Psychiatric Patients Fare Well in Australia's Health System

When Americans think of life “Down Under,” that is, in Australia, they often envision cowboys roaming the outback and encountering kangaroos, dingos, and laughing kookaburras or young adults in splendid health playing on Sydney's beaches. And indeed, life is very good for many Aussies; their life expectancy is among the highest in the world.

When it comes to health insurance, however, Aussies do not emphasize rugged individualism as much as Americans do. Australia has had a publicly funded universal health insurance system since 1975—first called“ Medibank” and then renamed “Medicare” in 1984. As Ken Kirkby, M.D., president of the Royal Australian and New Zealand College of Psychiatrists, explained in an interview, “The philosophy of Medicare is communitarian; we all chip in to help those less fortunate.” Kirkby is also chief psychiatrist of mental health services in the Department of Health and Human Services in Tasmania.

Under Australia's Medicare, all citizens are entitled to treatment in a public hospital at no charge. “Many people who can't afford treatment or who need extensive treatment are treated in public hospitals,” Kirkby explained.

Medicare will also pay 85 percent of the going Medicare fee for outpatient visits with physicians in private practice; patients then pay the remaining 15 percent as well as anything beyond that when doctors do not accept the Medicare fee as payment in full. A Medicare fee accepted as payment in full is called “bulk billing.”

“Anywhere from 70 to 90 percent of psychiatrists bulk bill sometimes, but a lot of them don't do it most of the time,” said Kirkby. When psychiatrists do bulk bill, he added, it is often for patients who are incapacitated by depression or psychosis and not working. Also, there is a limit on patients' out-of-pocket costs for outpatient care; Medicare picks up the tab for any care beyond the limit.

Australia also offers people of few means outpatient care—including outpatient psychiatric care—in public clinics. “For example, we have outpatient clinics in country towns that are free to the user,” Kirkby said.

Medicare is funded by a 1.5 percent tax levy. An exemption applies to low-income earners and the unemployed. In practice, the levy raises only a fraction of the money required to cover the program. If the levy were to cover it fully, then it would need to be about 8 percent. Moreover, Medicare does not fund public hospitals; they are financed by federal tax revenue through grants to the states.

The Australian government also encourages citizens to purchase private health insurance to supplement their Medicare hospital coverage (see Original article: Private Health Insurance Purchased as Supplement).

System's Pluses Add Up

In Kirkby's opinion, “Australia's Medicare system is one of the world's best health care coverage systems.” One of the features he likes best about it, he said, is that it provides “universal coverage of the population.”

Alexander McFarlane, M.D., a professor of psychiatry at the University of Adelaide, concurred: “The system provides invaluable access by all members of the community to general practice and specialist health care independent of their personal wealth. Furthermore, medications are provided at marginal cost to patients, which ensures that treatment is available to all. The fact that Australia has the second longest life expectancy [in the world] may, in part, arise from the accessibility of health care.”

The system's strong safety net, Kirkby added, is especially beneficial to psychiatric patients who are “one of the most socially disadvantaged groups.” Not only do psychiatric patients have access to free or subsidized care in public hospitals, public outpatient clinics, and the offices of private medical practitioners, but also their psychotropic medication costs are subsidized by Medicare. Medicare recently started covering psychotherapy by psychologists.

Yet another benefit of Australia's Medicare is that it treats mental illnesses like other illnesses without discrimination, Harvey Whiteford, M.D., a professor of psychiatry at the University of Queensland and an adviser to the Australian government on mental health policy and financing, told Psychiatric News. For example, Medicare pays 85 percent of the cost of a psychiatric outpatient visit for up to 50 visits a year.

Still another positive aspect of Australia's Medicare “is that it greatly reduces the financial barrier to appropriate professional health care for young people with mental health problems,” Michael Sawyer, Ph.D., a professor of child and adolescent psychiatry at Women's and Children's Hospital in North Adelaide, South Australia, said. “This is an important issue because many young people with mental health problems live in families with very limited financial resources. As such, they cannot afford to pay for expensive health services.”

Picture Not all Rosy

However, Australia's Medicare is not without flaws.

One of the things that Whiteford does not like about it, he said, is that“ procedural medicine (for example, surgery, invasive procedures such as endoscopies) is reimbursed much better than is nonprocedural medicine (for example, internal medicine, psychiatry).”

Kirkby agreed that this is one aspect of the system that he doesn't like—and so did McFarlane, who added, “The differential fees where proceduralists are overpaid for their work.. .conspire to encourage interventions and investigations when less-invasive approaches would be appropriate.”

Another weakness of Medicare, Kirkby pointed out, is that it has no way of correcting physician shortages if they occur. True, he said, the Australian government essentially controls the number of people who receive a medical education in Australia, yet the numbers are largely historically based rather than need based.

Yet another “limitation of the system is its focus on payment for specific treatments or interventions delivered by medical and nonmedical specialists to young people who have existing mental health problems,” Sawyer noted. “There is a need for a funding system that gives equal weight to universal and targeted prevention programs designed to reduce the incidence (that is, reduce the number of new 'cases') of mental health problems among young people.”

Ian Hickie, M.D., a professor of psychiatry at the University of Sydney, has called for an overhaul in the way that Medicare pays psychiatrists to lure them to work in more remote areas of the country.

Any Lessons for Americans?

So in view of the advantages and disadvantages of Australia's Medicare, and with health insurance reform being a hot election issue in the United States this fall, are there any aspects of Australia's Medicare that Americans should perhaps consider?

“Given the different economic doctrine in the United States, particularly the emphasis on individualism, this is a complex question to answer,” Kirkby replied. However, “with the U.S. government already providing ample medical coverage to seniors through the American Medicare, it is not a radical departure to envisage extending the safety net to younger Americans as well. But it is for the United States to work out how this would best be accommodated in a system dominated by employer-funded health insurance and health maintenance organizations (HMOs), neither of which are significant factors in Australia.”

“I feel it would be a little presumptuous of me to make suggestions for the United States to adopt,” Sawyer said. “However, all countries need to ensure that young people with mental health problems, regardless of the wealth or poverty of their parents, have access to appropriate professional health care. Furthermore, all countries need to adopt universal and targeted approaches to reduce the incidence of mental health problems among young people. This is important because mental health problems among young people are relatively common, they are associated with significant comorbidity ... [and], once established, they are often chronic or recurring with a significant proportion persisting into adulthood.”

“You need a national health insurance system with parity coverage for mental illness as a basic financing system for all Americans,” Whiteford advised. “If physicians want to charge above that, they should be allowed, and the market will determine who can and who chooses to pay. It will not bankrupt the country. Australia has had this system since 1984, and we spend 9.5 percent of our gross domestic product on health compared to 14 percent-plus in the United States.”

McFarlane commented, “I understand that Sen. [Hillary] Clinton got to know about the Australian system from contact with senior government officials who were traveling with our prime minister to meet President Clinton. She got a number of her ideas [for health insurance reform] from these conversations. A system of universal health insurance that is based on a taxation levy provides social equity and protects those disadvantaged by ill health. This system underpins social stability and allows children to get good quality health care independent of the resources available to their parents. The system provides access to good quality mental health care without the restrictions that have come about in HMOs. This means that psychiatrists can deliver both good quality psychotherapy and pharmacotherapy.” ▪