26

Only approximately one-quarter of all skin com-

plaints were found to be entirely occupational; this find-ing makes the prevalence of occupational skin disordersamong all laboratory employees 6%.Of the 8 cases diag-nosed as having occupational contact dermatitis only 2were found to be allergic, the other 6 being irritant. Allcases of occupational dermatoses have so far been man-aged without job changes. Preventive measures intro-duced since the investigation have consisted of a step-ping up of existing measures rather than introduction ofnew measures.

This investigation shows that non-occupational der-matoses can be responsible for the skin problems of a siz-able proportion of people at work. It counteracts thealternative view that if more than a small percentage of

employees have skin problems there must be some uni-

versal occupational factor underlying them. An ad-ditional point made by this report is that even the

minority of dermatoses that were occupational in origincan be managed by adjusting work practices rather thanby excluding employees from work.

I thank Dr R. F. Sellers, director, Mr 1. F. Rae, laboratory managerand safety officer, and the safety representatives of the Civil ServiceUnion and the Institute of Professional Civil Servants at the AnimalVirus Research Institute, Surrey, for their referral of the problem,their assistance in its investigation, and their review of this paperbefore publication.

Requests for reprints should be addressed to R. J. G. R., St John’sHospital for Diseases of the Skin, 5 Lisle Street, London WC2H 7BJ.

REFERENCE

1. Baker H, Wilkinson DS. Psoriasis. In Rook A, Wilkinson DS, Ebling FJG,eds. Textbook of dermatology, 3rd ed. Oxford: Blackwell, 1979: 1315.

Health Insurance

A CONSUMER’S VIEW OF THE AUSTRALIANEXPERIENCE IN HEALTH INSURANCE

ERICA M. BATES

Senior Lecturer, School of Health Administration, Universityof New South Wales, Sydney

THE Australian health-care system lies somewherebetween the British National Health Service and the sys-tem in the United States. We have a generally private,fee-for-service, medical sector both for general practi-tioner and specialist services, and a mixed private andpublic hospital sector. About 40% of doctors are nowsalaried employees of hospitals, but these are mostlyjunior doctors in training. Almost all the specialist salar-ied doctors have the right of private practice. Themajority of specialists are in private practice. Generalpractitioners are all self-employed business people,either in solo or group practice. There is no equivalentto family practitioner committees, and doctors are

allowed to work where they wish, and to charge whatthey want to charge (except in South Australia, wherethere is price control over their fees). It is left to marketforces to determine where a viable practice can be set upand what fees can be charged. This clearly leads to con-siderable surpluses of doctors in the pleasanter parts ofour cities, and to shortages in the less affluent suburbsand in many of the rural areas.

There are two fee schedules issued to guide doctorsand health insurance companies as to the approximatefees they should charge in normal circumstances: oneschedule is prepared by the Commonwealth Health

Department, and it is on this basis that health insurancepayouts are based; another, generally higher, scheduleof fees is prepared by the Australian Medical Associ-ation. But doctors are not obliged to follow either sched-ule, though most doctors do observe at least the higherschedule most of the time.

BEFORE MEDIBANK

In the ’50s and ’60s, there developed a large numberof health insurance companies, some of which coveredhospital insurance, some covered medical services, and

some covered both. Thus, one could insure for either,both, or neither of hospital or doctors’ fees. Hospitaltreatment for uninsured people was free if they camewithin a relatively reasonable means test, and hospitalsrarely pursued people who were not insured, not coveredby the means test, but had not paid their bill. Specialists("honoraries") gave their services free to hospital pa-tients both in wards and outpatient clinics.

As medical insurance was introduced, the CommonwealthGovernment in 1952 and 1953 introduced a special bonus forthose who did the right thing and took out voluntary healthinsurance. Although the theoretical aim was that medicalbenefit refunds should total 90% of medical fees, the practicalreality was that, between 1953 and 1970, the patient’s contri-bution, instead of being 10%, fluctuated between 30% and37%. This led to considerable complaint by the public. Hospi-tal costs, on the other hand, were covered in full for the in-sured person. But benefits were not payable at all for chronicillnesses, hospital treatment exceeding a certain period eachyear, or for "pre-existing ailments" .

