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Health Care Systems Reform in Insurance vs Tax based System Australia

Health Care Systems Reform in Insurance vs Tax based System Australia

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Health Care Systems Reform in Insurance vs Tax based System Australia

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  1. Health Care Systems Reform in Insurance vs Tax based SystemAustralia Florence Kwan Janice Yim Nora Kwok Molin Lin Rita Mak

  2. Initiatives • Initiative that was introduced to meet challenges • Health care Expenditure: Case-mix funding • Health care Expenditure: PBS • Viability of PHI: Life time health cover, 30% tax rebate • Strengthening the Medicare: Medicare plus • Workforce shortage: workforce policy

  3. Casemix funding Evaluation

  4. Casemix funding • Public hospital funding model based on the level and composition of output • Aiming at providing explicit incentives for hospitals to improve efficiency Rationalize health care expenditure

  5. Casemix funding • Greater focus on cost and benchmarking • Increased output to address waiting time concerns • Increase shift of resources to efficient hospitals from those less efficient

  6. Casemix funding: Evaluation • Efficiency • Reduced length of stay • Output • Increased number of patients treated • Decreased waiting time • Quality • No change in the readmission rate

  7. Casemix funding: Evaluation • Northern Territory • Casemix funding implemented in 1996/97 fiscal year

  8. Casemix funding: Evaluation • Efficiency • Length of stay is reduced through better scheduling of tests, discharge planning and review of need for hospitalization

  9. Casemix funding: Evaluation • Output • Weighted separation • The sum of no of separations x cost weights for AN-DRGs • number of bed days • Product of average length of stay and number of separation

  10. Casemix funding: Evaluation • casemix funding has a substantial impact in lifting total casemix-weighted separations • Decreased the total number of bed-days

  11. Casemix funding: Evaluation • Quality • Reduced quality = premature discharge lead to higher readmission rate • No impact on readmission rates

  12. Casemix funding: Evaluation • Victoria 1992/93 vs 1993/94 (before and after introduction of casemix funding) • No of patients increased 5% • Total expenditure decreased 5% • Number of casemix weighted separations increased by 4.4%

  13. Casemix funding: Evaluation • Challenges • Supply-side moral hazard • Supplier induced demand • Clinical diagnosis and procedures

  14. Casemix funding: Evaluation Conclusion • Casemix funding reduce inefficiencies among hospitals and seek maximum returns for the health dollar

  15. Private Health Insurance Initiatives in 2000 : Lifetime Health Cover : Replace the community rate. Join the PHI < 30 years of age and stay in PHI, pay a lower premium throughout their lives 30% Rebate : Subsidy of 30% for all PHI fund members by Government in 1999

  16. Private Health Insurance – initiatives- Evaluation • Membership increased from 30.5% to 42.9% of Australian from 1998-2004 • 27% increase in PHI fund reserves in 12 months • Minimal or no increases in PHI premiums • Decrease in overall claim rate What about the long term effect ?

  17. PHI membership

  18. Private Health Insurance – initiatives- Evaluation What about the long term effect ? Membership aging increases the overall claim rate – highly affected by the birth rate and the aging population. Is the Low premium rate sustainable ?

  19. Private Health Insurance – initiatives- Evaluation • Is 30% rebate a huge cost to Government ? Government fund in total health expenditure: 68.8% in 2001-2002 69.9% in 1990-2000

  20. These initiatives support the shift of Public service to Private service Private Health Insurance – initiatives- Evaluation

  21. These initiatives support the shift of Public service to Private service : Private Health Insurance – initiatives- Evaluation

  22. These initiatives support the shift of Public service to Private service : Private Health Insurance – initiatives- Evaluation

  23. Total funding for health service through PHI: ( in million ) Private Health Insurance – initiatives- Evaluation

  24. Private Health Insurance – initiatives- Evaluation → →Private Service → → Choices of Service → →Appropriate level of Care

  25. Pharmaceutical Benefits Scheme (PBS) –Background • One of the major national subsidy • Cover all Australians on the purchase of medicine • Nearly 2/3 of prescriptions are subsidized • Pay more if want patented / branded drug • Two groups of consumers : general & concessional • Safety net on annual expenses

  26. Evaluation • PBS has been successful in suppressing drug prices. • Compare with the OECD countries • Leakage ( prescribing outside PBS condition )

  27. Price Ratio compare with OECD countries

  28. Pharmaceutical Benefits Scheme (PBS) - Initiatives 12.5% price reduction for new brands after 1 August 2005 : • Generic drug already listed on PBS • Price of medicines are linked in generic drugs • Reduction flow on to all brands of that medicine • Applied to combination medicines on a pro-rata basis • Applied to the first new brand after 1 August 2005 only (Once a patent medicine expires, other manufacturers can produce equivalent products)

  29. Evaluation • Newly implemented, no actual figure !! Presumption from Australian Consumers Association : • If competition was allowed to function, it could be expected to reduce prices by 20% - 60% • Proposes tendering for generics.

