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HEALTH CARE DELIVERY AND FINANCING
Diagram 9.39 shows the major flows of funding between the government and non-government sectors, and the providers of health goods and services.
9.39 STRUCTURE OF THE AUSTRALIAN HEALTH CARE SYSTEM AND ITS MAJOR FLOW OF FUNDS
Medicare is Australia's universal health insurance scheme. Introduced in 1984, its three objectives are to make health care affordable for all Australians, to give all Australians access to health-care services, and to provide a high quality of care.
Medicare benefits provide financial assistance to people who incur medical expenses for selected professional services rendered by medical practitioners, participating optometrists, practise nurses, dentists and other allied health professionals. Medicare benefits are based on a schedule of fees.
Practitioners are not required to adhere to the Schedule fee, except for optometry, which is a participating scheme under which practitioners sign an undertaking to charge no more than the Schedule fee for the services they perform.
Where practitioners bulk bill Medicare Australia, they receive the Medicare rebate, and they cannot levy additional charges on the patient.
Medicare benefits do not cover services to public patients in public or private hospitals, services provided under Veterans' Affairs arrangements, some compensation cases, and some services provided under other publicly funded programs.
For private in-patients in hospitals or approved day surgeries, the Medicare benefit is 75% of the Schedule fee. Amounts paid in excess of the rebate may be claimed under private health insurance arrangements.
For non-hospital services, from 1 January 2005, the Medicare benefit is 100% of the Schedule fee for out-of-hospital non-referred (GP) attendances, including practice nurse items, and for all other out-of-hospital services, 85% of the Schedule fee or the Schedule fee less the maximum gap ($61.50 from 1 November 2005 - indexed annually), which ever is greater.
With effect from 1 February 2004, additional benefits (from 1 November 2005 - $5.15 and $7.85) are paid to GPs as an incentive for bulk billing. The $7.85 incentive applies to bulk-billed services provided by GPs, to persons under 16 years of age or concession card holders, to persons in Tasmania or in specified rural and remote areas and with effect from 1 September 2004, to a number of other geographical areas. The $5.15 incentive applies to bulk-billed services provided by GPs to persons under 16 years of age or to concession card holders in other parts of Australia.
A number of 'safety net' arrangements apply for patient-billed services provided out-of-hospital. Under the original Medicare Safety net, when gap payments (fee charged less benefit paid and where fee charged is less than Schedule fee; or Schedule fee less benefit paid, where fee charged is at or above the Schedule fee) exceed $345.50 for an individual or family in calendar year 2006, Medicare benefits increase to up to 100% of the Schedule fee for the remainder of the calendar year. Under the Extended Medicare Safety Net, for Commonwealth concession card holders and families who receive Family Tax Benefit Part A, once out-of-pocket costs (total fee charged less benefit paid) exceed $500 in calendar year 2006, Medicare covers 80% of the out-of-pocket costs for the remainder of the year. For other singles and families, Medicare covers 80% of the out-of-pocket costs, once those costs have exceeded $1,000 in calendar year 2006.
In 2005-06, the Health Insurance Commission paid benefits of $10,976.3 million (m) ($533.46 per person) for 247.4 million items of services (12.0 services per person).
When Medicare began in 1984, a levy was introduced as a supplement to other taxation revenue to enable the Australian Government to meet the additional costs of the universal national health care system, which were greater than the costs of the more restricted systems that preceded it.
The Australian Taxation Office estimated revenue raised from the Medicare levy in 2004-05 to be $6.1b which represents 17.2% of estimated total Australian Government health expenditure for the year.
PHARMACEUTICAL BENEFITS SCHEME (PBS)
The Australian Government provides Medicare-eligible people with affordable access to a wide range of necessary and cost-effective prescription medicines through the PBS. The following details relate to charges and 'safety net' levels applying at 1 January 2006.
Medicare-eligible patients who do not hold a Health Care Card, Pensioner Concession Card or Commonwealth Seniors Health Card, are required to pay up to the first $29.50 for each prescription item for medicines listed on the PBS. Concessional patients who hold a concession card must pay $4.70 per prescription item.
Individuals and families are protected from large overall expenses for PBS-listed medicines by safety nets. For general patients (non-cardholders), once the eligible expenditure of a person and/or their immediate family exceeds $960.10 within a calendar year, the additional payments the patient has to make per item (co-payment) decreases from $29.50 to the concessional co-payment rate of $4.70.
