Is Medicare 'unsustainable'?

If you've heard it once, you've probably heard it a thousand times. A $7 GP tax is required to make Medicare 'sustainable', says the Abbott government at every media opportunity. The truth is: (1) free access to GPs is an extremely important but relatively small health cost; (2) federal government spending on health is falling (not rising); and (3) the Australian government spends significantly less on health services and products than the average for countries with modern economies.

To grasp the context of the debate on the GP tax, examine these nine figures:   

1. Visits to the doctor covered by Medicare are a small part of the health system.

Access to GPs (general medical practitioners) is covered by 'medical services (non-referred)', the small light blue sector below the quarter line on the left hand side of this diagram, which shows the full health system:

2. Visits to the doctor covered by Medicare are a small health cost.

The cost of visits to GPs in 2012-13 (the latest figures) was $8.2 billion within a $147.4 billion health system. This represents only 5.6 per cent of the total health costs, or very little in the context of the industry at large, as represented by the non-hatched section of the third column from the left in the figure below:

3. Total health expenditure is falling compared with national income.

Spending on health has been falling relative to income in Australia since 2009-10, and is now growing slower than national income (GDP).

4. Total government health expenditure is falling compared with taxation.

Total government expenditure on health has fallen relative to tax revenue from 27.4% in 2009–10 to 25.9% in 2012–13. 

5. The federal government's expediture on health is falling.

The federal government’s share of total government health expenditure has fallen from 43.6% in 2002–03 to 41.4% in 2012–13.

6. The federal government's contribution to hospital expenditure is also falling.

Between 2002–03 and 2012–13, the federal government’s share of recurrent funding for
public hospital services has fallen from 44.2% to 37.0%.
7. Too many Australian citizens already cannot afford to visit a GP.
In 2012–13, 5.4% of Australians who needed to see a GP in the previous 12 months delayed seeing or didn't see a GP at least once because of the cost (due to the unavailability of free access under Medicare in some areas). Significant proportions of Australians also have poor health due to the costs of dental services, drug prescriptions, and pathology or imaging tests.
   8. Australia only spends around the OECD average on health.
Check the arrow, for Australia's total health expenditure as a proportion of income (GDP).
9. But Australian government expenditure on health is well below the OECD average.
The government share of total health expenditure in Australia is miserly, trending toward Mexico.
Broad pictures of health status mask the fact that there are clear inequalities in health for many Australians, particularly Indigenous Australians, people living in rural and remote areas, and the socioeconomically disadvantaged. People living outside Australia’s major cities have worse outcomes on leading indicators of health and access to care. They have higher rates of obesity, smoking and risky alcohol consumption, their rates of potentially preventable hospitalisations are also higher and they are less likely to gain timely access to aged care. People living outside major cities are also more likely to defer access to dental services and general practitioners due to cost, and were more likely to wait longer than 1 year for access to public dental services.
A GP tax is a bad health policy. Socioeconomic factors have the largest impact on health, accounting for up to 40% of all influences compared with health behaviours (30%), clinical care (20%) and the physical environment (10%) (The British Academy 2014). The World Health Organization’s Commission on Social Determinants of Health concluded that social inequalities in health arise because of inequalities in the conditions of daily life and the fundamental drivers that give rise to them: inequities in power, money and resources (Commission on Social Determinants of Health 2008). The WHO describes a ‘social gradient in health’ which shows that, in general, the lower an individual’s socioeconomic position the worse their health. Where people are in the social hierarchy affects the conditions in which they grow, learn, live, work and age, their vulnerability to ill health and the consequences of ill health (WHO 2014).
The Australian government should be reducing barriers to primary health care for citizens with few resources, not raising them. A responsible government should at least maintain overall health expenditure at world standards. The only thing 'unsustainable' about Medicare is the Abbott government's propaganda to that effect.

All statistics are from: (1) Australian Institute of Health & Welfare, Health Expenditure Australia 2012-13, Australian Government, Canberra, 2014; (2) Australian Institute of Health & Welfare, Australia's Health 2014, Australian Government, Canberra, 2014; (2) OECD, Health at a Glance 2013: OECD Indicators, OECD Publishing, 2013. 


'Australia's 'unsustainable' health spending is a myth', by Jeff Richardson.

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