Thus, many of the people who most needed cover wereexcluded. By the end of the ’60s, the considerable dissatisfac-tion by the public, at the confusion and inadequacy of healthinsurance cover, had led to the setting up of an inquiry (theNimmo committee) which reported in June, 1970. The Nimmoreport had seven major findings:

1. The operation of the health insurance scheme is unnecessarilycomplex and beyond the comprehension of many.

2. The benefits received by contributors are often much less than thecost of hospital and medical treatment.

3. The contributions have increased to such an extent that they arebeyond the capacity of some members of the community and in-volve considerable hardship for others.

4. The rules of many registered organisations including the so-called"special account" rules permit disallowance or reduction ofclaims for particular conditions. The application of these ruleshas caused serious and widespread hardship.

5. An unduly high proportion of the contributions received by someorganisations is absorbed in operating expenses.

6. The level of reserves held by some organisations is unnecessarilyhigh.

7. The cost of illness may include, in addition to hospital accommo-dation and treatment and medical services, a wide range of otherservices which have never been covered.

During this period, money paid for health insurance pre-miums was a tax-deductible item, as was any other expenditureon doctors’ fees or hospital services, so obviously the cost ofhealth services was less for those on higher incomes, whose taxliability was reduced at the top of their income by deductionsfor health insurance.

The cost of health insurance as such, even with its

deficiencies, was in the ’50s and ’60s still reasonably

27

low, and 70-75% of the population was insured; of theremainder, 15% were pensioners of various kinds andwere covered by special provisions and did not need totake out insurance, and 10-15% were not insured at all.These of course were often the most vulnerable groupsof the population-the self-employed, the poor, the

aborigines, and recent migrants.

MEDIBANK

In December, 1972, the Labour Party was elected toform a Federal Government-for the first time for over20 years. After a series of political battles (they had amajority in only one House of Parliament) and a furtherelection in 1974, a National Health Insurance scheme,called Medibank, was introduced. This had no relationto a national health scheme; it retained the fee-for-ser-vice principle of payment to doctors and left the doctorsas independent practitioners. Its sole purpose was to giveinsurance cover to the whole nation, paid for from thenational Budget.Now, when a patient saw a doctor, the doctor could choose

to bill the patient in the usual way, directly; the bill was

paid by the patient, who then claimed from Medibank a rebateof 85% of the standard fee set by the Health Department. Ofcourse, if the doctor charged more than that fee, the patientwas liable for the balance. On the other hand, the doctor coulddecide to "bulk bill" some or all his patients, in which case thepatient was merely asked to sign a form which stated the ser-vices rendered, and the doctor then recovered 85% of theHealth Department’s scheduled fee from Medibank. He thusdiscounted 15% of his fee for the elimination of bad debts andfor accountancy and postage costs. The scheme did mean that

now, for the first time, many people actually could see theirgeneral practitioners when they felt it necessary and not, as

before, when they felt they could afford it.Hospital treatment was made free to everyone under Medi-

bank, as long as the patient was prepared to be in a "stan-dard" ward if he was in a public hospital, and this was no par-ticular hardship since the only difference between an

"intermediate" bed and a "public" bed was the label on thebed. Private hospitals, of course, were a different matter andthe Government did not make their beds freely available in thesame way. But there was another condition, which caused agreat deal of friction between the Government and the A.M.A.,and that was that the standard-ward patient had to be treatedby the salaried doctors of the hospital and could not employthe doctor of his choice. The A.M.A. saw this as being an in-trusion into the doctor-patient relationship. However, thosepeople who took out private hospital insurance could choosetheir own doctor in hospital, and their beds would be declared"intermediate" or "private."Health care was now, for the first time, free at the

time of need for the whole population. The privatehealth insurance companies naturally declined underthis system, but they maintained a small market amongthose who wanted to choose their own doctor should

they have to go to hospital, or who wanted private hospi-tal treatment, dental insurance, and other items such asglasses, physiotherapy, home nursing, and funeral insur-ance.

