For years, the cost of healthcare in America has been steadily increasing faster than the rate of inflation, cost of living and the average income. Many an American has been faced with the hardship of the high cost of healthcare. Some have had to choose whether to live or pay their mortgage or rent and put food on table. Some have been forced to declare bankruptcy. Some do their best to ration out their needed medications, only to die as a result, as has been the case with some insulin dependent diabetics in recent years.
I know of a man who was told her had cancer but that it was treatable. He found out that the cost of treatment would amount to hundreds of thousands of dollars for surgery, chemo and radiation therapies and that undergoing treatment would mean he could no longer do his job which meant he would lose his insurance coverage. He told me he could not put his family through the financial ordeal of his cancer treatment, so he opted to let the cancer take its course. He died about a year later and instead of being burdened with a mountainous debt, his widow and kids were left with several hundred thousand dollars from his life insurance policies.
I share this because in a recent discussion with a friend of mine in Australia, who is a retired doctor and whose daughter is still a practicing doctor in Australia, he made the comment to me in an email:
Re US healthcare, IMHO we have a much better system here than what you guys had before or after O/care. No one goes broke over medical bills…
That got me realizing that we often hear Obamacare or the free Medicare for all being proposed by many of the 2020 Democratic hopefuls, compared to the nationalized healthcare systems in Canada, United Kingdom and even the failed system in Venezuela. I have friends in Canada and the United Kingdom and they all share the many flaws of their healthcare system. Basically, their taxes to pay for nationalized healthcare continue to go up while their coverage continues to decrease and become more limited. One friend in the UK had to wait 7 painful months to have her gall bladder removed because of their nationalized healthcare system and there are many other horror stories from both countries.
So, I asked my retired doctor friend to tell me more about the system in Australia and this is what he replied:
OK, here goes… It’s called Medicare, and it is a system of compulsory universal health insurance. And it’s designed to run in parallel with a private health insurance scheme, which is optional (every Australian citizen is in Medicare). I was a GP both before and after Medicare came in, and it’s worked extremely well except for one basic flaw, which is that the government failed to keep its word and index the payments to doctors to match inflation at all times, rather it let it slip behind substantially; had it done that, i.e. indexed as promised, it would be exceptionally effective and earn my ‘full marks’. As it stands, it is still very, very good.
Medicare covers 85% of the set ‘schedule fee’ (there’s the flaw I mentioned above, in that the schedule fee has not been indexed, so doctors have over the years either had to charge substantially above the schedule fee (which defeats the whole point of such insurance) or have had to rush patients through in a ‘sausage factory’ type procedure which is also not good, if they wanted to maintain their income to the levels of 20 years ago in real-dollar terms). Now this is not for hospital admission costs, it is for all medical procedures performed by doctors, i.e. consultations, operations, X-rays and lab tests. Whether done inside or outside hospital. Doctors have the option to ‘bulk bill’ for any or for all patients, that means they directly bill the government and accept 85% of the cost in return, but they have instant payment and no bad debts, etc. When I was in practice I was bulkbilling, but since the payment has gradually declined in real dollar terms year on year, I would now be either a) accepting a reduced income ++ b) Pushing patients through faster, and only allowing one problem per consultation (come back tomorrow for the other problem) or c) Cease bulkbilling and charge well above the schedule fee, so most patients would be really out of pocket.
If I had the say, I would a) restore indexation b) ensure that doctors can bulkbill still but that the patient has to pay a co-contribution of say $1. It’s to minimise abuse of the system which people tried in my day, “Just passing by, Doc, saw you weren’t busy so I thought I would come in, say hello and sign the book for you”.
But back to explaining more. Most pathology providers like for blood tests, bulkbill, so those are effectively free to the patient. Medicare is paid for by a levy through the tax system, which only kicks in at a certain level of income, so if you are unemployed or a low-income earner, you don’t pay anything.
But Medicare pays nothing for a hospital admission. So what happens if you need an operation? There is a 2-tiered system – the public hospitals and the private ones. You can opt to be treated as a private patient in the public system. The public system is the place to go of first choice in an emergency like an accident, stroke, or heart attack eg. And it is entirely free. The care is excellent, the only drawback is the waiting lists for elective surgery, i.e. if you have to have a hip replaced, in the private system you will wait maybe a week or two if that, whereas in the public you may have to hobble around for 6-12 months. And you can’t choose your surgeon as a rule. But any urgent situations will always get seen and get priority. And almost all top specialists have a public hospital portion of their time, as these are teaching hospitals and prestigious. Even if you have a top operation in a private hospital, Medicare will pay 85% of the schedule fee for the doctors involved, i.e. the surgeon, the assistant, and the anaesthetist. Plus any consulting specialists that might get called in during the admission. Plus the radiologist’s charges for Xrays and scans, plus blood tests, etc. But if you are having the procedure done as a public patient, you never get to see those bills anyway.
