Australian Health Care

Considered the world’s smallest continent, Australia is in the southern hemisphere. Australia has six states, two major mainland territories and minor territories. States include: New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia. The two territories are Northern Territory and Australian Capital Territory (Wikipedia, 2007).

The territories have similar functions to the states but Commonwealth Parliament prevails over any legislation of their parliaments. Federal legislations can only prevail over state legislation in some areas delineated in Section 51 of the Constitution (Wikipedia, 2007).

Each state has its own legislature. The heads of government in each state and territory are referred to as Premiers and Chief Ministers, respectively.

The Commonwealth, State and Territory governments use on the Westminster system, wherein the political party or coalition that comprised the majority of elected members in the lower house of the parliament forms the government (not all State and Territory parliaments have an upper house). Ministers with executive powers are selected from these elected members of government in either lower or upper houses. Within States are local governments such as municipal and shire councils (Department of Health and Ageing, 2005).

The Australian Health Care System

The national health care funding system in Australia aims to give public access to health care at the same time giving the individual the chance to choose the best applicable health by involving the private sector in the delivery and financing (Department of Health and Ageing, 2005).

In 1970s greater efforts toward promotion of health and prevention of disease gained momentum through the efforts of Canada’s A New Perspective on Health of Canadians (1974), the Declaration of Alma-Ata (1978), the “Health for All by the Year 2000″ agreement among members of WHO (1981) and Ottawa Charter for Health Promotion (1986) (Palmer & Short, 1994).

According to Department of Health and Ageing (2005) the national health care system revolves mainly on the “Medicare” offering of the government. Medicare offers excellent, affordable and accessible health care to all Australians, usually free of charge at the point of care. The bulk of the financing of Medicare comes from general tax revenue, including Medicare tax deducted on a person’s taxable income. Commonwealth funding for Medicare is used for the following:

• Financial assistance for prescribed medicines ( free medicines for those chronically ill) and free or funded treatment from health care practitioners such as doctors, participating optometrists or dentists (specific services only);
• Significant grants to State and Territory governments to contribute to the costs of providing access to public hospitals at no cost to patients; and
• Grants for specific purposes to State/Territory governments and other bodies.

In addition, the money for Commonwealth general-purpose funding awarded to State and Territory governments are used partly to finance health services. State and Territory governments support Medicare using their own revenues to fund public hospitals.

Some Australians such as members of the armed forces and veterans receive special health coverage at the same time still enjoy standard Medicare coverage. There other forms of financing for other injuries and illnesses such as the required workers’ compensation insurance which is for work-related injuries and illnesses, and third person motor vehicle insurance for vehicle accidents.

The Commonwealth Government finances service providers of residential aged care depending on the type of care required by the person. Residents can pay the daily care fees and accommodation payment. Those residents who could not afford the fees can avail of special provisions for subsidy. The Commonwealth determines the amount forwarded to new residential care places through annual regional population based planning process. Residential care providers must bid for new places.

Community care services for aged and disabled are funded by the Commonwealth, State and Territory Governments following a certain formula for computing contributions. For community care, clients pay according to the type of services required and their capacity to pay. The Commonwealth subsidizes Community Care Packages to allow aged people to continue living at home, instead of availing low-level residential services.

Present State of Australian Health Care

Despite the efforts directed towards improvement of health care, the budget for health services is still not enough to address health care needs for the last 20 to 30 years (Deeble, 1999). A number of factors were cited: health care expenditures have to compete with general expenditures in the annual budgets; the benefits of health intervention take years while the needs are immediate; prevention is often the focus of healthcare services instead of treating actual illnesses or injuries; measuring the outcome of population health measures are often difficult, that is why groups advocating interventions would find it hard to prove costs and benefits of the program; and, medical and pharmaceutical aspects of the health sector have the strong backing of industry groups which the population health greatly lacks (Common Department of Health and Aged Care, 2007).

Financing, therefore, is an essential aspect of population health. According to the World Health Organization (WHO), financing is one of the components of the health systems. The other three are: provision, stewardship and resource generation ( human, physical and knowledge) ( Murray & Frenk, 2000; WHO, 2000).

Health financing is defined as the devices used to establish source, volume, price of resources required by the health sector and the distribution of these to regions, populations and activities. Such mechanism can influence the achievement of health policy goals. Financing has three functions according to Murray and Frenk (2000), these are: revenue collection, fund pooling and purchasing.

Concept of Health Care

‘Population health’ is the sum of “those initiatives with a specific objective of promoting health or reducing the risk of ill health.” The National Public Health Partnership defines it as “the organized response by society to protect and promote health and to prevent illness injury and disability”.

Health is defined as the absence of illness or disease. The amount required on population health then should focus on those health interventions and aspects of health.