THE DISMANTLING OF MEDIBANK

In December, 1975, the Labour Government was dis-missed from office and in the ensuing election early in1976, the Liberal (which, in the Australian system, is

equivalent to the Conservative) Party was re-elected,promising to retain Medibank. In spite of this undertak-

ing, there have now been four major changes to Medi-bank since 1976, and it is now effectively abolished: weare back to a large number of private health insurancefunds (about 80) which vary enormously in size, stabi-lity, cost of premiums, and availability of benefits.

There are now no Government bonuses for those whoinsure themselves, and health insurance premiums areno longer tax-deductible, though money actually paidout in health expenses is tax-deductible. This is some-

thing of a disincentive for well-off people to take out in-surance, at least for medical services, because doctors’fees are likely to be manageable financially, and. suchfees are tax-deductible, whereas the premiums theywould have paid to the insurance company are not.

There is another disincentive to taking out insurance.The Government has so far retained the principle of freestandard-ward treatment being available to all who areprepared to be treated by hospital doctors, but therehave been recent threats to reimpose a means test if notenough people take out insurance. Further, doctors’ feesand hospital costs have escalated in Australia as theyhave in all advanced technological systems. The conse-quence is that full health insurance has now become ex-

tremely expensive, and costs between CIO and 20 perweek, depending on the package one chooses. And whilehealth insurance costs have risen, the benefits havebecome more dubious for the reasonably young and fit,who have opted out of insurance in large numbers, leav-ing the health funds, and the rest of the population, tocarry the increasing cost of those who are sick or whothink they might become sick. According to the nationaldaily newspaper, The Australian, on April 24, 1980,40% of the population have now opted out of privatehealth insurance and these are primarily young andhealthy people, so that the basic principle underlying allinsurance, that the non-claimers help defray the cost ofthe claimers, is rapidly being eroded.

Health insurance now falls into two parts, hospitaland medical, and people can take out either, both orneither. For those who want choice of doctor in hospital,hospital insurance is available and covers all hospitalcosts but not the fees chargeable by the consultant fortreatment provided, either in conjunction with hospitaltreatment or quite unrelated to it, nor the fees chargedby the hospital for services such as X-rays and pathologi-cal tests, nor, of course, services obtained from generalpractitioners. These are covered by medical insurance,which can cover either the whole standard medical fee,or a certain proportion of it, depending on the particularinsurance package taken out, and on the amount of thefee the doctor charges. Dental fees can also be part ofa medical insurance package, but are usually refundedonly to 50% of the fee. Hospital and medical insuranceboth come in a number of packages, covering, for exam-ple, basic hospital fees, intermediate or private hospitalbeds, convalescent home beds, and different proportionsof the various fees charged by doctors.

CONSUMER REACTIONS

If readers are by now confused, so was the Australianpopulation. People could not decide whether to insure atall, and if so, which package to take.The first phase of the dismantling of Medibank (I

have left out many of the intermediate steps between

28

1976 and 1980) came in October, 1976, 8 months afterthe new Government was elected on the promise to

retain Medibank. There was a considerable amount of

public agitation at these changes, and, for the first time,a spontaneous reaction emerged and a Medical Con-sumers’ Association was formed in New South Wales. Iwas president of the Association in 1976-79, when thefirst three major changes in Medibank were being made.It was clear that the market model could not work inthis field, and for months at a time I was receiving manycalls a day asking for advice on what to do. Although allfunds must offer, by legislation, certain basic hospitaland medical cover for their basic packages, they varywidely in the cost of the packages, the promptness withwhich claims are met, the conditions they impose, andthe complexity of the forms that have to be filled in foreach claim, as well as the extra benefits that can be pur-chased, such as higher benefits for a limited number ofweeks-and the number of weeks available varies, ofcourse, with the companies, home nursing, dental ben-efits, physiotherapy, spectacles, eye testing, and so forth.Variations occur between funds in the number of suchservices they allow per year, the number of "highercost" hospital weeks they pay for, and in which type ofhospital, and the proportion of the service cost whichthey reimburse. It would take an actuary to work it allout. The average person is totally helpless among allthis confusion, and opting out is one way of throwing upone’s hands in despair. And enough people are nowdoing this to worry the insurance funds and the Govern-ment.

