Cracks widen in healthcare system: Experts and patients expose failing Medicare, skyrocketing costs, and worsening wait times

With soaring medical bills, ballooning surgery wait times, and an ageing population, cracks in Australia’s healthcare system are widening. SBS’ Insight reveals stark challenges voiced by healthcare professionals, patients, health economists and Private Healthcare Australia (PHA) ensnared in the crisis. Who will shoulder the cost of care as demand outstrips supply?

Health economist Professor Henry Cutler warns the healthcare system is under unsustainable pressure. He says, “We’ve seen a large increase in healthcare spending – by government and individuals. New technology is driving better health outcomes but at a greater cost. New treatments increase the supply of care, but they also increase the pressure on the healthcare system.”

The strain is already visible. “The canary in the coal mine is waiting lists,” Professor Cutler says. “We see them in EDs, we see them for elective surgeries, and they’ve been growing for a decade. A health system collapses when people can’t access care at the right time, in the right place.”

Is Medicare Broken?

Dr Walid Jammal, GP at Hills Family General Practice, argues that Medicare is fundamentally flawed. He explains, “Medicare rewards volume. We need to reward continuity of care. We need to reward access to care and quality of care. There’s no checks and balances in the Medicare system for any of that.”

Professor Cutler acknowledges healthcare inefficiencies but warns against more investment, saying “Research suggests that 60% of healthcare is valuable care, 30% is of low value or no valued care, and 10% actually causes harm. So, if we are to invest more in the healthcare system, we need to make sure that it is not going into areas that are wasting resources.”

Private Healthcare: A Solution or Another Problem?

Two-thirds of elective surgeries and over 50% of inpatient mental health care take place in private hospitals. Yet, patients with private health insurance are still facing crippling out-of-pocket costs.

Duncan Sharpe, a patient diagnosed with diabetes, reflects on the financial toll. He says, “I lost the eyesight in my right eye last year and was out-of-pocket nearly $20,000 for the care I received – even with top insurance cover. In the future, I’ll keep private cover for the tax break, but I’ll be using the public system.”

Despite arguments that private health eases pressure on public hospitals, Professor Cutler suggests the opposite.

“The most recent research suggests that the increase in private health insurance membership does little to reduce the public hospital elective surgery wait list. The reason is that although it removes a lot of the demand from the public system, it also removes a lot of the supply of clinicians. They get paid more in the private system, and so therefore they would rather work in the private system,” he explains.

PHA CEO Rachel David pushes back saying “For many clinicians, it’s a choice to work in the private sector because they can really focus their skills on one or two procedures.”

Is Expanding Scope of Practice the Answer?

With workforce shortages, the Medicare Task Force is keen on expanding the scope of practice for nurses, pharmacists and allied health professionals. But, GP Professor Louise Stone warns it’s not a silver bullet.

“When Britain tried it, the outcomes were mixed. It didn’t take pressure off EDs or GPs. Expanding scope for highly skilled professionals is great. Unfortunately, there’s always an underbelly in whatever profession you choose where there’s risk,” she argues.

Registered nurse Emma Ratajczyk argues that the health system needs urgent reform, saying “Healthcare has a history of taking 16 years to make change. We don’t have that kind of time to drive changes in the way that Medicare services are funded. We need to make use of and value the expert clinicians that we’ve got in healthcare already to help cope with this crisis.”

Who Pays for the Future of Healthcare?

The 85+ age group will triple in the next 40 years, with fewer working Australians to fund the healthcare system through taxes.

Professor Cutler lays out the options: “We could increase immigration to bring in younger workers, ask older Australians to delay retirement, or invest in productivity. But if public funding can’t keep up, patients will have to pay more – either through out-of-pocket costs or higher taxes.”

Is Australia moving towards US-style managed care?

“There are legal protections against a full user-pays model – that’s in the Constitution,” David challenges.

However, despite repeated lobbying efforts by the Medical Association (AMA), Australian Private Hospitals Association (APHA), and the Australian Society of Ophthalmologists (ASO) to prevent the rise of US-style managed care in Australia, the trend continues. The recent opening of Medibank’s ‘no-gap’ private hospital is a push for vertical integration. This follows the earlier ACCC authorisation of Honeysuckle Health and nib private health insurer to form a health services buying group.

Health economist Professor Stephen Duckett argues the focus should be on smarter investment. “We have to think about where we invest that has the biggest return.

“Investing in primary care will save money down the track in hospital care. And, while investing in prevention does not cost any money, in fact, it raise money, it is politically hard. There’s strong vested interests against it.”

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