By Denis Bright

Can the federal LNP ignore the problem of rising consultation costs for routine medical consultations and associated diagnostic services in these difficult financial times? The onset of the COVID-19 Virus has only accentuated Australian’s emergent health cost problems which extend to the outrageous cost burdens of nursing home care.

Even families on the top tables of private health insurance are not spared from these health cost spirals. It is commonplace to be paying well over $5 000 a year for private health cover at the most comprehensive benefit tables. The enormous cost of private health insurance still does not remove out of pocket costs for medical consultations and diagnostic services particularly at an outpatient level. To ease pressures on public health systems, the Australian Private Hospitals Association (APHA) has called for the return of incentives to restore the the Private Health Insurance Rebate for the 30 per cent of Australians in the lowest income levels.

APHA CEO Michael Roff outlined the case for change to the federal LNP on behalf of the 30 per cent of Australians in the lowest income categories which as part of a submission to the federal LNP prior to the 2020-21 budget.

Low-income Australian households face a double whammy of increased premiums and reduced rebates when it comes to private health insurance,” he said.

“Every year the value of their rebate goes down, while their private health premiums increase.

“For example, in 2019 a high-income earner who did not receive the rebate would have experienced a premium increase of 3.25%. However, low-income earners would have experienced a real premium increase of 3.74%,” Roff said.

“This doesn’t pass the fairness test, nor does it achieve the aim of the rebate – to incentivise Australians to take up private health insurance.”

Roff said APHA is calling for the restoration of the rebate to 2013–14 levels for low-income earners. This would return the rebate to 30% for those under 65, 35% for those aged 65–69 and 40% for those aged 70 and over.

This will reduce premiums for these households by between 2.02% and 3.67% and cost about $1.4 billion in 2020–21,” he said.

The submission also makes recommendations for savings, including curbing claims for private health insurance in public hospitals.

“This practice is punishing patients who can’t afford private health insurance. They suffer with deteriorating health on elective surgery waiting lists as public hospitals push the privately insured ahead of them. Add to that, it is also a perversion of Medicare – care based on clinical need, not ability to pay,” Roff said.

“If this practice stopped, private health insurance premiums would drop by 6%.”

The financial problems experienced by Australians in nursing home facilities will be addressed later in this article as they face the added problems of institutional costs and low remuneration rates from Medicare.

Only Australians who are fortunate enough to be free from routine medical problems might be assured by the ongoing media releases from the federal Health Minister on rates of bulk-billing. The latest assurance came on 28 February 2020 as the spread of the COVID-19 Virus was just gaining momentum around the world.

Medicare bulk billing rate of 86 per cent for 2019

Australians continue to visit their GPs without having to pay a cent, with the latest Medicare data showing 86 out of 100 visits to the GP were bulk-billed for the 2019 calendar year… As well as continuing and increasing its investment in Medicare, our Government is ensuring it supports quality health care.

Australia has one of the best health systems in the world, founded on Medicare. These figures show Medicare, under the Morrison Government, is supporting the health and wellbeing of Australians more than ever.

The Morrison Government is only able to guarantee Medicare and essential services because our strong economic management.

Even on the specific issue of bulk billing rates for consultations with GPs, the Royal Australian College of General Practitioners (RACGP) offers a more complex picture of healthcare costs across Australia. The RACGP advises everyone that the state of the nation’s healthcare cannot be summarised in this statistic which exaggerates national bulk-billing rates. It ignores the more serious structural problem of low remuneration rates from Medicare for medical consultations and associated diagnostic procedures.

Our country is headed down the corporate trail in healthcare at all levels from consultations at GP clinics to diagnostic procedures. There is an enormous cost for private health insurance. The costs of nursing home care challenges the stability of life for older Australians.

On bulk-billing rates, recurrent users of GP services by elderly and chronically ill patients artificially inflates the bulk-billing rates. Great variations also exist in bulk billing rates across Australia.