Prevention could be primary, secondary and tertiary (Starfield 1996). Vuori (1984) defined primary health care as ” a concept which seems vaguely defined and whose contents seem to change from country to country and situation to situation,”. It has four ways of interpretation: a set of activities, a level of care, a strategy for organizing health care and a philosophy (DHAC 2000c).

Governments, the Private Sector and Health

According to Department of Health and Ageing ( 2005) Commonwealth health power used to have influence over quarantine matters in the past. In 1946, the Constitution was amended to allow the Commonwealth to provide health benefits and services, without changing the powers of the States. As a result, the responsibilities in the health system for the two bodies of government overlapped.

The Commonwealth is in charge with creating policies addressing national issues like public health, research and national information management.

The States and Territories are in charge for providing and running the public health services and for continuous relationships with health care providers, such as imposing regulations on health professionals.

The States and Territories supply acute and psychiatric hospital services and a host of community and health services such as school health, dental health, maternal and child health and environmental health programs to the public.

The State and Territory governments fund a number of health services. The Commonwealth funds go to out-patient medical services and health research.

The Commonwealth, States and Territories altogether fund public hospitals and community care for old and handicapped persons.

All levels of Government, the consumers and the non-government sector play a role in financing, managing, or providing care for aged people. Residential aged care is funded and controlled by the Commonwealth Government while those in the non-government sector (by religious, charitable, and for-profit providers) assume the role of providing it. The Commonwealth, States and Territories finance and oversee the delivery of community care such as delivered meals, home help and transport. Some State, Territory or local governments have community services benefits.

The private health sector comprises a huge active part in health services. The Commonwealth Government realizes the importance of the involvement of the private sector in the delivery of health services and subsidy needs to the Australian health system. That is why the Commonwealth Government subsidizes 30 per cent of private health insurance fees and other benefits to insure that individuals avail of private health insurance.

The benefits of private health insurance include coverage of private and public hospital fees (charges in public hospitals only apply to patients who choose to be private patients so they can have their own doctors). Private health insurance also extends to part of medical fees for inpatient services, pay for allied health / paramedical services (such as physiotherapists’and podiatrists’services) and to some health aids and appliances (such as spectacles).

Private religious and charitable organisations help in the delivery of health services, public health and health insurance.

Health Services Delivery

The delivery of health services are accomplished by both public and private sector. These two work hand in hand to ensure that the quality of health services provided is excellent.

Most doctors in Australia are self-employed. Some do work for the Commonwealth, State or local governments. Specialist doctors working for public hospitals can elect to treat some patients as private patients by charging fees to those patients and then contributing a portion of the income earned to the public hospital. Other doctors partner with public hospitals in providing medical services such as separate pathology and diagnostic imaging services operated by doctors (Department of Health and Ageing, 2005).

Some allied health / paramedical professions are mostly self-employed such as dentists or physical therapists. Others depend largely on the State and local government health organizations for employment such as nurses (Department of Health and Ageing, 2005).

The term public hospitals refers to hospitals created by governments, also hospitals made by private organizations such as religious or charitable institutions but now are financed by the government. There are also private hospitals that have special arrangements with the State governments to deliver public hospital services. Public hospitals provide the mostly acute care and emergency outpatient needs of the patients. Large public hospitals also supplies complex hospital care required by patients such as intensive care, major surgery, organ transplants, renal dialysis and specialist outpatient clinics (Department of Health and Ageing, 2005).

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Private hospitals are built by either for-profit or not-for-profit organisations such as large corporations, religious organisations and funded by private health insurance. Private hospitals used to provide less complex non-emergency care recently private hospitals provide complex health services (Department of Health and Ageing, 2005). .

Specialised public mental health care is provided by separate psychiatric hospitals, general hospitals, and community based settings. Mental health services used to be separate from ordinary health services, but the Commonwealth, State and Territory Governments is working with National Mental Health Strategy to make mental health services readily available to the public just like the ordinary health services. Important reforms are also being introduced such as Strategy focus on using community based and general hospital services for mental health care needs instead of separate psychiatric hospitals and providing mental health care provided in other places (Department of Health and Ageing, 2005). .

Caring for the aged person in Australia has two ways of providing care: residential (accommodation and various levels of nursing and/or personal care) and community care (ranging from delivered meals, home help and transport to intensive coordinated care packages for people who otherwise would need residential care). Residential services are mostly operated privately by religious and charitable organisations. Both public and non-government sectors such as religious and charitable organisations provide community care services, under the Home and Community Care Program (Department of Health and Ageing, 2005).

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Medicines prescribed by doctors and provided by independent private pharmacies are directly funded by the Commonwealth Pharmaceutical Benefits Scheme (PBS). Public hospitals provide medicines to inpatients free of charge and do not need PBS subsidies.

