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Commentary by David Guest

The new Coalition government hits the ground reviewing.

The report on the troubled PCEHR project has been delivered to the Minister but not released. On 16 December 2013 it was announced that Professor John Horvath, former Australian Chief Medical Officer, would review the Medicare Locals. Submissions to the review closed on 20 December.

A number of organisations have already been abolished or absorbed by other Federal Departments. Gone are the Department of Science, the Climate  Commission, the Foreign Aid Agency, AusAid ( Australian Agency for International Development), the Clean Energy Finance Corporation, the Immigration Health Advisory Group and the National Adoption Advisory Group. Federal government support for the Murray Darling Basin Authority and the Marine Parks Authority has been reduced. The funding for the legal aid services (Aboriginal and Torres Strait Islander Legal Services, Community Legal Services and the Family Violence Prevention Legal Services) has been drastically cut.

A trend is emerging.

The National Commission of Audit was announced in October 2013 by the Treasurer, Joe Hockey. The Commission's interim report is expected at the end of January and the final report prior to the May Budget. The Commission is charged with identifying "areas of unnecessary duplication between the activities of the Commonwealth and other levels of government" and to “identify areas or programs where Commonwealth involvement is inappropriate, no longer needed, or blurs lines of accountability.”

Just prior to Christmas Terry Barnes, through the Australian Centre for Health Research (ACHR), submitted a proposal to the Commission recommending a six dollar co-payment for GP visits. The payment would apply to the first 12 visits to a GP for the year and hence be capped at $72. Most medical groups and health economists have argued against the introduction of this payment saying it will have no effect on the vast majority of consultations but would unduly affect the elderly and the poor; namely those who are the most in need of medical care and the least able to afford it.

A few medical practitioners and economists have endorsed the proposal agreeing with the principle that patients need a price signal to remind them that health services are not a "free good". Unfortunately the price signal sent to patients varies with their disposable income, so a set fee is a fairly blunt instrument.

It has also been noted that the administrative cost in collecting a six dollar co-payment is probably about the same for bulk billing practices as the fee itself. It may not be worth their while charging such a low fee. This could result in them abandoning bulk billing and charging a much higher fee or alternatively accepting a lower rebate. This is probably the real effect envisaged by the ACRH but it would further constrain the delivery of services in disadvantaged areas.

The amount of money raised by this proposal is relatively modest, $750 million over four years. However extending the co-payment to pathology, radiology and optometry would save over one billion dollars each year. General practitioners are likely to agree with the view that there is more waste in diagnostic services than general practice.

Is there much evidence of over-servicing amongst GPs? In rural Australia bulk billing is far less common than in metropolitan areas. GP fees on the Northern Rivers have largely kept pace with CPI and so now are roughly twice the rebate. At least on the North Coast patients are sent the  price signal the ACHR recommends.

In the thirty years since the introduction of Medicare Professor Keryn Phelps has commented on the increasing complexities of managing an aging population with increasingly chronic complicated illnesses while at the same time noting the Medicare payments driven financial pressure to avoid the longer consultations that these problems require. North Coast surgeries have partially addressed these problems through the setting up of care teams to share the burden of managing these chronic diseases.

What will the Commission of Audit recommend? The co-payment for GP services on its own would seem to generate too little return for so much policital heat. However extending the co-payment to diagnostic services could make it worth the government's while and would help to reduce the duplication of these services. This will strike a chord with the Commission and with the Abbott government.