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Public hospitals aren't 'free': so charge an accommodation fee


David Gadiel and Jeremy Sammut

The Abbott government’s proposed $7 co-payment on GP services has met with almost universal opposition, including from coalition state governments concerned about the impact on emergency departments.

To prevent patients who will no longer be bulk billed and are unwilling to meet the cost of the co-payment from inundating public hospitals, the Abbott government has proposed to allow state public hospitals to charge for GP-type services in emergency departments.

This has led most states and territories to rule out charging GP-type patients. Moreover, it has even led NSW Health Minister Jillian Skinner to announce a novel plan to employ bulk billing GPs in public hospitals to deal with the extra demand the co-payment is expected to generate.

Instead, of charging GP patients in emergency, the NSW government intends to collect the Medicare rebate for GP services provided in public hospitals.

If this flawed initiative goes ahead, and if other jurisdictions are encouraged to emulate this policy, it will defeat the main purposes of the co-payment - to limit the ever-growing use and cost of GP services, and contribute to the more effective allocation of scarce doctor time to treating essential needs. Nationally, approximately  5 per cent of the emergency department workload consists of GP-type patients. If GPs are placed in public hospitals, emergency departments would surely become magnets for patients seeking "free" GP care.

Workforce logistics means that the Skinner plan is unlikely to get off the ground, as it is unclear from where the new hospital-based GPs will be recruited. Shortages and imbalances in the supply of GPs remain prevalent throughout Australia, particularly in outer metropolitan and rural areas. Without substituting nurse practitioners for GPs (a move the AMA would strongly oppose), waiting times at emergency departments could be expected to lengthen as queues grow.

It is paradoxical that state governments should appear to be seeking to provide additional primary care services in public hospitals without user chargers. The idea that health services are "free"  in public hospitals is patently false.

Metropolitan public hospitals in capital cities charge sizeable parking fees - a so-called "sick tax" that is rarely mentioned when the subject of out-of-pocket health costs is raised.

Rather than encourage people to avoid the co-payment, state and territory governments should be looking to implement their own form of direct cost sharing.

Since Medicare’s inception in 1984, federal government funding for state health services has been conditional upon all Australians receiving treatment in public hospitals without user charges. If the Senate passes the co-payment legislation, "free" treatment will no longer need to apply to outpatient services. The Abbott government should seize this opportunity to also remove the obligation not to charge for inpatient public hospital services.

This would permit the states to access an untapped source of non-taxpayer funded revenue by levying a daily accommodation fee. The fee would not cover the cost of medical treatment, but rather the cost of the "hotel services" component of a hospital stay, such as meals and cleaning.

An accommodation fee is standard practice in the European social democracies. The rationale is that when a person enters hospital, they are relieved of their normal living expenses, which are transferred to the hospital. In France, for example, the forfait hospitalier is €18 a  day, or  about  $27.

In 2012-13, there were over 5.5 million public hospital admissions in Australia, which equated to over 18.8 million bed days. If each day patient had been charged say, a $30 daily accommodation fee, $565 million would have been raised.

This revenue would have defrayed a small, but not insubstantial portion of the $37 billion public funding to public hospitals and would have been a more honest way of charging for hospital care than imposing exorbitant parking fees.

Hospital accommodation fees would go some way towards addressing the irrational, ad hoc way the state charges for public hospital care. Like GP co-payments, an accommodation fee would signal that public health services are not "free", and might encourage more informed debate about the sustainability of the health system and the need for individuals to directly contribute to hospital and other health service costs.

David Gadiel is a senior fellow at The Centre for Independent Studies. Jeremy Sammut is a research fellow at The Centre for Independent Studies. 

6 comments so far

  • This kind of article really annoys me. Everyone knows medical care is not 'free' but is paid for by our taxes (levies, whatever). We are paying the taxes, and are 'entitled' (yes, entitled) to feel that medical care should be there when we need it, irrespective of capacity to pay at that time. If the govt can't get enough from the taxes they are getting now, they should be looking at increasing taxes, not trying to claw back at the other end (user pays) or force people to pay double (i.e. pay both the taxes already being paid, plus private health premiums). It's quite simple economics of scale really: have one good system for everyone, paid by everyone's taxes. Australians are not stupid.

    Date and time
    June 11, 2014, 7:22AM
    • The idea that we have a free medical system in Australia is false. And should remain false. Every free service will always be abused. That is the nature of our much publicized ingrained belief in fairness. If you are getting it for free well it's only fair I should also get it for free. Economics may be the dismal science but to the extent that it understands the destructive effects of the free rider it is worth paying attention to!

      Date and time
      June 11, 2014, 8:55AM
      • On 'exorbitant' parking fees - these are simply cost-reflective of the cost of building multi-level carparking on very expensive inner city land. To give it away 'free' would simply transfer the cost of the parking to taxpayers - something I'm sure the CIS normally argues against.
        Is it fair that the health budget ends up effectively paying for parking? Surely not.
        It's reasonable to expect those that drive to pay their way in the same way that users are being asked to contribute to their health care. Parking charges can be avoided if there are suitable alternatives (and there should be) - drop off areas, public transport especially, taxis, and the like.

        On parking
        Date and time
        June 11, 2014, 9:29AM
        • Most of us know that public hospitals aren't free, so I wish people would stop writing articles that are based on that premise. It seems that the writers have forgotten a little thing called the Medicare Levy which pays for public health. Like many I would rather pay an increased levy than see the poor and the vulnerable pay $7 every time they see a doctor. I foresee public health scandals such as haven't been seen since the thirties.

          Date and time
          June 11, 2014, 9:54AM
          • The question that should be asked is where is all the money going that is paid in tax on cigarettes and alcohol. Every year the government reaps tens of billions from those two taxes alone. They should be going straight to hospitals and the health sector. One would hazard a guess that the government takes that money and throws it at pie in the sky schemes that don't help ordinary Australians one iota.

            Date and time
            June 11, 2014, 10:07AM
            • More right-wing propaganda. Keep repeating the lies.
              The essence of propaganda is repetition, and the authors know this, so just fall into lockstep with their paymasters and keep repeating the lies, forever, and the general public will eventually start to accept lies as true. Facts don't count in this area, just repetition of the lies. The Centre for Independent Studies will say and publish whatever their paymasters desire, so much for "Independence".
              Illness doesn't discriminate between rich or poor, but under the system being proposed the health system most certainly will. My taxes over a working lifetime have paid for the hospitals,and the nurses and doctors who staff them, and university medical training, so why would I ever agree to a two-tier health system where the wealthy get immediate and intensive attention and pensioner me gets to die waiting? Because that's where we are heading under the new facism.

              Date and time
              June 11, 2014, 10:23AM

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