MEDIA RELEASE: Terry Barnes: lessons from the GP copayment experience

 

There has been some media comment today on points made in a wide-ranging speech by Terry Barnes at the Centre for Independent Studies health innovation event on Wednesday.

Mr Barnes, who first proposed revisiting mandatory GP co-payments in 2013, spoke about the political lessons for reform from the experience.  He also raised some challenging questions about how we use scarce public funding for healthcare, and the value of what we spend.

“The GP co-payment failure was a failure of both policy and politics, blowing up a second-order Medicare reform needed among many into something it was not intended to be, a centrepiece measure,” Mr Barnes said today.

“My speech highlighted that as a result of the co-payment’s fallout the Coalition has become reform-shy over health and Medicare policy, and Labor was emboldened to abandon policy innovation for easy populism — especially in its false but successful Medicare privatisation scare campaign.

“It’s also clear with hindsight that the 2014 budget GP co-payment proposal was fatally damaged by the Coalition government’s plan to link its savings to a Medical Research Fund. That surprise link made the budget proposal almost impossible to defend politically.

“As a result of the rise and fall of the GP co-payment, necessary and meaningful reform of Medicare has become much harder, and as I said in my speech I greatly regret my part in bringing that result about,” Mr Barnes said.

“Politicians and policy-makers must learn from it and not repeat the mistakes that were made.”

The full transcript of Mr Barnes’s talk follows.

Jeremy (Sammut), thanks for having me. Jeremy, thanks for explaining the HIC concept as you have and Peta (Seaton), I think you for your words of wisdom as always.

It did worry me, Gerald (Thomas), that you said the Private Health Insurance Act was a big problem for you because in 2006-2007 I was the one who actually was responsible for steering it through the parliament, so not only being the GP copayment guy, it looks like I’ve sabotaged your progress as well. For that I apologise.

I am going to talk as I was asked, about the bigger picture in terms of the politics of healthcare reform, and the challenges of thinking innovatively about healthcare policy and healthcare practice in the ways we just been hearing, because of the way that the political scene works in relation to health and Medicare in general.

I’m going to give you a bit of a case study from my experience as the ‘GP copayment guy’. It’s all my fault, the entire problems of the healthcare system are all my fault: Tony Abbott, when I went around with him as his senior advisor, used to say to people “I’m Tony Abbott, I’m the health minister, I do all the good stuff.  Terry Barnes is my senior adviser, he does all the bad stuff”, clearly that’s followed me through the rest of my career!

So I’m going to talk about the GP copayment experience as a case study, and then I’ll draw some lessons for health care reform from that, and I also might ask a couple of tough threshold questions which I think that innovators and policymakers should keep in mind, particularly as we look ahead to the needs of the Australian population in the next decade or two.

In terms of the politics of reform, the GP co-payment and Mediscare as in the election campaign showed how diabolical it can be to pursue structural and efficiency reform in the Australian health care system. Basically, to talk about changing the settings of Medicare is like killing Bambi. Voters value what they can see they have: Medicare is clearly a sacred cow.

The co-payment experience really highlighted that. Labor was able to run such an efficient scare campaign, which almost got them to office, on the basis of really nothing, because people perceived they were losing Medicare as they understood it.  This became a disaster for the government.

On top of that, the sector is infested with powerful practitioners, experts and vested interests all convinced they know absolutely best and that government, state and federal, are merely payers for their grand schemes, ambitions and whatever they think is appropriate. And on top of all that, we saw with Mediscare it’s too easy for opponents of change to distort, mislead and even lie to ensure that they get what they want, or that the status quo remains.

Governments and political parties attempting to place restrictions or conditions on access to healthcare therefore run a very risky gauntlet. Even positively and relatively benign reforms, like the healthcare home concept, and the health innovation communities concept as well, change relationships between patients, providers and payers, and therefore threaten the status quo. So you have to expect a storm of opposition to come down upon you.

It is up to governments, and advocates of change, to make clear how that change will work, what the benefits will be, and how patients, consumers and taxpayers will be better off. And from my own experience it also means that you have to be willing to make a blood sacrifice to the ravenous Bug Blatter Beast of Traal (for those of you who remember Hitch-Hikers guide to the Galaxy) which is actually known in Australia as the Australian Medical Association.

Having said that, in terms of the politics of the present health care debate I fail to understand why the Turnbull government went into the recent election campaign without a health policy. It had a couple of announcements, including the health care home trial but, when you think about it, the last time a government went for re-election – or an opposition went for an election – without a clear, coherent, narrative for its health vision was 1990 when Liberal shadow minister Peter Shack actually stood up just before the election and said “Sorry, we don’t have a health policy”.

