senator DI NATALE: How often do you and the AMA agree on policy issues? It does sound as though you agree on this one.

Dr Woodruff : We agree on their concern about co-payments, but we do not agree with the AMA's proposal which is about having co-payments.

Senator DI NATALE: You are both critical of the current proposal put by the government.

Dr Woodruff : Absolutely, but we do not see anything right about the suggestion to have an alternative co-payment that is restricted to some group, because it will have the same effect.

CHAIR: I very much like the critique of the sustainability argument. I think you said Medicare is 'cheap, cheap, cheap', not 'unsustainable, unsustainable, unsustainable', which is what we are hearing from the government.

Dr Costa : That is exactly right.

Senator CAMERON: Thank you, Dr Costa and Dr Woodruff, for what you constantly do on these issues. What we have heard today is that this is not really just about bulk-billing; it is about cost-shifting. You have argued that the cost-shift argument would then be taken up by people in the health funds and that that cost-shift should be taken up through the payment of the private health funds, and so you have the two-tiered system in place. If you can afford to be in a health fund, you do not pay the co-payment—

Dr Costa : That's right.

Senator CAMERON: whether that is $7 or $35 or whatever it is. If it comes about, that is Medicare gone, finished, isn't it?

Dr Costa : Yes.

Senator CAMERON: The universality is gone.

Dr Costa : Absolutely. Let us be quite clear about what we will lose. We will lose all those gains that we outlined before. There were very few doctors in the western suburbs. Working people never had a family doctor, and the only women who had pap smears were the women in the inner city. This would come back. People would leave the poorer country towns, for example. There are no hospitals around the poorer country towns, and so where they will go, I do not know. There will be a cost explosion for sure. I am certain there will be a cost explosion, which will need to be covered by the private health funds. And you will lose that control of costs where Medicare bulk-billing is holding back on the whole system.

Senator CAMERON: What we heard from the AMA and the rural doctors—some good people have presented today—is that they are in a small business and that they have to maintain sufficient income to keep the business viable. What we heard from one of the doctors who is part of a 15-doctor practice in Tamworth is that the estimates they have done with the $5 and the freeze is that for them to maintain their income and maintain the viability of their surgeries is that they would have to increase the payment to $100 to see a doctor. Is that unreasonable? I am not saying, 'Is that reasonable that they do that?' but is that something you could see?

Dr Woodruff : I think over time that might be what happens, but whether it is just about the viability of income that would take it to that level, I do not know, because competition plays its part in keeping the costs of health care down in general practice, in small businesses. Doctors are different in how they think, obviously. We are all human. Some people believe that they should have a lot of money for all the hard work they do; other people are happy to work in a community health centre for a quarter or a third their wage, and they are doctors. So what you have suggested or what they have suggested is conceivable. It is not necessarily just what is necessary to make a small run. We are both small businesspeople as well, doing exactly the same thing. It depends upon how much you think you deserve to some extent for all the hard you do. So that is going to vary, but it is going to be substantial. The cost control is lost.

Dr Costa : I think once you lose cost control, once you lose the pull back that bulk-billing holds on the private charging doctors, plus the combination of the insurer covering the gap, $100 is a very gettable amount. Doctors are not going charge less than what they can get.

Dr Woodruff : Not all of them. That is what I am saying: some doctors are going to do that and other doctors will say: 'I don't need that much. I can get by.' It is going to vary.

Senator CAMERON: Yes. You have raised the issue of this policy making no economic sense—

Dr Woodruff : Absolutely.

Senator CAMERON: and I think that has been reinforced time and time again. The AMA is on the same argument with you on that—the economics of this are crazy. You have raised the morality of it as well. But I suppose the morality is about people having access to health care.

Dr Woodruff : Yes.

Senator CAMERON: Have you got any idea what this policy of the $5 plus the freeze will mean in terms of people being able to access?