Image: Matt Woodley in News GP from RACGP 18 December 2019

The enthusiastic tone of the federal minister’s commitment to equitable bulk-billing is contradicted by the current edict from the Australian Department of Health. The rate of the bulk-billing incentive for metropolitan doctors will be about two-thirds of rates offered to rural doctors. While remote rural and regional districts certainly need special attention for more bulk-billing assistance to reduce over the counter costs to patients, there is surely a wider problem associated with remuneration rates from Medicare to doctors.

Inner-city medical providers are usually forced to be pragmatic in their bulk-billing of patients at GP clinics. The real problem lies not with the medical providers themselves but with remuneration rates for bulk-billing offered by Medicare on the federal LNP’s current watch.

The Cordium Group operates twelve GP clinics in near Brisbane locations plus a Melanoma Centre adjacent to one of its inner-city medical clinics.

Such facilities cannot operate successfully on current levels of Medicare remuneration at $36.55 for a standard consultation. Eighty dollars is usually charged as a across the counter fee which leaves patients about $43 out of pocket costs for each visit with higher amounts required for longer consultations. Exceptions are made for pensioners and some Commonwealth Health Cardholders.

One specialist practitioner with a long and distinguished medical and academic career must manage the costs of his inner-city practice on these ridiculous remuneration rates for consultations which are bulk-billed. Even bulk-billing rates for specialist procedures are 22 per cent below over the counter rates.

The federal LNP strategically intervened in a non-election year to tighten the asset test for access to even part-pensions. The asset test always included sometimes non-performing superannuation assets, bank deposits now offering minimal interest returns and beaches houses acquired by families over the generations which do not usually generate income. By tightening access to pensions in 2017, the federal LNP could be generous with its tax reforms to upper middle-income families. It also attempted to reduce company tax rates for the largest corporations to 25 per cent until Labor and the crossbenchers combined to oppose the changes. The asset tests for part-pensions was tightened from $1.3 million to less than $800,000 for married couples in 2017.

Many of the largest multinational companies use offshore tax havens to minimise their taxation liabilities and the wealthiest families are notorious for their use of family trusts to minimise taxable incomes. Negative gearing for multiple property investment is widely used in more affluent sections of our community.

Remuneration payments from Medicare for bulk-billed consultations with GPs are of course only the tip of the iceberg of health costs.

Regrettably, X-Ray clinics and complex radiology providers are resistant to any extension of bulk-billing. Costs cannot be contained by employing casual staff members as the diagnostic services require high levels of professional skill. Just passing the cost onto patients in high over the counter fees has been a financial winner for companies large and small.

Queensland X-Rays is an arm of Sonic Healthcare. Sullivan Nicolaides Pathology as a major diagnostic provider is also a member of the Sonic Healthcare Group. Sonic Healthcare is 38^th on the list of Australia’s Top 50 Companies in ASX Tables.

Regrettably, Sonic Healthcare through its US Clinical Pathology Laboratories (CPL) is becoming deeply immersed in corporate healthcare. As the sample payment advice from CPL in Austin Texas shows, choice of credit card for payments is not ameliorated by a national health system as in Australia. To the Trump Administration, this infringes upon corporate freedoms under market ideology. The subsidiary of Australia’s Sonic Healthcare is thriving in the US healthcare market where bulk-billing rates are not a factor.

Information was sought from CPL in Austin, Texas on comparable rates for specific diagnostic procedures.

Should this information be provided, I will pass it on through The AIM Network. I am not expecting a reply to my emails to the media and billing departments of CPL.

If market ideology in diagnostic health is a better option for Australians, CPL should be keen to communicate their competitive billing rates outside our national health network.

The international corporate profile of Sonic Healthcare can be gleaned from the latest Concise Annual Report which was released in June 2019. The report is readily available online and makes easy reading. It covers the multi-million incomes for senior directors from salaries, incentive payments and share allocations for the most senior directors at Sonic Healthcare. Of significance for an Australian firm is Sonic Healthcare’s involvement in the lucrative US health market which is now almost as large as its Australian operations with an annual turn-over of $A2.5 billion.

