No. 152

HEALTHCARE COST PROJECTIONS LOOK PRETTY SICK

STONE the crows! Who’s doing the diagnosing of medicine’s maladies?

Nine out of ten medical experts will tell you doctors are over-worked and under-paid. And the 80 per cent of patients who are bulk billed say they need easier access to more medical services, presumably to ensure their constitutional right to immortality.

The problem is that all this costs ever-increasing amounts of money. Total health spending has increased, in constant dollars, from $77bn in 2000 to $130bn in 2010. [i] It is cash Canberra is short of now and will not have in the future, given that the longer people age the more they collect in social security.

We could spend the entire Commonwealth budget on health but it would not be enough to stop the complaints. And all players in the health game are champion complainers.

Have you noticed the TV campaign and electronic billboard on the approach to the domestic terminal at Kingsford Smith by the nurses union demanding improved patient ratios? [ii] Seen the advertisement in television from home care nurses demanding more staff?[iii] Or heard that the Opposition has guaranteed money for medical research, evidently not wishing to cop anything like the 2011 campaign when scientists took to the streets in protest at a rumour Labor was going to cut their funding?[iv]

And does anybody remember a state government doing something significant that specialists did not like? The Crows think it was Laurie Brereton’s “beds to the west” campaign.[v] Brereton? Well he was a Labor minister when, … oh never mind.

Sure, an ageing population and an activist workforce are big parts of the problem, but health is also an industry that creates its own demand. As national treasure of social policy research Bob Birrell points out, in the last six years the number of GPs grew by 17 per cent, twice the rate of population growth. Commonwealth payments to GPs were up by 8 per cent and their services per individual each year grew from 4.9 per cent in 2004-2005 to 5.7 per cent in 2011-12.[vi]

It did not take long for the health industry to respond to Birrell’s figures. According to health policy experts Peter Sivey and Anthony Scott, more GPs is a good thing since they address previous doctor shortages and unmet demand because people in the past have delayed or not-seen a doctor due to the cost. In any case, “it’s difficult to define over-servicing without knowledge about what the right level of servicing is.” They suggest (what a surprise!) more research to find out.[vii]

The Crows don’t see the connection either; perhaps people decide not to go to the doctor because they get better themselves or just don’t feel that crook.

This is not the first time Dr Birrell has weighed into supply and demand for doctors and it ties neatly with his long-standing interest in who immigrates to Australia and at what impact on economy and community. A decade back he was warning that a shortage of locally qualified quacks was leading to more foreign medicos practising here, and these newcomers needed further study to get up to speed.[viii]

Back then, the accepted wisdom was that Australians were suffering from a previous orthodoxy that had restricted the supply of doctors on the assumption they generated their own infinite on-costs.[ix] Not to mention actually hindering health:

Medical workforce supply well in excess of need has undesirable outcomes including large unnecessary training costs, the costs of servicing above levels where it is likely that improvements in health status are effected, poorer health outcomes in some fields of over-servicing, and reduction in quality of care to the consumer if consultation time is reduced too much or if all medical problems cannot be considered in the one consultation.[x]

It makes sense to the Crows, especially when millions of medical consumers need not heed price signals, as the taxpayer picks up the tab for visits to the doctor and drugs. But it is now out of fashion; with the surgery refrain now being that we need more doctors, and lots of them.

Never mind that Treasury and taxpayer are screwed, which ever is right – the health burden will become ever heavier. As the admirable Anne-marie Boxall puts it; ”Slowing growth in health expenditure … is not a simple policy problem that can be solved with technical solutions.” [xi]

But inevitably technical solutions are all that exist.

To avoid ending up a medical equivalent of Frederic the Great’s garrison state – with an economy devoted to keeping the health system happy – we are going to need a great many new ideas from health economists on how to improve productivity and from medical ethicists on who wins and loses as ever more expensive health care is rationed.

The Crows don’t think this is the sort of research Sivey and Scott are calling for but it is what, sooner or later, we are going to get.

ENDNOTES