Monday, December 15, 2014

The partly correct Ergas

I have to admit that Henry Ergas comes across as almost balanced today in his column on health costs and the co-payment, where he agrees up front that the Australian health system actually seems to work well and at basically reasonable costs compared to international standards.

Where he goes more ideological than evidence based, though, is in the basic assumption that a "price signal" is warranted for GP services.

Economists may see increasing costs of providing services and instinctively say "price signal needed"; but obviously it is more complicated than that with health care, where treating a condition early may result in massive savings later.   And really, what is the evidence that people love going to a doctor to waste time?

There have always been people willing to go to the doctor for trivial matters (my own mother was inclined to), but it is not as if this resulted in much of the way of excess visits over the course of a year.  I think the great majority of people don't like going and only do so for what is usually a justifiable reason.  Putting a price signal to discourage a small number of people who might warrant it for a minority of their visits to a doctor may quite likely be outweighed by the problems caused by the larger number of people who may delay treatment due to the cost.

If the price signal is meant to be directed more to doctors (if, for example, there seems evidence that they are doing unnecessary and wasteful pathology tests - and I have a hunch there have been cases where that suspicion is justified), then putting the price signal on that makes some sense; but it seems to me the evidence that you need a price signal on the average punter going to the doctor per se is completely lacking.

That doesn't stop a government simply saying the co-payment is needed as another tax, and people can decide whether that seems justifiable or not.

The worst aspect of the government's latest changes, though, is not that it has a $5 co-payment, but by drastically changing rebates to doctors, purely bulk billing practices seem likely to disappear, and the working poor will actually face a very large increase in the cost of going to the doctor.   The "price signal" of their new policy is therefore dramatically worse for most people than the simple idea of $5 extra to go to a GP.   I would not be surprised if that results in more expense for the health system in the long run.

This is a hopeless government, full of crook policies, and without an ounce of sense that I can detect.

1 comment:

Not Trampis said...

The problem for our Enry is people are not over-visiting GPS at all. It is hospitals where the cost blow-outs are occurring.

Another area where our Enry ignores the facts