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Health Care Systems Reform in Insurance vs Tax based System Australia. Florence Kwan Janice Yim Nora Kwok Molin Lin Rita Mak. What are the measures and policies adopted ? - Financing - Private Insurance - PBS - Medicare - Workforce. Hospital Funding Model. INITIATIVE.

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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

Health Care Systems Reform in Insurance vs Tax based SystemAustralia

Florence Kwan

Janice Yim

Nora Kwok

Molin Lin

Rita Mak

What are the measures and policies adopted ?

- Financing

- Private Insurance


- Medicare

- Workforce



Casemix funding

hospital funding
Hospital funding

Traditional funding of acute hospital

  • Historical budgets
    • Hospital budgets may have been approved on an input or ‘line-item’ basis
    • Renegotiated when the hospital had a major redevelopment or additional services approved.
hospital funding6
Hospital funding
  • Negotiated budget
    • Contract between state and the hospital
    • Include negotiated goals covering a range of aspects of hospital administration
      • Including broad targets
    • Specification of the funds in that year
hospital funding7
Hospital funding
  • Inefficient and inequitable
  • output based funding system
hospital funding8
Hospital funding
  • Casemix funding
    • Monies are provided on the basis of services actually delivered
    • Make more informed decisions on the best and most appropriate use of hospital resources
    • Provides incentive such that hospital can treat additional patients up to the point at which marginal treatment cost equals marginal revenue
casemix funding
Casemix funding
  • National casemix development program introduced as part of 1988-92 Commonwealth: State Health Financing Agreement
  • Aims:
    • encourage more efficient patient treatment
    • Recognizes the costs associated with different procedures
casemix funding10
Casemix funding
  • The budget for a hospital is based on the number and patients treated in the hospital
  • AN-DRGs: Australian National Diagnostic Related Groups were developed as clinical and resource homogeneous categories for inpatients grouping for payment purposes
casemix funding11
Casemix Funding
  • Casemix development program
  • Substantial funding for establishing the first Australian DRG classification
casemix funding12
Casemix Funding
  • Funding of each hospital are based on relative weights (cost weight) estimated using cost modelling approach
  • Cost modelling approach:
    • Specific prices of each DRG is calculated uses general ledger data and patient activity data
casemix funding13
Casemix Funding
  • The Casemix Development Program, funded the development of Australian service weights to be used in calculating DRG relative weights for hospital as state and national level.
  • Annual update by the National Hospital data collection
casemix funding14
Casemix Funding
  • Casemix funding
    • Victoria: 1993-1994
    • South Australia: 1994-1995
    • Western Australian and Tasmania 1996-97
  • Using casemix to inform the budget setting process
    • New South Wales 2000
    • Queensland
    • Northern Territory
    • Australian Capital Territory
casemix funding model
Casemix Funding Model

State: Victoria

  • Hospital Funding

= fixed + variable grant

victoria casemix funding model
Victoria Casemix funding model
  • Fixed grant: to cover hospital overhead costs
  • Variable:
    • based on the payment units of the DRG system
private health insurance background

Private Health Insurance - Background

Coverage :

Provides choice of doctor, hospital, timing of procedure

Scope of coverage > Medicare

eg. Dental, optical, physiotherapy and podiatry

Premium :

Community rate – everyone the same, regardless of health status, claims history, age

private health insurance initiatives

Private Health Insurance - initiatives

Lifetime Health Cover :

Replaced community rate in 2000.Join the PHI < 30 years of age

and stay in PHI : pay a lower premium throughout their lives.

People > 30 pay 2% more every year delay.

Discourage “hit and run” behavior.

Overall claim rate ↓

private health insurance initiatives19
Private Health Insurance - initiatives

30% rebate :

  • Subsidy of 30% for all PHI fund members by Government in 1999
private health insurance initiatives20
Private Health Insurance - initiatives

Positive effect in a short run :

  • 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
pharmaceutical benefits scheme pbs background
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
pharmaceutical benefits scheme pbs initiatives
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)

pharmaceutical benefits scheme pbs initiatives25
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
medicare initiatives
Medicare: Initiatives

Universal access to medical services

What is Medicare?

