In late July I made a personal submission to the Senate Standing Committee on Community Affairs relating to its Inquiry into the value and affordability of private health insurance and the challenges posed to health consumers by out-of-pocket health care costs.
My submission leaned heavily on materials produced by the NRHA during my time there. It is published in full at https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/Privatehealthinsurance/Submissions. (It’s number 220.)
My contribution to the Committee’s considerations made the point that there is little interaction between private and public hospital systems in rural and remote areas, due to the small number of private hospitals in those areas. In general, the more remote the area, the worse the people’s health status and health challenges, and the less likely there is to be a private hospital.
In 2011-12 the rate of private hospital use by people living in Inner regional, Outer regional, Remote and Very remote areas was 77 per cent, 60 per cent, 53 per cent and 39 per cent respectively of the rate for people living in Major cities.
At that time private hospital expenditure per head tailed off rapidly with remoteness: from $346 per person in Major cities in 2011-12, to $313, $235, $158 and $102 per person living in Inner regional, Outer regional, Remote and Very remote areas respectively.
The reverse is true for public hospital usage. In 2006-07 the rate of public hospital admission/separation increased to twice the Major Cities rate in remote areas. Total expenditure on public hospital admissions was 10 per cent and 30 per cent higher for residents of Inner Regional and Outer Regional areas, and roughly twice as high for residents of remote areas.
This is largely because there is no health service alternative in more remote areas, with hospitals having to provide the sort of primary care available in the cities from medical and other practitioners.
Issues relating to out-of-pocket costs are complex and were dealt with in detail in the NRHA submission dated 12 May 2014.
Out-of-pocket health care costs are financial payments made by consumers for accessing health care services and products that are not rebated by Medicare, private health insurance or other means. When last measured national out-of-pocket costs amounted to $24.8 billion, or 19 per cent of all recurrent health expenditure. This is a greater proportion of total health expenditure than in many other developed nations.
It equates to an average contribution (for 23 million Australians) of $1,110 per person per year. If insurance premiums are included, out-of-pocket costs were $36 billion, 27 per cent of health expenditure, or $1,610 per year per person.
These personal payments pose challenges for people in rural and remote areas, including because they have less capacity to pay, with lower and less secure incomes overall than their peers in major cities.
Critically, the bulk of the unavoidable costs associated with accessing health care for people in rural and remote areas (ie travel, accommodation, lost earnings due to the time taken to access services) are not measured and not considered part of the standard set of published out-of-pocket health care costs.
What this means is that the standard numbers grossly understate the disadvantage faced by people in Remote or Very remote areas. The standard figures show that, compared with city people, those in areas classified Very remote pay considerably less per person in out-of-pocket costs. But this is due largely to their inability to access services to which out-of-pocket costs are attached.
So a global health care cost disadvantage faced by people in rural and remote Australia is relatively large by international standards, is worse for them than for urban Australians, and is getting worse.
The potential health effects are serious. Faced with unaffordable costs, patients may decide not to make a health appointment, not to access a medication, and/or to reduce compliance with a medication regime. One of the results is that avoidable hospitalisations are more common among rural people.
The situation could be improved if health insurance companies tailored their product range to better cover the needs of patients in rural areas, including stronger support for unavoidable travel and accommodation.
Effective medical services for people in rural and remote areas can be quite different from those available to people in the major cities. Health insurance products should not relate only to service delivery methods that are the norm in more remote areas.
Hopefully this and other particular rural issues will be canvassed, and improvements sought, by the Senate Committee’s report, due at the end of November.