Dr Costa : It is mean-spirited. It makes no economic sense. It is mean-spirited. It is bad public policy. It is not going to save money, that is for sure; I am certain. It is going to drive up health costs. More importantly, as I started my presentation about, the hidden community cost has reached tragic dimensions for me as a doctor going to that nursing home. I have to tell you that I ended up stopping going to the nursing home because the people were so sick and needy. I was responsible and trying to fit them in at the end of a long day. I felt I was not really giving them the care they needed. It was a terrible, heart-wrenching decision because you are undersupported in the nursing home. The specialists will not come out there. It is very hard to get the patient to go to the specialist. There could have a chest pain in the middle of the day and you are in the middle of the clinic. You might be able to get there in two or three days. Sometimes that stretches to a week. By then they have gone to hospital. So in the end in good faith all I could do was stop going to the nursing home, which meant that the other doctor who was seeing the other 30 patients had to take my 30 patients on top of his workload.

So there are these hidden community costs, which are of tragic dimensions to me at the moment. These are people who fought for this country and who paid taxes all their life. They are in effect being siphoned off into these nursing homes—we are talking about a couple of hundred thousand people. I am not saying that doctors are not doing a good job for them; I am just saying that with the way the system works it is very hard for a doctor to take care of these people. Yet we are talking about a co-payment which is just going to make it so much worse. It is going to isolate these people even more from care unless they have private health insurance and unless the country is paying a lot of money for health care.

Senator CAMERON: You indicated the palliative care and aged-care health issues. Are there any examples internationally where it is done better?

Dr Costa : I am sure it is done better in other countries that have a more holistic system. We are under a private fee-for-service system with perverse incentives here. That is not Medicare. That was there before Medicare and Medicare is underfunding that. You have to have your doctors based around those people in the community who need the care—the really sick people—not sitting in medical centres treating the walk-ins and cut off from the really sick ones, who then depend on the hospital care, which is so much more expensive. We need to move away from fee for service and bring in some capitation. We need to enrol the really sick people with the GP and make the GPs responsible. Stop worrying about how much we are paying the GP and cutting their wages; give them more responsibility. Make it pay for us. Put the savings to the hospitals back into primary care. Do not leave the money in the hospitals when we are saving them money so they can just keep spending it.

There are lots of savings to be made here. There needs to be an inquiry into what is happening in these nursing homes and the palliative care. There is no public policy coming out. There are no initiatives. There it is just cost-cutting and cost-cutting, as if that is some sort of public health policy initiative. It just seems crazy.

Senator CAMERON: It is called reform. The last time I looked at the dictionary 'reform' meant to make things better.

Dr Costa : That is it.

Senator CAMERON: I shake my head.

CHAIR: Yes, making things worse and a lot more expensive. I know Senator Di Natale was seeking in his former questioning some responses on exactly the matters you have raised there—the whole notion of blended models of care and funding. Over to Senator Di Natale.

Senator DI NATALE: If you were speaking to the new Prime Minister next week, what would be the three key areas you would list to change in health?

Dr Costa : The three things?

Senator DI NATALE: Yes, if you had to pick three things that you think would make a big difference to healthcare delivery and potentially to savings.

Senator CAMERON: So is that for the Prime Minister or getting in early!

Senator DI NATALE: No, no. Honestly, you never know. You might have an audience with a new Prime Minister next week who is very interested in health reform. If you had to pick three areas that you think we should be focusing on right now—you have made your views clear on co-payments and the MBS—what would they be?

Dr Woodruff : I think the first priority is to improve primary health care. To improve that, we need to have it integrated and appropriately funded. It will pay for itself in terms of reduced hospital admissions, for example. It will pay for itself in terms of—

Senator DI NATALE: But what would you do? What would you recommend needs to be done in primary care?

Dr Woodruff : One of the things, which is about integration and making people not have to traverse the many different aspects of primary care to get proper care, would be to take the Labor Party initiative of Medicare Locals—which have fortunately not been completely chucked out and still are primary healthcare networks—and help them to evolve to be a strong, coordinating force to integrate the health system so there is much less duplication at the primary care level at least and it is much easier for patients, so that patients get much better access. I think that that would be a huge direction to take.

Senator DI NATALE: Is there anything in the area about the way primary care is funded at the moment?

Dr Woodruff : We are on record as saying that we think we should move away from totally fee-for-service, definitely. That is because it is a barrier to the teamwork that we need for that coordination of care and it has got all the perverse incentives that we were talking about: every little item has to be checked and filled. It just creates this crazy situation that we have now. We could move much more to block funding, enrolment and cavitation; all of those need to be considered. If there was more blended care at least, which already exists to a small extent, then we would have a lot better primary health care. It would allow, if you throw in all of those things, general practitioners to get into nursing homes and to help the aged in their nursing homes and at home. But it has to change, because this fee-for-service model just does not work for them.