We saw a repetition of that this year. I think it actually cost the government dearly, because they couldn’t factually respond to Mediscare: the rest is history in that respect. Despite the fact they almost lost the election on Mediscare, I haven’t seen any real evidence of them forming a policy narrative after the election and, more to the point, making it clear that they see health and health care reform, health policy and the stability of the system as a top priority for the second term Coalition government.

On the other side, what have we got from Labor? Basically what we have had for the last few years, really since the copayment broke just after the Abbott government was elected in 2013, is just push back. It’s just been all negative. It’s just been “I hear your pain, so I’ll throw money at all that bad things governments have done and make it better for you”. Put a Band-Aid on it and kiss it better!

And in the election campaign itself, besides the fact it was founded on a lie, all the health policy that Labor put forward was of that nature. I wrote recently that the real imitator of Donald Trump in Australian politics is not Pauline Hanson but actually Bill Shorten, because of the populism that under his leadership the Labour Party is resorting to, and therefore is actually creating a big problem for the healthcare conversation, and the health policy conversation in general.

But the government doesn’t have a clear sense where it’s going, so that actually creates very fertile ground for scare campaigns, for uncertainty, and for making discontent.

So with that, I’ll tell you about my own experience and my thoughts about GP co-payment debate, which in political terms came from nowhere and just blew up as a story that just kept on going. And now I’m the GP copayment guy, the “architect” of the government’s ill-fated plan according to everybody who doesn’t realise that I had nothing to do with that plan.

The government did its own thing: they just let me run the debate before they were ready to go public. It got currency because of the fact that just after the government was elected, I did a paper for another think tank called the Australian Centre for Health Research, and it was reported that it was being put to the Commission of Audit – and the PM at the time, Tony Abbott, was asked about the idea of a co-payment but didn’t confirm or deny anything in true budget speculation style.

So off we went, and it was on for young and old. And really what happened over the next year or so, I think, has really set the cause of health reform back a long, long way, and I’m personally quite so sorry for that.

The co-payment should rightly have been considered a second-order structural efficiency measure, which is the way it was brought forward.  It was no magic bullet and it was never a magic bullet, never intended to be. It was, however, meant to be part of suggesting how the system could be made more effective, more robust and more patient and payer responsive. It was not intended to be the single measure to solve the problems of the system.

The co-payment became an ugly cackling hag that hijacked the political policy agenda.

Besides the fact it wasn’t the magic reform bullet, the implacable opposition and resistance of vested interests, especially Brian Owler and the AMA, was totally underestimated. And the budget decision itself to link the outlay saving to a humongous Medical Research Fund, instead of recycling those savings into health and hospital services, and infrastructure, was mystifying and totally out of left field, politically naive and frankly a big, big mistake.

What the government really didn’t do before that budget 2014 was read the politics of the Senate and therefore gauge the chance of the enabling legislation passing. They thought that they would have a better chance after July 14 with the new Senate including people like Jacqui Lambie and the Palmer United Party, but how wrong they were. They needed to start making a rational policy case of greater patient contributions for primary care. They didn’t. There is a genuine equity argument that says people on higher incomes shouldn’t expect bulk billing is right and should actually contribute in some way, according to their capacity, to help those less well off, but we never heard it.

The government didn’t start sending a message to those who could afford to do so that they must do their bit, but they — ministers — didn’t understand details and implications of what they were proposing in many respects. Post- budget estimates hearings revealed that modelling of the co-payment measure was minimal or non-existent, and I understand a lot of the thinking actually happened in political offices, not in the bureaucracy or using expert advice.

They certainly didn’t seek my advice, or at least consult me, on my experience in trying to explain the concepts publicly.

The other issue, which is key here, is that it showed the government was concerned not about access and efficiency, but about booking budget bottom line savings in 2014. So they rushed to judgment to get a proposal out there so they could actually have a figure in the budget papers that could actually show that they are reducing our debt and deficit. And the government’s subsequent attempts to refine and then redesign the co-payment plan later in 2014 and into early 2015 did not make things better, in fact I think they made things a lot worse.

The government and its key ministers: health ministers, treasurers and prime minister even didn’t quite look like they knew what they were doing. ‘Improvements’ were actually more complex and messier than the copayment mark 1, and again the government’s attempts at explaining and defending these changes were awful.

The change of minister in December 2014, in my view, made little difference but the fallout from the whole co-payment debate and the political outcomes were a disaster for general healthcare reform.

Both the Coalition and Labor have adopted a common position, and it is this: that they, be it the Labor Party or the Coalition parties, will not pursue difficult reform in healthcare unless the medical profession is on board, and in practice that means that the AMA is the arbiter of who comes to Medicare and the circumstances in which they come.

And despite the AMA leadership changing from the outspoken demagogue Brian Owler to the far more reasonable and moderate Michael Gannon, that hasn’t really changed. Really, the AMA sets the pace. In terms of their proposal, Jeremy, Peta and Gerald need to convince Michael Gannon and his members that what they are proposing will work if it is ever going to succeed. And whether that’s are a good thing you can make your own judgement. I don’t think it is a good thing.

