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Monday, 15 June 2009
Page: 5917


Ms OWENS (4:40 PM) —I rise to support the Health Insurance Amendment (Extended Medicare Safety Net) Bill 2009. It is an extremely important bill for the sustainability of the extended Medicare safety net. The purpose of the extended Medicare safety net is to protect patients from high out-of-pocket medical costs for out-of-hospital medical services such as GP and specialist services. Relative to the total health budget it is quite a small component but is an incredibly important one.

While most people face out-of-pocket costs of less than $50 a year, some members of the community face significant medical bills for out-of-hospital services. In 2007, around seven per cent of individuals had out-of-pocket costs of over $300 per year—add those up for families. And in 2007, 11,000 Australians incurred out-of-pocket costs of more than $2,000 each. The number of people with these very high out-of-pocket costs initially fell after the Howard government introduced the EMSN in 2004 but rose very quickly again shortly after that and has been rising since.

The benefits are highly concentrated in certain types of services. In 2007, over 30 per cent of all EMSN benefits helped fund obstetric services and 22 per cent went towards assisted reproductive services. The EMSN has more than doubled the amount of Commonwealth funding going towards these two professional groups. Only eight per cent of the EMSN benefits went towards the funding of general practice consultations. There is also an extremely effective program directing assistance to cancer patients relative to other patients with high healthcare needs. Given that over 50 per cent of EMSN payments go towards people for obstetric services, assisted reproductive services and chronic illnesses, you can see how incredibly important a program it is. It is incredibly important that it is sustainable over the long term so that we can continue to provide assistance to people with the greatest need.

It is a relatively new program. It was introduced by the Howard government in 2004 to tackle high out-of-pocket costs for medical services. Under the EMSN, patients are reimbursed 80 per cent of their out-of-pocket costs for all out-of-hospital Medicare services once annual personal expenditure on these reaches a certain threshold, which was indexed annually. Prior to the introduction of the extended safety net in 2004, there was a limit on the amount of government contribution for services. That was done through the Medicare schedule fee. In fact, for the first eight or nine years of the Howard government, contributions to this area were capped by those Medicare schedule fees. But in 2004 that cap was removed and instead 80 per cent of out-of-pocket costs or out-of-hospital services were paid no matter how much the doctor charged. You would expect that, if you removed the cap in that way, there would be some doctors and specialists who would increase their fees or who would think: ‘Okay, I can increase my fee by 50 per cent, or 80 per cent or whatever, and it will still be paid by the 80 per cent contribution for out-of-pocket costs.’ Some did and costs started to rise, and between 2007 and 2008 they rose 30 per cent.

That rise in the spending on EMSN benefits has not been matched by a drop in patients’ out-of-pocket costs. In fact, since its introduction there have been concerns that the EMSN may lead providers to increase fees and thereby dilute the potential benefits to patients. Since the introduction of the EMSN, average fees have increased by around 4.2 per cent per year, excluding general practice and pathology, which have been fairly stable. This increase is over and above the rate of inflation and it is estimated that the EMSN is responsible for 70 per cent of the increase. It was directly responsible for a 2.9 per cent increase in fees each year. It becomes a question of whether the taxpayer should pick up the increase in fees by the specialists.

The rise in costs was also of concern to the Howard government. In fact, in 2005, just one year after the scheme was introduced, concerns were such about the charging of excessive fees by some doctors that the government raised the safety net expenditure threshold so as to reduce the number of people who would qualify for the EMSN and rein in costs. They did not consider capping again at that stage but they did raise the threshold, which meant that people had to spend more of their own money before becoming eligible. It reduced access to the scheme. The original thresholds were set at $300 for concession card holders and FTBA recipients, and $700 for all others. Those were increased to $500 and $1,000 in 2005. After indexation, the thresholds now sit at $555.70 for concession card holders and people who receive family tax benefit part A and $1,111.60 for all other singles and families. But costs still continue to rise. Consistent with the fact that people in affluent areas incur more out-of-pocket costs, it was found that some 55 per cent of EMSN benefits is distributed to the top quintile of Australia’s most socioeconomically advantaged areas, whereas the least advantaged quintile receives less than 3.5 per cent. That is, 55 per cent for the top quintile and 3.5 per cent for the lowest.

In rural areas costs have not increased in the same way. Over time, average out-of-pocket costs increased most in major cities, although the median in the major cities was quite stable, which suggests that the higher out-of-pocket costs in major cities are faced by those at the upper end of the distribution. Interestingly enough, over time the difference between the average and the medium is actually increasing, showing that the difference between the highest-charging specialist and the average-charging specialist has increased dramatically.

We know a lot about the nature of the rising costs because there has been extensive review of the program, with a report coming down in 2009. As required under the Health Legislation Amendment (Medicare) Act 2004, a review was undertaken of the operation, effectiveness and implication of the safety net. That was conducted by the Centre for Health Economics Research and Evaluation at the University of Technology in Sydney. The report noted that the safety net has helped patients who have very high costs and has reduced out-of-pocket costs for some patients with cancer, but it clearly showed that there were major concerns in areas such as obstetrics and assisted reproductive technology, including IVF. Fifty per cent of the safety net benefits are paid in those two areas. Medicare benefits have more than doubled for both these groups since the safety net was introduced. A significant proportion of the increase in expenditure is because of the increases in fees charged.

