Advocates Of US Managed Health Care Solutions For Australia Embarrassed By US Health Costs Explosion – 4 April 1997

Zealots of U.S. Managed Health Care solutions for Australia have been embarrassed by the latest reports from the United States indicating that health costs under Managed Health Care are set to hit double digits by 1998.

A spokesman for the Australian Health Insurance Association, Mr Russell Schneider, has been reported in ‘Australian Doctor’ on 21 March 1997 as stating that “Health Funds would drive the introduction of Managed Care (in Australia) which would see doctors contracted to Funds for the provision of health services”. Mr Schneider predicted “that Managed Care would probably be introduced in Australia in five to fifteen years and would receive Government endorsement as the only viable way of containing health costs”. He said “the Funds would choose hospital and doctors” and “patients would not receive a benefit unless they used doctors chosen by the Funds”.

However, a report in an American publication ‘Business Weekly’ of 17 March 1997 entitled ‘Health Care Inflation: it’s Baaack!’ flies in the face of those who are advocating Managed Health Care as a way of reducing Australian health costs. The report predicts that in the United States under a Managed Care system – “for 1997 health care spending is rising more quickly than other prices and in 1998 costs could shoot up to double digit pace”.

The report also backs up recent work by American academic Dr Susan Horn, Professor of Medical Informatics at the University of Utah’s School of Medicine, who found that strategies to restrict General Practitioners prescribing rights had actually added to health costs in the US. Her research is as a result of a year long study which showed that restricting the doctor’s ability to treat disease increased the number of visits to physicians, casualty and resulted in higher rates of hospitalisation.

Spokesman for the Australian Doctors’ Fund, Stephen Milgate said, “that research is now showing what doctors have advocated for some time namely, that the least expensive treatment comes about when a doctor is able to get a patient better as quickly as possible”.

“The use of General Practitioners as first point of call, backed by a specialist network and affordable co-payments were the most cost effective way to deliver medical care” Mr Milgate said.

Americans are now finding out to their dismay that attempts to by-pass the doctor-patient relationship through the imposition of Managers (Managed Care) did absolutely nothing to reduce the health costs – quite the opposite.

The Australian Doctors’ Fund in coalition with many other medical groups has long maintained that “Managed Health Care” would not contain cost pressures in health care.

“The American public are now demanding legal retribution and damages for the pain and suffering Managed Care has inflicted on them, in particular, legal loopholes which have prevented class action cases against Managed Care companies are now under attack. Future payouts to victims of Managed Care will add substantially to the cost of US Health Care. Why anyone would advocate such a system here in Australia is beyond explanation”, Mr Milgate said.

Instead of failed overseas solutions the answers lie within our own grasp:

Firstly, patients must be helped to pay for minor medical expenses themselves directly. We Australians must get to know what medical treatment really costs, what an x-ray costs, what a test costs. There must be price signals. Poor people pay $4 for Meals on Wheels but millionaires can choose to be bulk billed for medical services.

New products such as Medical Savings Accounts that help people save for their future medical and hospital bills must be allowed to develop. At the moment Australians have no incentives to operate their own health savings plans and federal health bureaucracy is intent on stifling any innovation in this direction.

Medicare, (a taxpayer funded health financing system) must be better targeted to finance the treatment of major illness episodes. The emphasis must be changed from Medicare paying everyone’s ‘little bills’ to getting Medicare to subsidise ‘health catastrophes’.

A vibrant and well financed public hospital system targeted at the needy both in terms of chronic illnesses and financial hardship must be maintained and enhanced as a safety net.

The Right Honourable Sir Robert Gordon Menzies said it all; “I would hate to see, in my own country, any Government scheme which lowered the importance of the doctor-patient relationship”.

Mr Milgate said “Positive health care financing solutions that give choice, responsibility, flexibility and freedom while providing protection is the only way forward”.