What the government should have done is this: It should have started tilling the ground well before the 2014 budget, perhaps even before the 2013 election, notwithstanding the political risks in getting public acceptance of the need for some reform around bulk-billing and patient contributions.

Clearly ministers needed to explain what the problem was, and there is a problem. Certainly, if you are going to change the system, and given that Medicare is such a social sacred cow, you need to be able to start talking sooner rather later. But, because of budget secrecy, neither confirming or denying what’s in the budget, they didn’t do that. Instead, they were quite happy to let me be the canary in the coal mine — and as you can see I’m not the best communicator in the world — but they wanted to see if I suffocated and died in the political hothouse of the co-payment debate. I didn’t, and I’m quite proud of that. I was actually able to prosecute a case publicly and in the media, and in writing. to show that this could work and it had a reasonable basis to it.

But the government didn’t realise, they seemed to say, “If Terry can do it, we can do it too”. The thing is, I was just an obscure former government advisor doing a paper for an obscure think tank, not the Treasurer and the Prime Minister and government of the country making this measure the centrepiece of a tough budget. They just didn’t expect the flak they got because they thought, the actual debate in the run-up to the budget was relatively benign in broad political terms.

They also did not set the whole plan in a wider health policy, or a wider fiscal and general reform context. They didn’t actually till the ground themselves. They may have flagged, could have flagged, their intentions instead of going into the 2014 budget with a fully-developed plan. They could have started a process of consultation and engagement that might’ve got an outcome that was sound policy, politically defensible and avoided most of the unfair features of the budget plan and also a lot of political pain.

I actually suggested at one point when it was going rough for them that perhaps they could give the Productivity Commission a reference to do that process and to leave those consultations at arm’s length from government, but that didn’t go anywhere either, except to the back page of the Financial Review.

As I say, taking the timing out of the budget process would have helped a lot,and most of all, sacking the bright spark who proposed hypothecating those savings to that Medical Research Fund. That person or persons had no sense of policy and they had no sense of politics, and I suspect their knowledge of the healthcare sector could be written on the back of a postage stamp. I’ve named no names but you could possibly guess who I’m talking about.

In terms of the consequences of policy failure, it certainly killed off the Coalition’s appetite for more doing anything more than tweaking Medicare and healthcare generally. It’s also emboldened Labor to make itself a populist champion of the people, blocking even minor changes such as the proposed reducing of pathology and diagnostic imaging bulk billing incentives, and in a way it’s set Medicare in politically unbreakable concrete. If you accepted Bill Shorten and Catherine King’s (the shadow health minister)’ rhetoric from the election campaign about Medicare: we will not cut Medicare —  “we will not touch Medicare” — to simply cut a dollar from Medicare would be a breach of Labor’s election promise.

Labor’s actually dug themselves in such a hole that if they ever got to implement that plan that they would be in political trouble perhaps even more diabolical than the co-payment experience. But the other side of that I think is its going to, because of Mediscare in particular, be very hard for rational policy plans and proposals to get a fair hearing, and that’s a real worry I think that we have to consider.

Again, that reinforces the AMA as the chief arbiter of what is possible and what isn’t in terms of the healthcare system, and further entrenched the power of the vested interests that strangle Australian healthcare innovation: the l people in the system and those self-appointed experts who believe that they are the guardians of Medicare. The fact that somebody else has to pay for their ideas, basically it’s you and I, doesn’t really occur to them. The ultimate consequence, of course, is that we will continue to waste billions of taxpayer dollars that could be better spent or saved.

Peta talked about that, the waste, before. I worked in the health department many years ago I had a colleague with a screensaver: “Half of all health expenditure is wasted, the problem is we don’t know which half”.  My role in this debate —  while I didn’t start it, I certainly kicked it along —  helped create an anti-reform state of affairs. For that I am truly sorry and I apologise.

In terms of implications for major healthcare reform from here, as I said the GP copayment was a relatively minor proposal in the bigger scheme of things that got blown out of proportion. It almost brought down the government and was a big factor in the downfall of a PM. In fact, I thought of calling this talk “Tony Abbott, my part in his downfall”. Yet there is no doubt the truly fundamental reform of the system, such as we’ve been hearing about tonight, is needed as the Australian population ages and the whole population starts to show the acute and especially chronic consequences of our soft and namby-pamby sedentary self-indulgent and lazy lifestyles.

And sugar taxes won’t solve those problems, by the way.

Let’s also not forget the spiteful dysfunctional marriages of federal and state, and public and private, responsibilities for health care funding and service delivery. Our federation indeed is perhaps the biggest single drawback to meaningful healthcare reform, yet we cannot easily remake the federation and that sets the agenda whether we like it or not. In fact, I remember at the time of the GP copayment a then Liberal state health minister I knew decided to blame me for his troubles, and he also harked back to Tony Abbott’s push to have a single federal payer of public health money, saying if Abbott did something like that would actually do a lot of state politicians out of a job.