There are some health care solutions unique to Australia such as:

 the Royal Flying Doctor Service which delivers care to remote areas by aircraft;

 the Aboriginal and Torres Strait Islander peoples community controlled health services which aim to meet the special needs of Indigenous Australians; and

 Regional Health Services. Through Regional Health Services, community identified priorities for Health and Ageing services in rural and remote areas are met through a flexible mix of Commonwealth and state funded services.

The Australian Red Cross operates Australia’s blood donation system and coordinates matching of donors and recipients for organ transplants, receiving Commonwealth, State and Territory government funding for these activities(Department of Health and Ageing, 2005).

The Medicare levy

Medicare was introduced in 1984, the Medicare tax was created to increase money from other revenue sources to allow the Commonwealth Government to provide for costs needed in the care for the whole population, instead of limiting the health care to people with low incomes alone (Wikipedia, 2007).

Medicare tax revenue comprise of an estimated 27 per cent of Commonwealth funding for Medicare. Funding for Medicare comes from other taxes such as income tax, taxes on sales of goods and services, and non-tax revenue which makes up the consolidated revenue. Parliament funds most government programs from the money in the consolidated revenue.

The Medicare levy is 1.5 per cent of taxable income. Taxpayers who earn higher and do not have private health insurance pay an additional 1 per cent of taxable income.

Eligibility for Medicare

Medicare is for people living in Australia who are Australian citizens, New Zealand citizens or holders of permanent visas. Some visitors and temporary residents may be eligible for Medicare depending if Australia has reciprocal health care agreements with the country they hail from (Medicare Australia, 2007).

Hospital care under Medicare

All people eligible for Medicare can choose to avail of any of the following:

• free accommodation, and medical, nursing and other care as public patients in State/Territory-owned hospitals, designated non-government religious and charitable hospitals, or in private hospitals which have made arrangements with governments to care for public patients; or
• treatment as private patients in public or private hospitals, with some assistance from governments

State and Territory governments are primarily responsible for the delivery of public health services to all people eligible for Medicare. This is funded by the Commonwealth Government and State and Territory governments under the Australian Health Care Agreements.

Patients can choose to be public (Medicare) patients, or private patients upon admission in hospitals. If they choose to be public patients then they can avail of free medical and allied health / paramedical care from doctors chosen by the hospitals, also free accommodation, meals and other health services while in hospital (Department of Health and Ageing, 2005).

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Patients eligible for Medicare who want to be private patients in public hospitals are charged by doctors, and are charged by the hospital for hospital care, at a much lower rate. If the patient has private insurance, this is often sufficient to pay for all hospital charges (Department of Health and Ageing, 2005).

Medicare pays subsidises part of the doctors’ fees and private insurance pays an additional amount to cover doctors’ fees. Private insurance benefits can also be used top pay the costs of allied health / paramedical and other costs incurred during the patient’s stay in the hospital (Department of Health and Ageing, 2005).

Patients may also choose to be treated in a private hospital. Private patients in private hospitals are charged fees by doctors and some allied health / paramedical staff, and are billed by the hospital for accommodation, nursing care and other hospital services. If the patient holds private insurance it will contribute to these costs. If the patient is eligible for Medicare as a permanent resident of Australia, the Medicare benefits cover doctors’ fees generally (Department of Health and Ageing, 2005).

Future Trends

The Australian Medicare has been in placed for more than 20 years. Recent changes in the Australian community have been noticed such as the rise of elderly Australians availing of the health services to 156 per cent. Changes in the roles of the public and private in delivery and financing of health care are also observed.

Public hospitals have achieved great strides in providing health care services to the people such as the introduction of same day surgery. The efforts of public hospitals though still do not suffice in meeting the needs for their services. Despite the introduction of reforms, public hospitals have still to address issues such as cutting waiting lists, delays incurred in emergency departments or the numbers of ambulances being redirected because the hospital’s emergency department is already congested.

Even if changes have been adopted by hospitals to make their services more efficient, the funding arrangements still leave a lot to be desired of. Funding is not supporting these changes including the way funding is allocated.

State and territories health ministers are concerned with the Commonwealth’s inability to introduce necessary health reforms. Medicare framework is strong but there is still room for improvement.

In order to be able to fully address these pressing health care concerns, issues regarding how services are delivered and funded should be fully satisfied. Health ministers addressed this issue in 2002 when a group of experts were called to advice on health care issues. One of the findings of experts is that health care benefits were focused on hospital care alone. But since health services are geared towards caring for people in their homes, community or without a ward stay in hospital then health care should include those kinds of patients. Also, in order to attain flexibility in health care delivery and funding, stronger partnerships between state, territory and federal governments is greatly sought after.

