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July 07th 2011 print

Geoffrey Luck

Medicare or Medibinge?

I have no complaints about the excellent professional care I received, but almost all this cost to the exchequer could have been saved by an initial physical examination by the G.P.


The health waste 


The happenstance of a number of simultaneous problems recently gave me the opportunity to observe the economic inefficiency of the medical profession and led me to reflect on the waste in what is one of Australia’s largest industries. 

In the recent 2011-2 Commonwealth Budget, Health expenditures amounted to $60 billion, 16% of the total. Although additions to services, and differences in the treatment of allocations make exact comparisons difficult, in ten years the nation’s health costs have more than doubled, from $26.8 billion in 2001/2. Factor in the out-of-pocket co-payments we all pay, and the premiums of private health insurance, adding further untold billions, to grasp the real price of pursuing good health in this fortunate advanced democracy. 

Of the health budget, almost $12-billion will be spent in the next year on the Pharmaceutical Benefits Scheme, three times the amount of ten years ago. When the PBS was launched in 1948, it was limited to free medicine for pensioners and provided assistance with 139 life-saving and disease-preventing medications for others. A Health Department spokeswoman confirmed for me that as at June 1, the Schedule of Pharmaceutical Benefits now lists 770 drugs in 1,962 formulations and strengths. Almost weekly, newspapers report the demand for new medications to be added to the schedule. 

But the biggest lump in the budget is the allocation for Medical Services and Benefits – mostly the Medicare claims, but also the Private Health Insurance Rebate – at $22.5 billion, up from $8.12 billion in 2002. That is 37.5% of the total health expenses for the current year. As the budget papers point out, Medicare expenses are the main driver of growth in this area. And here’s where my anecdotal experience illustrates how easily the billions can slip away. 

I complained to my G.P. of an attack of vertigo, slight nausea, tingling running down my left arm like an electric shock, and at times a strange inability to focus properly. The result was a recommendation and referral for an examination by a neurologist. He did a thorough physical check of all reflexes and sent me for two MRI scans – one of the head, the second of the neck. His review of the images revealed nothing but (normal) age-related deterioration in the brain, but cervical problems – arthritis and scoliosis in the upper vertebrae. This sufficiently explained all my symptoms. The recommendation was for physiotherapy on the neck. 

The costs of this exercise were instructive: 

GP Visit:           $90        Medicare refund         $ 63.00
Neurologist:     $300                  “      “               $264.70
MRI Scans (2) $897.40             “      “               $846.55
Neurologist      $125                   “      “                $112.40
GP Visit            $70                     “      “                $ 63.00

TOTAL COST TO MEDICARE                         $1349.65 

I have no complaints about the excellent professional care I received, but – and it’s a big but – almost all this cost to the exchequer, as well as the small amount of $132.75 I was left with as co-payment, could have been saved by an initial physical examination by the G.P. The tingling sensation in my arm was noted as indicating pressure on a nerve, but the cause was sought by referral upward to a specialist, not by pursuit of curiosity. A physical examination would have revealed the bunched, knotted muscles in my shoulders and neck, trying to react protectively to the spinal pressures. The final link in this medical pass-the-parcel has been the physiotherapist who immediately set to work to relieve the stresses. With simple questioning, she also diagnosed the postural aggravations at the root cause of the problem. For a fee of $85 per treatment, half of which is covered by private medical insurance. This medical bureaucracy didn’t exist to the same extent in the past, when specialists, clever technology and prodigal funding were not so freely available. In this rushed world, too many visits to the doctor seem to result in a conversation from the chair beside the desk, instead of an examination and diagnosis. The patient all too frequently leaves with a pathology order or a referral. 

A year ago, Dr Lesley Russell analysed the Commonwealth’s 2010-11 Health and Ageing Budget for the Menzies Centre for Health Policy – a combined research initiative of the University of Sydney and the A.N.U. “The real reform elements are critically lacking” the report concluded. “The need (is) to move from paying for activity to paying for health outcomes. Our current reimbursement system rewards volume and not value, quantity and not quality. Real reform … would tackle duplication and waste in the health care system, particularly in the areas of pathology testing, diagnostic imaging and the prescribing of medications.” 

I could not have put it better.