Medicare analysis shows fairness in the system

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How fair is Medicare? If "fair" means spending more on people with the greatest medical need regardless of income, then Australia's Medicare scheme is very fair. This is the overall result from a pioneering analysis by researchers from CHPPE, the Centre for Health Policy Programs and Economics at the University of Melbourne's School of Population and Global Health, and the George Institute for Global Health in Sydney.

Led by PhD candidate Rachel Knott, the study, which focused on patients aged 55 and over, was published in the Medical Journal of Australia in December 2012. It is an Australian first in its approach of combining information from patients and clinicians with administrative information to measure the equity of Medicare funding.

"Medicare has been operating for almost 30 years but this is the first study using actual de-identified Medicare records to analyse where the funding goes – to ask, how is the funding distributed across income groups and does it go to people who have the highest health care need?" she said. "No study so far has considered this question using individual-level Medicare records."

The results are described in the MJA article, How fair is Medicare? The income-related distribution of Medicare benefits with special focus on chronic care items. The research drew on the AusHEART (Australian Hypertension and Absolute Risk Study). This involved GPs across Australia collecting clinical data from patients aged 55 years and over who presented in 2008 and had consented to have their information linked to Medicare administrative records over 12 months.

"Before taking into account differences in medical need across income groups, we found that lower income groups were receiving much more out-of-hospital funding – about $400 per-person for the year – than higher income groups," Ms Knott said. "But this is because of their higher level of chronic illness."

Those in the lowest income quartile were about 2.5 times more likely to report having below-average health compared to respondents in the highest income quartile."That $400 figure is quite significant because it's average out-of-hospital expenditure across all people, including people who may not have used Medicare in that 12-month period," she said. Once differences in medical need across income groups were taken into account, the difference in funding received by the highest and lowest income quartiles fell to just $22.90, the research found. This suggested that the overall need-adjusted expenditure was relatively evenly distributed across income groups.

The Chronic Disease Dental Scheme (CDDS) was one of Medicare's chronic care items for which more was spent on poorer people than richer people. In the case of the CDDS, people in the lower half of the income distribution received on average more than 2.5 times the funding than that received by the highest income group. However, the CDDS was closed from 1 December 2012, following claims from the Health Minister that the scheme may not be equitable. Without commenting on that issue, the MJA article said: "If it is the objective of the government to better target dental services to low-income groups, then it would be important to show that new mechanisms of publicly financing dental care would be more progressive than the CDDS."

Data linkage could provide the evidence needed to develop funding policies and monitor the implementation of programs to ensure resources flow to Australians with the greatest need, the paper concluded. Having scrutinised Medicare's fairness, Ms Knott and her research colleagues have since been analysing the Pharmaceutical Benefits Scheme.