For concessional and pensioner patients (cardholders), once their total eligible expenditure exceeds $253.80 within a calendar year, any further prescriptions are free for the remainder of that year. All pensioners continue to have their pensions supplemented by a pharmaceutical allowance of $2.90 per week payable fortnightly, or $150.80 per year, to help defray their out-of-pocket pharmaceutical expenses. The allowance is not paid to other concessional beneficiaries.
Patients may pay more than the relevant co-payment in certain circumstances. A special patient contribution is payable for a pharmaceutical benefit where there is a disagreement between the manufacturer and the Government over the dispensed price for that benefit item. This extra charge is paid by all patients, together with their usual patient contribution.
In 2005-06 the PBS had 168.3 million benefit prescriptions, representing a cost to the Government of $6,163.1m (table 9.41).
The number of PBS subsidised prescriptions per person in 2005-06 was 8.2, compared with 8.3 in 2004-05. The number of subsidised prescriptions decreased by 1.1% over the previous year, and the cost to Government of these prescriptions grew by 2.7% (in current dollars).
The rate of change in prescription numbers and their cost reflects the ongoing trend towards newer and more costly medicines.
PRIVATE HEALTH INSURANCE
At 30 June 2006 private health insurance was offered by 38 registered health insurers, giving a voluntary option to all Australians for private funding of their hospital and ancillary health treatment. It supplements the Medicare system, which provides a tax-financed public system that is available to all Australians. Depending on the type of cover purchased, private health insurance provides cover against all or part of hospital theatre and accommodation costs in either a public or private hospital, medical costs in hospital, and costs associated with a range of services not covered under Medicare including private dental services, optical, chiropractic, home nursing, ambulance and natural therapies. Overall, the private health sector funds around a third of all health care in Australia.
HEALTH INSURANCE COVERAGE
The introduction of Medicare in 1984 resulted in Australians' participation in private health insurance steadily declining. The introduction of the Australian Government 30% rebate on private health insurance in 1999, and the Government's Lifetime Health Cover policy in 2000, saw participation in private hospital cover increase strongly, with participation rates rising from 31% in June 1999 to 46% in September 2000. Rates appear now to have stabilised, with a participation rate of 43% for the three months ending June 2006 (graph 9.42).
FUNDING OF HOSPITALS
Australian Government funding to the state and territory health systems is made through the Australian Health Care Agreements.
In 2005-06 total Australian Government funding under the Australian Health Care Agreements was around $8.4b. Of this amount, over 99% was paid to the states and territories as Health Care Grants, while the residual was either allocated to national initiatives in areas of mental health, palliative care and casemix development, or paid to those states and territories which were eligible to receive financial assistance from the Pathways Home initiative.
In 2004-05 there were 759 public hospitals nationally, including 20 psychiatric hospitals, compared with 749 in 2000-01. There was an average of 55,112 beds in public hospitals during 2004-05 (table 9.39), representing 68% of all beds in the hospital sector (public and private hospitals combined). Public hospital beds have increased from 2.7 beds per 1,000 population in 2000-01 to 2.8 beds in 2004-05.
The number of patient separations (discharges, deaths, and transfers) from public hospitals during 2004-05 was 4.3 million compared with just under 3.9 million in 2000-01. Same-day separations accounted for 49% of total public hospital separations in 2004-05 compared with 46% in 2000-01.
Total days of hospitalisation for public health patients during 2004-05 amounted to 16.7 million, an increase of 6% since 2000-01. The average length of hospital stay per patient in 2004-05 was 3.9 days. For 2000-01 the corresponding figure was 4.1 days, reflecting a steady increase in same-day patients up to 2004-05. If same-day patients are excluded, the 2004-05 average length of stay was 6.7 days which is the same as 2000-01.
There were 532 private hospitals in operation in 2004-05, comprising 285 private and acute hospitals and 247 free-standing day hospital facilities. The number of acute and psychiatric hospitals has decreased since 2000-01 when 299 of these hospitals were in operation. In contrast, day hospital facilities have shown strong growth for several years, with only 217 in operation in 2000-01.