Sorry Peta, but that’s the way many people at state level think, and I suppose preselection candidates worry about it too.

The GP copayment and Labor’s successful Mediscare, I think, ultimately showed that the Whitlam-Hawke Medicare settlement is not easily tampered with. The Australian public won’t readily tolerate even minor changes to that settlement, let alone major renovation, and that’s because of the politics around it. The ground for such changes therefore need to be well-tilled, and in the populist rent-seeking mentality that now dominates our politics, this requires real political courage that I think is sadly lacking.

Indeed, I fear genuine big thinking by genuine big thinkers, such as referred to tonight, scares politicians and government, and provides easy targets to the oppositionists and populists who dominate federal and state agendas these days. And by opposition I don’t just mean Shorten Labor: I mean any party or leader seeking to gain office by playing to the fears of voters rather than to their aspirations. Indeed, when vote-hungry oppositions shred a government’s record on obsolete measures like bulk billing rates, public hospital beds and waiting times and pander too much to the wishes of doctors, that is to say the AMA, rather than the best interests of patients and taxpayers, we get reform paralysis not a climate of innovation.

So aligning reform aspirations to community aspirations and expectations therefore is a big challenge for genuine health policy thinkers and reformers. The first big step is understanding those aspirations and expectations and making the fundamental change evolutionary rather than revolutionary, and I also think it needs to ask  some pretty tough questions and make some challenging conclusions. So, despite the failure of the co-payment, essentially plugging away at the Australian community’s entrenched mindset about Medicare and healthcare provision matters.

Medicare is a healthcare access scheme. It is not a middle-class welfare entitlement scheme as politicians, particularly those on the left of politics, condition us to think. The better-off should not expect bulk-billing, and all this should not assume that health services are an ever-running, bottomlessly-funded tap.

We also need start asking ourselves some very difficult social and ethical questions about what services are provided and paid for by taxpayers, including people who voluntarily assume risks that damage or destroy good health. Smokers, for instance, shouldn’t expect to be top of the queue for expensive treatment arising from their habit. People who attend emergency departments be patched up after alcohol-fuelled brawls should not expect free treatment. People who contract Type II diabetes because of their lifestyle choices shouldn’t expect everyone to pick up the full tab for their own improvements, and private health insurance should at least have some element of risk rating, including positive rewards for those doing the right thing by themselves and by others – and that includes taking steps to do the right things.

And as medical science gets better and better at keeping people going, is there such a thing as providing too much healthcare? There are too many people with chronic conditions, in my view, particularly the very old who are kept going but whose quality of life is reduced or perhaps even almost non-existent. We do need I think to have a conversation about the right balance between keeping people alive when lives become miserable, and whether people and families perhaps should not expect the taxpayer to help keep stringing things out indefinitely.

But, on the other hand, I think perhaps we as a community need to change our own mindsets and own expectations about what’s right, particularly as we reach the end of our lives. We can’t go forever. And in areas like IVF, where the physical and emotional cost on patients is terribly high, the chances of successful outcomes depressingly low, and corporate imperatives actually manipulate demand, it’s arguable that treatment subsidies should be strictly limited if they are to be applied at all.

I also think that preventing and mitigating illness and injury should be greater part of the healthcare service delivery and funding picture provided that it involved genuine harm reduction based on people taking responsibility for themselves. I’ve taken a lot of policy interest in vaping, quitting smoking and getting people off the deadly weed, because according to the emerging body of evidence some experts say it’s at least 95 per cent safer than smoking.

Yet Australian regulation virtually suppresses vaping if it involves nicotine. The thing is, when the Australian public healthcare establishment prefers to keep things as they would like them to be, as opposed to accepting the possibility of disruptive innovation actually leading to genuine improvement in health outcomes, we have a real problem. But when we also have a situation where our politicians as funders and regulators of the healthcare system are too afraid to do anything that challenges the status quo, that challenges received wisdom, and aren’t prepared to go elsewhere for advice and guidance, we going to get nowhere. We’re talking right across the board, but I just think in the public-health space it is really a problem.

To wrap up, these are tough, emotional and confronting conversations but they need to be had, I believe they must be had. A genuine climate of healthcare reform can’t be created if questions like these are set aside. They help create a definition of what is possible, but I think the point of all this is that sadly our political class is not up to providing a courageous thought leadership that makes innovative reform possible.

Peta talked about inoculating the public, I think it’s the other way around. We should be inoculating our political leaders to feel that they can take on the populists and the opportunists, and actually do something courageous to set us on the road to a better healthcare system, better healthcare outcomes, and a more efficient use of taxpayers’ money.