  30. Increase co-payment : Pharmaceutical Benefits Scheme (PBS) - Initiatives

  31. Threshold Adjustment : Pharmaceutical Benefits Scheme (PBS) - Initiatives

  32. Pharmaceutical Benefits Scheme (PBS) - Initiatives Positive effect in a short run : • Reduce the cost of PBS. Maintain its affordability • Decrease contribution from Government • Increase contribution from customers

  33. Pharmaceutical Benefits Scheme (PBS) – Increase co-payment - Evaluation • Intended to deter inappropriate use by patients and raise revenue. • No effect on the those receiving sickness allowance, older long term allowee • Pharmaceutical Allowance (PA) will be granted : $150 per year

  34. Pharmaceutical Benefits Scheme (PBS) – Increase co-payment - Evaluation • Will fail to greatly increase the patient copayment because 80% of PBS expenditure is on concession consumers. • The copayment for the remaining 20% would soon become astronomical and would tend to drive people away from necessary medical care. • It would not have changed the total cost of the PBS.

  35. Pharmaceutical Benefits Scheme (PBS) – initiatives - Evaluation Average growth of expenditures on pharmaceuticals is 13.9% from 99/00-00/01 Reasons suggested for growth : • Increasingly expensive new drugs being listed. • Over-prescribing and leakage • Consumer expectations • Ageing of the population • Aggressive marketing by the Pharmaceutical Industry

  36. Pharmaceutical Benefits Scheme (PBS) – initiatives - Evaluation • Initiatives address the situation ? • Increasingly expensive new drugs being listed (-ve ) • Over-prescribing and leakage (- ve ) • Consumer expectations (-ve ) • Ageing of the population (-ve) • Aggressive marketing by the Pharmaceutical Industry • (-ve)

  37. Evaluation • Economic efficiency (cheapness ) • Allocative efficiency ( allocate resources where they are most needed ) • Dynamic efficiency ( flexibility to respond to changing circumstances.

  38. MedicarePlus Evaluation

  39. MedicarePlus: Background Information • Initiators • Commonwealth Department of the Health and Ageing (federal government) • Funding • Commonwealth Government of Australia • Beginning, expected end and duration: • Announced on 18/11/2003 • Began from 2/2004 • Duration: 4-year package, intended to run indefinitely

  40. MedicarePlus:Background Information • Problems driving the reform • Decrease in availability • Primarily an issue for regional and rural areas • Decrease in bulk billing rate • Decline from ~72% in 2000 to ~68% in 2003 • Increase in cost to the user

  41. MedicarePlusInitiatives • Bulk Billing incentive increases by 50% for regional, rural and remote Australia – and all of Tasmania • increase in bulk billing rate, and on the other hand, increase availability in RRMA • A more generous safety net will cover all other individuals (threshold:$700) and families (threshold: $1000) • decrease cost from user • Steps taken to increase the supply of doctors, and encourage those overseas trained to work in areas of shortage (regional and rural areas) • Increase in availability of doctors in rural areas

  42. MedicarePlus Evaluation Bulk billing rate increase in 2004-2005

  43. Percentage of Services Bulk Billed, Australia(Medicare Statistics, 2005)

  44. MedicarePlus Evaluation Bulk billing rate increase in rural and remote areas in 2004-05

  45. Percentage of Services Bulk Billedby State or Territory(Medicare statistics, 2005)

  46. MedicarePlus Evaluation Number of GPs from overseas increase in 2004-2005

  47. GPs by place of basic qualification, 2003-04 to 2004-05

  48. MedicarePlus Evaluation Increase in availability in RRMA

  49. GPs by place of basic qualification and broad RRMA, 2003-04 to 2004-05

  50. MedicarePlus Conclusion • Major conditions for success • Bulk billing rate increase • Qualified health care professionals come from overseas to work in regional and rural Australia • Increase in the availability of doctors in regional and rural areas • Safety net is a key structural improvement to Medicare, but still too fast to have statistics to prove it’s result. But since 1/2004, more than 33,000 individuals and families were benefit from this plan