  • Social insurance scheme by Government
  • Tax funded
  • 85% of schedule fee for outpatient services
medicare initiatives bulk billing
Medicare: Initiatives (Bulk Billing)

What is bulk billing?

  • GPs bill Medicare directly, accepting the Medicare rebate as full payment
  • No out of pocket cost to patient
  • No bulk billing----GPs charge more
medicare initiatives bulk billing28
Medicare: Initiatives (Bulk Billing)

What is so good about bulk billing?

  • No co-payment for patients -> no cost-shifting to patients
  • Minimize govt. administration fee
  • No costs shifting to the state

In April, 2003, Fairer Medicare was proposed: introduce a participating practice scheme

  • Concessional patients
    • GPs bulk bill  increased Medicare rebates
    • $1 for metropolitan city
    • $2.95 for non-metropolitan city
    • $5.3 in rural centre
    • $6.3 in outer rural and remote area
  • Non-concessional patients
    • if GPs chose not to bulk billing these patients, still able to charge the patient the co-payment and claim Medicare rebate via HIC online
    • Avoiding the transaction costs

In November 2003, another policy MedicarePlus was passed: no participating practice scheme

  • Concessional patients
    • $5 in metropolitan areas
    • $7.5 in remote, rural and regional areas
  • Children under 16
    • Extended the increase rebate to children under 16
  • Safety net
    • 80% rebate above $300 thresholds
overall of healthcare workforce
Overall of Healthcare Workforce
  • 798,201 people are employed in health and community services industries

(9.7% of total workforce ; 17.1% of total female workforce)

what major problems they are facing
What major problems they are facing ?
  • Shortage of healthcare workforce

- Growth of demand for medical services

- Ageing workforce

(31% of the workforce is aged <35 yrs ;

12% is aged >55 or above)

- Changes in participation (as measured by hours

worked per week)

(~34% of workforce is part-time, with

38.6% working < 35 hours/week)

initiatives to address workforce shortage
Initiatives to address workforce shortage
  • Australian Health Workforce Advisory Committee (AHWAC)
  • Australian Medical Workforce Advisory Committee (AMWAC)
  • National Nursing and Nursing Education Taskforce

Major Initiatives:

  • Workforce Supply:

Adjust the training intake number

Maximise the working life of the current health workforce

  • Workforce Flexibility:

Avoid Overspecialization -> Substitution

  • Workforce PlanningAlign education and training supply

Australia and New Zealand Health Policy 2005, 2:14

rural health practice
Rural Health Practice
  • 1996 Census:

17.9 million Australian;

~27% live in regional & rural area &

3% live in remote area

  • Work related injury is common e.g. Mining Forestry
  • Lack of funding and infrastructure
  • Rural Health Services:GP are on call much more GP providing hospital-based services and emergency medicine
initiatives for rural health services
Initiatives for Rural Health Services
  • Short-term solution: overseas trained doctors (30.6% of doctors in remote practice)
  • Nurse-led Strategy e.g. nurse anesthestist
  • Promotion of “e-health” (telecommunication)
  • Financial support (scholarships), personal support and mentoring and student clubs, for rural student
reference and bibliography
Reference and Bibliography
  • Duckett, S.J. (2004) The Australian Health Care System. 2nd edition. South Melbourne, Vic., ; New York : Oxford University Press
  • Duckett, S.J. (1998) ‘Casemix funding for acute hospital inpatient services in Australia.’ MJA. 169:S17-S21
  • Casemix Funding for Acute Hospital Care in Victoria, Australia in
  • Duckett, S.J (2000) ‘ The development of australian refined diagnosis related groups: The Australian inpatient casemix classification’ CASEMIX, volume 2, no 4: 115 to 120
  • New challenges, new solution. Australian Consumers Association, July 2002 
  • Health Care System in eight countries, trends and challenges, European Observatory on Health Care System, April 2002