If you take out private insurance to cover the cost of some of the ‘gap’ after Medicare has paid its percentage (which due to non-indexation can be only half or less of what the doctor actually charges), and to cover private hospital inpatient charges, the government rewards you with a rebate of about 30% of what that costs you. This is because it saves the government money because when you use the private system, i.e. go to a private hospital for your operation, you are not burdening the public system, even though you are entitled to.
Note that this has kept costs down, too; an MRI scan that could easily cost 5k in the States is likely to be only about 1-1.5k here. Doctors earn less, but so be it; they earn very well indeed as it is. It helps the middle class as well as the poor. I have private health insurance, but when I had my heart valve replacement surgery recently, the consulting and testing etc. beforehand, imaging, etc., specialists’ consultations, it did not cost my private insurance anything, so for a family it is about 3.2k (US) a year. And the valve alone cost 25k, so it was a good deal, because I did not have to pay a penny towards it. The doctor would have been another 10k, I imagine, but I never saw that bill it was all settled between the doctor, Medicare, and the health insurance company as ‘gap’ insurer. There probably would have been a bit for me to pay on top if not for the fact that as a former doctor I enjoy ‘courtesy billing’ in which they generally agree to accept only what the insurer pays. Otherwise it would probably have been about 1-2k all up. And the hospital charge? Not a red cent. All covered by that insurance premium.
The principle is simple; the country decrees that healthcare at a reasonable standard (which is what the public system provides) is a right, and that those on higher incomes should pay more than those on lower. And no one should die because they can’t afford to pay the doctor. But those on higher incomes almost always take out private insurance as well, so they do get a higher standard of care, which is also a right, but it’s not normally about life and death, it’s more about convenience. And it’s not an unreasonable cost; many pensioners on the age pension only manage to pay for health insurance, as they see it as very important (and I agree). It’s been around for many decades now, about half a century, and I have absolutely no doubt that America could afford it even more than we were able to. I often hear talk of ‘socialism’ from Americans who have been influenced by the health/medical lobby and ultra-ideologues and who do not stop to think that compulsory insurance is no more an infringement on freedom than compulsory third party bodily injury insurance, which stops people tempted to take risks. If health insurance is totally voluntary, the healthy will likely take those risks, and the young and healthy especially, even if they can afford to pay. This way, they pay, and then when they need it they reap the benefits. And because everybody pays Australia’s GST (like a VAT, on goods and services), people of all income levels contribute to their health insurance by contributing to government coffers; because everybody pays it, and the big spenders pay more. So the compulsion is an important part of it. And by the way, there has never been that ridiculous thing where you have to tell the ambulance which insurer you are with to determine which hospital to take you to!!. Here, if you’re in trouble, you just head to the nearest public hospital; they will look after you (it’s free; in Queensland, so is the ambulance transport) and if you then need an operation and private transfer is appropriate for you as a privately insured person, that will happen in due course, and all private hospitals deal with all registered insurers without discrimination. And if you choose, you can also go without private hospital insurance, opting to be your own insurer. But the Medicare part is compulsory, as are seatbelts and motorcycle helmets. And the whole country is the better for it, I am convinced.
BTW, Medicare has nothing to do with medications. There is a completely separate scheme for that, the PBS (pharmaceutical benefits scheme) and most necessary medications are on that, the government having negotiated the cost down for the consumer because of its huge purchasing power, in effect; drugs on that list can be from say 10 to 35 dollars for a months supply, but if you are a pensioner, or have reached your family’s limit for the year (it gets adjusted each year, I think this year it’s $1700) the cost comes down to $5.60 (Aust) per prescription for a month’s supply till the end of that calendar year (permanently, if you’re a pensioner).
Donald Trump and many Republicans in Congress promised in their 2016 campaigns to repeal and replace Obamacare with a more workable system, but thanks to the wilful ineptness of Senate Majority Leader Mitch McConnell, those promises never happened.
There is a good chance that the promise of free Medicare for all will get many Democrats elected in 2020 and possible help give them control of the White House and Congress. Before that happens, maybe Trump and congressional Republicans should take a look at the system being used in Australia instead of Canada and the United Kingdom for a solution.
For those interested, here is a link to the Australian Government Department of Health official website.