Another quirk of our health financing system distortsthe whole market model even further. Doctors can

charge what they wish for each item of service they ren-der ; though the two guides I have mentioned are avail-able, they are only guides. This can mean that people donot know until well after the event what the cost of amedical service will be. For example, someone may betaken to hospital, and has taken out hospital insurancebut not medical insurance, a fairly common situation.The hospital will then bill the insurance company for "

the hospital cost, but the patient will have to pay for allmedical services rendered by all consultants, and for allservices such as tests, X-rays, and possibly even dripsand operating theatre services, depending on the hospi-tal. There is a special provision that if any one medicalservice costs in excess of A$20 (10), the Governmentpays the balance. This has two consequences. It meansthat a relatively expensive item of someone’s hospitalstay, such as an operation, costs only 410 to the unin-sured person, but it will readily be seen that it is quiteeasy to amass a considerable account from a number ofsmaller items, such as each session of radiotherapy, eachseparate X-ray, each separate blood and urine test, andeach visit by a series of different consultants. In a freemarket system, the patient ought theoretically to be ableto find out whether all the tests are really essential, andwhether, in another hospital or with another consultant,he could escape more cheaply. But of course this is notpossible in a medical market, where medical ethics pre-vent a free flow of information about fees charged, andno comparison can be made by the uninformed con-sumer (or often the informed one), as to the value of theservices rendered for the cost incurred.

A further consequence of the z10 maximum fee perservice is that there is a tendency for uninsured peopleto try and get a "quick fix" rather than a series of indi-vidual visits or treatments. The uninsured person canhave even a major operation for the comparatively lowcost of 10, but each visit to a general practitioner willcost him 5, and each visit to a specialist about 15.The system also promotes a strong "consumer ethic",with insured patients demanding their money’s worthsince they have paid such high fees for it, or such highinsurance premiums. A further consequence is "doctor-hopping", when people try out several general practi-tioners for the same condition, or obtain a number ofprescriptions for the same drug, without any of the doc-tors being aware that another doctor is involved,because all the patient has to do is to produce a fee andpay for the service. If he has medical insurance this willcost him little or nothing, but collectively, of course, thecost of insurance premiums will rise.

CONSEQUENCES OF SUCH A SYSTEM FOR THE CONSUMER

It should be evident that the general feeling is one ofbewilderment and lack of comprehension of our healthfunding system. The Australian, by no means a radicalnewspaper, described the whole scene as one of "confu-

sion, inequity, and waste" and, in my experience, thatis an accurate description. A further consequence is that,because the Government has no control over the doctorswho make the major decisions (and the expensive deci-sions) in health care, it is continually tempted to tinkerwith the incentives for the consumer-in changing theinsurance system-rather than being able to tinker withthe incentives for the providers, though there is somemovement in this direction now with the Government

reducing the number of available hospital beds.Torrens,l in his discussion of the scene in the United

States, commented that private health insurance has un-intentional negative effects: it tends to increase utilisa-tion of services, it can encourage an increase in the priceof services, and it has a profound impact on the valuesthat characterise health care. My experience supports allthese points. If one has paid for insurance, one wants"the best" without waiting; one expects more tests, morereferrals to specialists, and so on. It is harder in such a

system for doctors to say, "this admission to hospital,this test is unnecessary", if the patient is insured andthe beds are available, as they are bound to be if the pa-tient has insured for that eventuality.

Torrens’ also suggested that private health insurancemight shift the British emphasis "from comprehensivefamily care towards an item-by-item, high technology,entrepreneurially oriented health-care system". Judgingfrom the Australian experience, such an ethic is almostunavoidable when medical care is treated as if it were a

typical consumer good, to be purchased in the market-place from sellers who are in competition with eacbother, and who benefit when more of their goods aresold. The actual medical care rendered may well be ex

tremely good, as I believe it is in Australia, but it is haatpered by overuse, confusion, lack of coordination, andlack of community and preventive services, and it oftei)creates a sense of insecurity in the patient, who is B0<sure for what, and how much, he will have to pay.1 Torrens PR. Health insurance in the United States: implications for the Un-

ited Kingdom. Lancet 1980; 1: 27-31