The profile of Sonic Healthcare in Australia is concealed by the local brand-names used at hospitals and diagnostic centres. Patients choosing Queensland X-Ray Limited (Sonic Healthcare Company) for a simple kidney scan are expected to pay $222.75 in over-the-counter fees. The Medicare rebate is $103 for the procedure. The compensatory Medicare rebate is always offered as a sweetener through the usual automated payment system. However, non-pensioner patients are still at least $100 out of pocket.

The saga continues across the range of diagnostic procedures. Some costs can run into the thousands for patients. Medicare remuneration rates are running at about half the cost of over-the counter payment rates.

In the Casino City of Las Vegas in Nevada, where CPL has a considerable network of pathology centres, business seems to be booming by the network of blood collection centres now available to the subsidiary of an Australian company.

I would be curious to find out if Sonic Healthcare is a diagnostic provider on US military bases, including overseas military deployment posts.

Back at home in Australia with the remnants of its national healthcare system still in place, corporatization of Australian nursing homes is also part of the squeeze on the out-of-pocket costs of health and accommodation expenses for seniors who opt for institutional aged care or who are forced there by a range of health problems. The stresses associated with the sale of family homes to cover the enormous costs of aged care bonds is distressing to the elderly and their families. It is a stark reminder that nursing home placement is largely an irreversible choice.

Sydney Aged Care Financial Advisers is just one firm which offers advice to at risk groups who are contemplating a move to institutional nursing home care. Sydney Aged Care Financial Advisers use soft words to break the news gently:

Mum or dad are fine one day, then suddenly they’re in hospital and your local ACAT (aged care assessment team) are saying they need permanent residential care in a hostel or nursing home. It can be quite a shock. Especially when you’re confronted with the costs. One of the first questions many families ask when an elderly relative is assessed is: what is an accommodation bond & how do you pay for aged care?

Here are the main points you need to know:

– An accommodation bond is an upfront cost that is payable to the aged care facility in many, but not ALL cases for the actual accommodation of the resident. It is essentially a loan to the care facility that the hostel or nursing home can then ‘re-invest’ to derive income for assistance with their maintenance of the aged care home.

– There is no ‘typical’ or standard accommodation bond cost; it is determined by the assets of the resident, the supply & demand for beds in each care facility & the socio-economic profile of the resident’s suburb.

– Bonds can be as little as $200,000 in areas such as Penrith or Liverpool in the Western Suburbs but can range right up to $1.5 million for exclusive extra care aged care in blue-ribbon areas of Sydney such as Mosman and the North Shore or Double Bay and the Eastern Suburbs.

– The current ‘average’ accommodation bond cost in Sydney is $350,000 to $500,000.

– When the resident passes away the bond is refunded back to their estate within 14 days, less the retention amount. The retention amount applicable depends on how long the resident is in care but is currently capped at $3,972 per annum with a maximum of $19,860 after 5 years.

– An accommodation bond is payable for low care & extra services high care, but NOT for standard high care.

– The bond can be paid as a lump sum, periodic payment (regular monthly payments) or a combination of both.

– Most aged care facilities prefer a large component of the bond to be paid as lump sum.

– Lump sum accommodation bonds can be paid from cash savings, selling the family home or by raising a reverse mortgage loan against the property.

– The accommodation bond will not be the ONLY aged care cost. The resident may also be required to pay a ‘daily care fee’ & an ‘income tested fee’.

– An accommodation bond is currently not an assessable asset for the purposes of Centrelink aged pension

– Accommodation bonds are due to be payable on ALL types of aged care from July 1st 2014, under the Living Longer, Living Better reforms.

Cheers to the financial advisers for being so honest about the consequences of that horror budget from Joe Hockey in 2014. Joe Hockey has moved on to become Australian Ambassador in Washington. He expects to have a post-retirement career on the lecture circuit in the USA where he can earn an income talking about the successes of LNP governments in moving Australians closer to the US corporate health model.

Australians should strive to stay fit and healthy with a progressive political outlook that is sceptical of soothing hype from the corporate health sector. Staying in your home while you can with the support of home-help and nursing-care visits is the probably best and most cost-effective option.