There is also a substantial difference between in-hospital and out-of-hospital fees. Between 2003 and 2008, the fees charged by obstetricians for in-hospital services reduced by six per cent while the fees charged for out-of-hospital services increased by 267 per cent. That is an extraordinary difference in changes in fees over a relatively short period of five years. Similarly, the fees charged for assisted reproductive technology services fell by nine per cent for in-hospital services and rose by 62 per cent for out-of-hospital services. This indicates that some doctors have been taking advantage of the safety net as their fees for out-of-hospital services have increased far in excess of the fees that they are charging in hospitals.

The report also showed that, while EMSN payments have provided many with financial relief from significant out-of-pocket medical costs, those in the greatest financial need may be missing out on the benefits. The review found that, for every EMSN benefit dollar that is paid to a patient, 78 per cent went towards meeting the doctor’s higher fees rather than reducing the patient’s out-of-pocket costs. Further, those who have benefited most from affordable services have tended to be in the wealthier areas as they are in a better position to access the more expensive specialist services in the first place.

One would expect that costs would rise over four years, but rises have been extraordinary in some areas and quite modest in others. There is also, as I said, the substantial difference between in-hospital and out-of-hospital fees, with extreme variations in fees charged by specialists for the same services. The purpose of this amendment is to ensure that taxpayers’ money goes to reduce the out-of-pocket expenses for the benefit of patients and not to inflate the fees of some specialists in some circumstances. The consequences of fee rises are felt not just by those accessing the extended Medicare safety net but also by people who have not qualified for the safety net and also face those higher costs. This amendment allows the Minister for Health and Ageing to determine the maximum benefit that would be paid under the safety net through a legislative instrument to allow for parliamentary scrutiny. The report identified six areas of particular concern where fees have risen in an irregular way and well above others. Those six specific areas are obstetrics; assisted reproductive technology, including IVF; some cataract operations; some hair transplants; varicose vein treatment; and several procedures involving the injection of a therapeutic substance into an eye. These areas have more than doubled since the safety net was introduced and, disturbingly, this increase is directly accounted for by increases in the fees charged by specialists.

In cases such as these, particularly when 50 per cent of the costs associated with this extended Medicare safety net program go to areas such as reproductive health, there was always considerable controversy with any change that was made. We have already heard from the members of the opposition today stories of great pain and grief and joy of people undergoing IVF treatment in recent years under the current laws. We have already heard some of those. We have heard stories of hospitals in regional areas whose departments have shut down or had their funds cut back. That particular issue, of course, is not related to this particular bill, but I would like to cover two particular areas—the cataract area and assisted reproductive technology—because I know that they are areas where it is very easy to frighten people who are already very fearful about what the future might hold for them.

When it comes to cataracts, the changes announced in the budget represent the first time in 13 years that a government has reviewed the payment for cataract surgery. Over the past 13 years there has been significant advancement in the technology used to carry out cataract operations, which means that operations can now be performed faster, with better results and with greater safety for patients. The changes made by the government more accurately reflect the time taken to carry out these procedures, which typically, these days, is around 20 minutes. For this 20 minutes of work the new standard Medicare Benefits Schedule fee will be $419.85. To put this into context, currently the cataract procedure takes around 20 minutes and has the same fee as the payment made by government for complex skull surgery, which takes more time to perform and carries a far greater risk for the patient. Ninety-five per cent of cataract procedures are undertaken in hospital.

Assisted reproductive technology is also an area where it is very easy to frighten people who are already afraid that circumstances for them will be worse than they are now. For the vast majority of people undergoing IVF, this will not be the case. On average, patients are charged around $6,000 per IVF cycle, yet some doctors are charging in excess of $10,000 per cycle. Patients who see the specialists who charge around that $6,000 or less will not be worse off under these changes. From 1 January the Medicare items for ART services will also be restructured to better align the items to the phases of treatment involved in the ART cycle. This will help to spread the costs and caps across the treatment cycle to better reflect the costs involved at each stage of the treatment cycle.

At the same time the government is also investing $157.6 million in increasing the Medicare rebates for obstetric services, and $120.5 million in maternity services to improve options for women and support those doctors that do not charge high fees. Those changes have been particularly welcome in my electorate. I have met recently with a number of mums who are planning pregnancies in the next few years and are extremely pleased at the greater range of services that will become available because of those changes.

The government remains committed to the extended Medicare safety net. It is a very important part of health services in this country and incredibly important for people facing quite difficult times in their lives. In 2008, though, expenditure on the safety net was $414 million, 30 per cent more than it was in 2007. Unless we make these changes now and support people in meeting their reasonable out-of-pocket costs, this expenditure will continue to grow rapidly. As a government, we cannot continue to see costs rise because of the rise in excessive fees at the upper end of a few small sections of our medical services. This bill creates a mechanism by which the government can responsibly manage the safety net, and it is extremely important for supporting the sustainability of the safety net so that singles and families can continue to receive this incredibly important assistance with their out-of-pocket costs.