For private acute and psychiatric hospitals during 2004-05, the average number of beds available was 24,346, lower than the previous year. This was mainly due to a decline in the average number of beds available in regions outside the capital cities. Between 2000-01 and 2004-05, the average number of beds available decreased by 0.5%. There were 1.3 private hospital beds available per 1,000 population in 2004-05. The average number of beds or chairs available at free-standing day hospital facilities (used mainly for short post-operative recovery periods) increased over the same five-year period by 8.6% to 1,833, reflecting the continued growth in the number of free-standing day hospitals.
Private hospital separations in 2004-05 totalled more than 2.8 million, of which 80% were from private acute and psychiatric hospitals and 20% from free-standing day hospital facilities. Same-day separations accounted for 63% of all private hospital separations (compared with 49% of public hospital separations). This higher proportion of same-day separations contributed to the lower average length of stay in private hospitals (2.6 days) compared with public hospitals (3.9 days) (table 9.43).
The average number of full-time equivalent staff employed at all private hospitals was 48,544 of whom 63% were nursing staff. Total operating expenditure for private acute and psychiatric hospitals during 2004-05 amounted to $5,839m. Some 51% of this amount was spent on salaries and wages (including on-costs). Revenue received during the year was $6,249m, of which 95.6% was received as payments from, or in respect of, patients. Total recurrent expenditure for free-standing day hospital facilities during 2004-05 amounted to $305m, and revenue received during the year was $376m.
HEALTH WORK FORCE
In 2005-06 approximately 421,200 people were employed in health occupations in Australia, comprising 4.2% of the total number of employed people (table 9.44). The largest components of the health work force were registered nurses (165,300), generalist medical practitioners (38,800) and enrolled nurses (33,400).
Females comprised 73% of the health work force. The high proportion of females in the health work force is due to their predominance in registered midwifery (99%), enrolled nursing (93%), registered nursing (91%) and physiotherapy (60%). Conversely, males represented 79% of the ambulance officers and paramedics, 69% of specialist medical practitioners and 62% of generalist medical practitioners.
Over a third (38%) of the health work force were employed on a part-time basis, compared with 29% of other employed people in Australia. Of people employed part time in the health work force, 91% were female, a higher proportion than in the total part-time work force (72%). Males constituted 9% of those working part time in the health work force compared with 28% of those working part time in the total work force. The higher proportion of part-time workers in the health sector is a reflection of the greater number of females in the health work force, who are more likely to work part time.
HOUSEHOLD EXPENDITURE ON HEALTH AND MEDICAL CARE
Average household expenditure on health and medical care increased steadily between 1984 and 2003-04. As a proportion of total household expenditure on goods and services, health and medical care increased from 3.9% in 1984 to 5.1% in 2003-04.
The Household Expenditure Survey (HES) provides estimates of expenditure on medical care and health by households across Australia. Expenditure is net of any refunds and rebates received from Medicare, private health insurance companies and employers. The ABS has undertaken the HES at five-yearly intervals since 1984. Average expenditure in this survey is calculated across all households, not just those households that spent money on specific goods or services.
Household expenditure on accident and health insurance accounted for the largest percentage of total average household expenditure on health and medical care in each of the survey periods. However, this percentage was lower in 2003-04 than in 1993-94 (39% compared with 50%) reflecting a decrease in the hospital, medical and dental insurance share of total health expenditure (from 44% in 1993-94 to 34% in 2003-04), possibly as a result of the private health insurance rebate.
While the proportion of household health expenditure spent on health practitioners' fees has been similar in each survey since 1984, expenditures on individual items have varied. In particular, general practitioner doctors' fees were higher at 3.8% of total health expenditure in 1984 compared with 3.5% in 2003-04, while specialist doctors' fees were lower at 3.9% compared with 9.3% in 2003-04.
The proportion of total health expenditure spent on medicines, pharmaceutical products and therapeutic appliances increased from 20% in 1984 to 25% in 2003-04.
TOTAL HEALTH EXPENDITURE
Health expenditure in Australia includes expenditure funded by the Australian, state and territory governments, by private health insurance and by individuals and households. Total expenditure on health in 2004-05 was $87.3b compared with expenditure of $79.1b the previous year (table 9.45). This represented an average rate of health expenditure in 2004-05 of $4,319 per person. In 2004-05 governments combined provided just over two-thirds (68%) of the total funding for health expenditure. Health expenditure in volume terms, that is after adjustment for changes in prices, grew at an average annual rate of 5.3% between 1994-95 and 2004-05. In 2004-05 total health expenditure as a proportion of gross domestic product (GDP) was 9.8% compared with 8.1% in 1994-95.