Dr Costa : Can I give you one example to simplify this? Bupa, which has quickly become the second largest organisation, together with Medibank Private now control almost 70 per cent of the market. They have made an excellent suggestion. That is, to put salaried doctors in nursing homes. That is an excellent suggestion. Why aren't we doing it? Why isn't Medicare doing that? That is because if Bupa did it, who would they treat? They would only treat privately insured people.

Senator DI NATALE: They are doing it because it would save them money.

Dr Costa : It would save them money in their private hospitals.

Senator DI NATALE: They point of them doing it is that they are a business and they recognise that these people are costing them a lot of money.

Dr Costa : What I would say to the Prime Minister is: 'Why aren't we doing that? You have got nursing homes with 200 people in them.'

Senator DI NATALE: And they are going in and out of hospitals.

Dr Costa : Most of their care is in EDs and hospitals. But that is not just for GPs, why not for the specialists? Before, those old people all lived somewhere else. Their old specialist is now in Woop Woop. Why aren't you allowing people to have a specialist go there and let people opt in with the specialist who visits? Just on that level, there is so much that could be done.

Senator DI NATALE: You mentioned Bupa as an example of doing something that perhaps the government should be doing, which should be universal. Would there be anything you would say about the funding or the subsidies that are provided to the private health insurance industry? Do you think that is money well spent?

Dr Woodruff : No. We are on record as saying that the private health insurance rebate should be removed. To do that, we would also need to have adequate hospital funding to make up for the downside of that. I am not suggesting that suddenly be removed like that, because that might cause chaos; but it certainly should be pared back. We welcome the fact that it is not going up now according to however much they want it to, which is because of legislation. But it is still going up. We think that the private health insurance rebate is a complete waste of money.

Senator DI NATALE: But doesn't it take the pressure off hospitals? Isn't that the argument that is used?

Dr Woodruff : It is the argument that is used, and it has been found time and again to be false by almost every bit of evidence that comes out. The fact is the load on public hospitals is, if anything, greater—we have longer waiting lists, we have patients waiting more time. The biggest threat to private health insurance and its industry, and the private health sector, is having a good public hospital system, a good public system. That is what they are worried about. And that is precisely why, carefully organised, the Howard government let its contribution to hospital funding decay down to 38 per cent over the time that they were in government. It puts pressure on people to have private health insurance. And it worked. The rebate did not do it. The rebate is just a complete waste of money funnelled through an expensive intermediary—the private health insurance companies—and we could get a so much bigger bang for our dollar if we were spending that directly on hospital care.

Senator DI NATALE: So you are suggesting that, rather than spending—I do not know what it is at now, but six or seven billion—

Dr Woodruff : Seven billion.

Senator DI NATALE: Rather than subsidising people to take out private health insurance, that money should be invested directly in purchasing services, whether they be in public or private hospitals?

Dr Woodruff : That needs to be worked out, and I am not quite sure whether it should be one or the other or a mixture of both, but yes. That is the direction we should be moving in.

Dr Costa : I would invest it in primary care and keep people out of hospital.

Senator DI NATALE: Yes, point taken.

Dr Woodruff : We need to do that, but we also need—

Senator DI NATALE: People will still need hospitals, won't they?

Dr Woodruff : We still need hospitals, we still need the ambulances at the bottom of the cliff. So we do have to be careful about that.

Senator CAMERON: We have just got to stop people falling over.

Dr Woodruff : We want them to stop falling over! Let us work on that, too.

CHAIR: I think we would like to keep a few of those ambulances off the ramps as well. That is another big problem. Can I thank you, Dr Woodruff and Dr Costa, for your contribution to the hearings today. We have heard with some concern that the consultation phase with the new minister may be as short as two weeks before they make any further commentary. We invite you to put further submissions to us to put in the public place—ideas that you would like to see advanced in terms of policy, just so the whole thing does not go underground or disappear completely.

Dr Woodruff : It will not.

CHAIR: We look forward to further contributions. Thank you very much.

Dr Woodruff : Thank you very much.

Dr Costa : Thank you.