State and territory governments must work hand in hand with the Commonwealth to be able to provide quality health care. To be able to achieve their joint goals, sufficient funding should be provided to ensure excellence in services.

The current level of Australian Health Care Agreement (AHCAs) grants is not enough to cover costs of providing services. The 1998-2003 AHCAs has underestimated the real costs of health care services.

An expert appointed by the Commonwealth and state/territories recommended that the formula to compute health cost increases should be consumer price index plus 0.5 percent. The first four years, the index averaged 2.9 percent annually.

The Commonwealth committed an error of using its own index in calculating funding costs in 1998-2003 agreements which resulted in an average of only 2 percent per year. Consequently, public hospital funding was short of $904 million.

To address this underpayment, it is important that the 2003-2008 negotiations, the AHCA grant must apply the expert’s index not the inadequate Commonwealth’s index. This means an additional $350 million should be added to the starting point of the grant. Additional funding of $619 million from Commonwealth is also required to cover capital costs which used to be funded exclusively by the states and territories.

Elderly Care

Currently, residential care places for Australia’s elderly is not enough to meet the needs. Care for the elderly is primarily a Commonwealth job. Commonwealth should have provided 190,686 but it was only able to secure 173,253 places. This translates into under funding of at least $367 million per year. Problems with regards to shortage of services for the elderly to be able to return home after staying in hospitals, insufficient transitional accommodation and deficient supply of interim care also arose. Since Commonwealth has strict rules with regards to aged care money allocation, funding for these services cannot be taken from other aged care funding. As a result, older Australians stay in public hospitals while waiting for residential care which costs an additional $295 million per year. Funding problems also prevent adoption of programs that can improve elderly care (Australian Health Care Agreement, 2003-2008).

Solutions

To effectively solve these problems, Commonwealth should:

• meet target number of places for residential aged care
• if target is not met, use money for other care options such as home based programs
• Allocate funding to transitional and interim care
• Allow the use of federal, state and territory money for new programs

The demands for Australian health care is growing due to change in population and change in technologies. Just as there are new challenges, there are also new ways to address these challenges. It is not enough to use the same format over and over again in tackling new challenges. Negotiating an Australian Health Care Agreement that will effectively apply new solutions to these new challenges is the best option. Replacing outdated arrangements, overcoming obstacles to innovation and providing adequate funding for health services will ensure quality health care for all Australians (Australian Health Care Agreement, 2003-2008).

References:

CIA World Factbook. “Australia”. Retrieved September 16, 2007 from https://www.cia.gov/library/publications/the-world-factbook/geos/as.html

Commonwealth Department of Health and Aged Care. Health Financing and Population Health.

Commonwealth Department of Health and Aged Care. (2000b) Medicare Statistics March Quarter 2000. Retrieved September 16, 2007 from www.heatlh.gov.au/haf/medstats/index.htm

Deeble, John. (1999). Resource Allocation in Public Health: An Economic Approach, A Background Discussion Paper for the National Public Health Partnership, July.

Department of Health and Ageing. ( 2005 February 04). The Australian Health Care System. Accessed September 11, 2007 from

http://www.health.gov.au/internet/wcms/publishing.nsf/Content/healthsystem-overview-3-funding#systeminbrief

Department of Health and Ageing. ( 2005 February 04). Health Services Delivery. Accessed September 11, 2007 from http://www.health.gov.au/internet/wcms/publishing.nsf/Content/healthsystem-overview-2-delivery

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Medicare Australia. ( 4 September 2007). “What is Medicare?” Retrieved September 11, 2007 from http://www.medicareaustralia.gov.au/yourhealth/our_services/medicare/about_medicare/what_is_mc.shtml

Queensland Government. (2007). Facing the Future- AHCA. Retrieved September 11, 2007 from

http://www.health.qld.gov.au/publications/aust_hlth_care_agreement/Facing_the_Future_AHCA.pdf

Queensland Government. (2007). State and Territory Concerns-AHCA. Retrieved September 11, 2007 from http://www.health.qld.gov.au/publications/aust_hlth_care_agreement/Concerns.pdf

Vuori, Hannu. (1984). “Primary health care in Europe- problems and solutions”. Community Medicine, Vol. 6, No. 3, pp. 221-231.

Wikipedia. ( 15 September 2007). “Australia”. Retrieved September 16, 2007 from http://en.wikipedia.org/wiki/Australia

Wikipedia. ( 14 September 2007). “Medicare (Australia)”. Retrieved September 16, 2007 from http://en.wikipedia.org/wiki/Medicare_(Australia)

World Health Organization (WHO). (1978). ‘Declaration of Alma-Ata’, International Conference on Primary Health Care, Alma-Ata, USSR, 6-12.

World Health Organisation (WHO). (2000). The World Health Report 2000, Health Systems: Improving Performance. WHO, Geneva.