MEDIA RELEASE: New CIS research shows health ‘black hole’ needs shake-up - The Centre for Independent Studies
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MEDIA RELEASE: New CIS research shows health ‘black hole’ needs shake-up

cis logo 640x360The Turnbull Government must shake up Australia’s black hole health system to get the best value for our health dollars, according to a new report from The Centre for Independent Studies.

In Medi-Value: Health Insurance and Service Innovation in Australia — Implications for the Future of Medicare, Dr Jeremy Sammut argues that health spending is often inefficient due to health services not being provided in a market environment.

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“Multiple Australian and international studies suggest the federal government’s top-down, so-called Healthier Medicare reforms won’t prevent overuse of high-cost hospitals by chronic disease patients as promised,” Dr Sammut says.

“Bureaucratically-administered, and centrally planned coordinated chronic disease primary care programs like the new ‘Health Care Home’ service do not produce the real innovations that deliver the most cost-effective care.

“Fee-for-service payment systems like Medicare financially reward providers for inefficient practice and encourage over-servicing” says Sammut. “Innovative US health insurers are tackling spiraling health costs by developing integrated payment models that combine all health funding into one bundled payment.

“Value-based, shared-risk contracts such as the Blue Cross Blue Shield Alternative Quality Contract (AQC) in Massachusetts have bent the cost curve down by giving providers a financial incentive to innovate.

“When all care has to be funded from an agreed budget, traditional patterns of patient care are changed and are more efficiently managed.

“Hence AQCs have yielded cost-effective savings by reducing the use of procedures, images and tests and by directing patients away from expensive hospitals to lower-cost community clinics for specialist treatment.

“Finding better ways to manage hospital utilisation is crucial in Australia”, Sammut says. “We have very high rates of hospital use compared to the OECD, and the increasing cost of hospital care is primarily behind the escalating cost of health to government budgets.

“Replacing Medicare with a ‘Medicare Select’-style private health insurance voucher scheme would allow integrated payment models to flourish here. Putting health funds in charge of purchasing health care for members from competing providers will create a real market for health services and spur real innovation from the bottom up.

“Calls to increase taxes to pay for health will simply prop up latently inefficient hospital -based health services, and is not consistent with the Prime Minister’s ambition to lead agile government committed to reform, innovation and markets.”

“What we need is a truly innovative national health reform agenda that delivers the private sector solutions that can potentially reduce the cost of health by controlling use of hospitals,” Dr Sammut says.

Dr Jeremy Sammut is Director of the Health Innovations Program and a Senior Research Fellow at The Centre for Independent Studies.

Media Enquiries: Karla Pincott  kpincott@cis.org.au  0407 716 752