High income earners would be forced to take out private health cover, compulsory fees would be introduced for visiting the doctor and insurers would be allowed to charge smokers higher premiums under a radical prescription for health reform delivered by the Commission of Audit.
The Commission says health care spending represents the federal government’s “single largest long-term fiscal challenge,” with three programs – Medicare, hospitals and pharmaceutical benefits – now accounting for $40 billion a year in Commonwealth spending.
“Putting health care on a sustainable footing will require fundamental changes to all the components of the health system,” the commissioners write in their final report, released on Thursday. “Those with the capacity to pay should take greater responsibility for their own health care needs.”
The Commissioners recommend higher earners face a two percentage point tax slug if they do not purchase private health insurance. The impost – in the form of an increase to the Medicare levy surcharge – would apply to individuals earning above $88,000 a year and families with annual incomes above $176,000.
- Individuals earning above $88,000 and families earning above $176,000 to pay 2 per cent more in tax if they do not take out private health insurance
- $15 fee to visit the GP, to drop to $7.50 after 15 visits in a year. Concession card holders to pay $5 per visit for the first 15 visits and then $2.50 per visit.
- States to be encouraged to charge fees for less urgent treatment in emergency departments.
- Fee for prescription drugs to rise by $5, from $36.90 to $41.90. Fee to remain at $6 for concession card holders.
- Private insurers to be able to charge higher premiums to smokers and others with unhealthy lifestyles.
In a suggestion likely to be unpalatable to the Abbott government, the commission says high earners should not be able to access the private health insurance rebate. Prime Minister Tony Abbott has called private health insurance an “article of faith” for the coalition and has pledged to undo the means test on the rebate as soon as budgetary circumstances permit.
A fee of $15 would be introduced for all Medicare-funded services, including GP visits. After a patient had paid the fee 15 times in a year, the fee would drop to $7.50 per service. Concession card holders would pay $5 per service for the first 15 services, and then $2.50 per service.
The Commission’s proposal is influenced by a submission from a former advisor to Tony Abbott, Terry Barnes, but departed from Mr Barnes’ proposal in several respects, including by recommending doctors not be allowed to waive the fee. Health groups have predicted the introduction of such a fee would deter poor people from seeking treatment and placed added pressure on already strained public hospitals. In order to deter people from seeking treatment in hospital to avoid paying the fee, states would be encouraged to charge fees for the treatment of less urgent problems.
Private health insurers would not be allowed to cover the fee, but insurers would be allowed to provide coverage for GP services. Such a change would be bitterly resisted by public health advocates, who have predicted such a change would accelerate the shift to a two-tiered system in which those with private cover get better care than those who can’t afford insurance.
The commission proposes insurers be free to set premiums without government approval, and be allowed to vary premiums based on the customer’s lifestyle, for example charging higher premiums to smokers.
Fees for prescription drugs would rise by $5, taking the payment per script to $41.90. For concession card holders, the fee would remain at $6 per script. However in a change to the current arrangements, concession card holders would have to pay $2 per script even after reaching a safety net threshold of $360 in a year.
In proposals sure to antagonise the powerful Pharmacy Guild, the commissioners suggest opening pharmacies up to greater competition by relaxing rules about the ownership and location of pharmacies. Health Minister Peter Dutton has previously ruled out allowing large retailers such as Coles and Woolworths into pharmacy.
To constrain spending on pharmaceuticals, an independent authority would be set up to oversee the management of the Pharmaceutical Benefits Scheme.
Picking up on a proposal by Stephen Duckett, a former head of the federal health department, the new entity would have a fixed budget to strengthen its arm in negotiations with drug companies.
Drug approvals would be streamlined by the Therapeutic Goods Administration recognising approvals made by certain overseas agencies.