3205MED Healthcare Systems : Performance and Percentage of GDP

In this essay we would compare, analyze and research about the healthcare systems of the two countries that are Australia and United States of America. We would compare their Health care system on the basis of five areas that are Funding system (including health insurance systems), Governance system, life expectancy at birth, health system performance and percentage of GDP spent on health.

Australia is a culturally diverse country with a population of over 20 million. Australians have the highest life expectancy and it is because of the comprehensive and high quality health care system. The country has the most assessable, affordable and comprehensive healthcare system in the world. The cost effective healthcare is due to the tax funded system that supports healthcare at a universal level. Australians have access to a good healthcare funded through the general taxation. Australian health care system is a mix of state and federal government responsibility and funding. It is a web of providers, organizational structures, services and recipients. It is a complex system that is achieving great results as a universal health care system (Braithwaite et al., 2017).

The federal, territory and state along with local government are collectively providing for the people. The government in Australia has a federal form where it has functional and fiscal responsibilities that are divided between the government and the two territories and six states. The government subsides the primary care through the Pharmaceutical Benefits Scheme (PBS) and Medicare Benefits Scheme (MBS). Complexity cannot be avoided when a multifaceted system with an inclusive approach is meeting the needs of varied residents with varied age, location, cultural background, health history, behavior and socio economic background. Behind every healthcare system there is a network of support and governance mechanism that enable the legislature, regulation, funding aspects, policies and coordination (Grant et al., 2017).. The healthcare in Australia is divided into Primary, Secondary health care and Hospitals. Primary Healthcare is the first contact that the person has when he or she is ill. The expenditure on these services accounts to almost 36 % in the year 2011-2012. Secondary health care system operates with the primary health care system, as this system works with the referral and assessment of the primary care service (Dave, 2016). This care is provided by the referral of a primary care physician for a specialist or facility. Hospitals and their emergency departments are a major portion of the health system. These services provide emergency care to patients that are in need for surgical and medical care. The expenditure on these service

Intergovernmental decision making and collaboration led by council of Australian Government (COAG) that is represented by the Prime Minister and ministers from each state govern the healthcare system. The MBS and PBS are all federal governed national programs and policies. Medicare that is a tax funded scheme that offers subsidized healthcare for the population. This scheme gives subsidized pharmaceuticals, out of hospital care, and free subsidized access to the doctor in case of out of hospital care. About 68% of the expenditure comes from public sources, (46% is from the Australian government and the state government funds 22%). The remaining 32% is being funded from private sources. This all level provision of services includes the three major schemes which are the Pharmaceutical Benefits Scheme, Medicare and 30 % Private Health insurance rebate. The Pharmaceutical Benefits Scheme and Medicare Schemes cover all citizens to guarantee subsidized payments for prescription medicines and private medical services. Although all the public hospitals are funded by the government whether it be territory, state or Australian government, the private hospitals are operated by private sector. The government fund many services such as community health services, medical research and population health programs about the Aboriginal and Torres Strait Islander Health services, health infrastructures and mental health services. Medicare is a health insurance program that has Australian citizens covered. This plan was introduced by the Whitlam government in the year 1975 but it was Hawke who introduced the universal healthcare in the year 1984. This insurance pays 100 % for the general practitioner fees and about 85% for any specialist under the Medicare Benefits Scheme or MBS. Medicare covers private hospital costs, hospital and medical costs incurred overseas, hospital and medical services that are clinically or surgically necessary and even ambulance services. Medicare insurance does not cover dental treatment, home therapy, contact lenses, glasses, occupational therapy, eye therapy, psychology services, chiropractic services, and physiotherapy. Pharmaceutical Benefit Scheme is a scheme that provides prescription medicines at a subsidized rates. This scheme is governed by the National Health Act 1953 and it covers medications supplied by medical practioners and pharmacists. The cost of the medications are negotiated between the supplier, government and Department of Health. Under this scheme the patient pays the “Co-payment”, that is the patient contribution. This scheme covers all Australian citizens as well as the foreign visitors under the Reciprocal health care Agreement. The citizens can get subsidized medications if they have a Medicare card, PBS safety net card, concession card, Department of Veteran Affairs card and Health care card. Private health insurance is also available for the citizens who want to be partially or fully covered for health services. It is not compulsory to take private insurance but people prefer to mix and match the type and level of cover. These private insurances tend to cover the services that are not covered by Medicare such as ambulance services, prescription glasses, physiotherapy and dental services (Hsieh, & Bazzoli, 2012).. These patients enjoy the freedom to choose their doctor more freely and also enjoy less waiting time for any surgery or treatment (Ward et al., 2017). According to the data provided by Private Health Insurance Administrative Council for the year 2013 about 11 million Australians that is around 47% of the Australian population has some kind of private cover.

The data of AIHW or the Australian Institute of Health and welfare show that health expenditure data for the year 2014-2015 shows around 161 billion was spent on health, that is about 4 .4 Billion higher than the year 2013-2014. This is reportedly the 3^rd increase in three consecutive years. The health share of GDP has reached 10% for the year 2014-2015 so if inflation is taken into account it shows that health expenditure has grown by 2.8 % but GDP has only grown by 2.3%. The ratio of health and GDP was up by 10 % for the year 2014-2015 which shows that price rise in the health sector is to blame. Expenditure has continuously increased from 6753 $ for year 2013-2014 to 6846 $ per person for the year 2014-2015. Total health expenditure has increased on average by 5.4% over ten years while the GDP has grown by 3.1% each year. But this growth is still less in comparison to the OECD where it grew from $4078 to $5691 that is $1613 increase for the same period. Health has become a crucial part of the economy and for the year 2014-2015 the highest expenditure was for hospital services that was provided for both the private and public providers. These hospital services include everything from pharmaceuticals and the services from the specialists of the hospital. For expenditures “cardiovascular diseases”, “mental health” and “oral health” have the highest spending. Indigenous people also have higher per person expenditure as compared to non-indigenous people, in the year 2010-2011 the expenditure on the Torres Strait Islander and Aboriginal people was $7995 per person (Coretti,& Ruggeri, 2015). These numbers are around 1.5 times of that in non-indigenous Australian. For hospitals and health services in the community the expenditure was highest for the indigenous people. The data shows that average expenditure on the Indigenous Australian was $ 3631 in comparison to only $1683 for a non-indigenous Australian. Aging population is another factor that attracts more expenditure as according to the data from OECD, 2013 survey and Productivity commission survey for the year 2015 expenditure on older population greater than age 85 is almost 20 times higher than that of children between the ages 5-14 years. For the year 2014 United States has the highest spending on health in OECD countries that has a spending of about 16.6 % of their GDP. The average expenditure on health per person is double in United States than in Australia. ( Kotzian, 2008), (Layton, 2014).

Life expectancy at birth has been used to measure the population health of any country as it reflects the mortality rate of the country’s population. In Australia the life expectancy has increased drastically over the last century. According to AIHW (Authoritative information and statistics to promote better living) data about a century ago the life expectancy of an average Australian was in their 60’s. Whereas people who are born between the year 2013-2015 are expected to live up to 80 years of age (Kynoch, 2013).. It is mostly due to the access to sophisticated and innovative healthcare that had made treatment, diagnosis and detection easier. Australia is ranking 6^th in the OECD countries in life expectancy in males and 7^th in life expectancy in females. But this also creates an aging population that is growing in Australia due to increasing life expectancy at birth and low level of fertility. Good numbers are recorded for infant death rate which has decreased by 4.7%. according to the national health survey that is a 3 year household survey that is conducted by the Australian Bureau of Statistics the risk of dying has decreased for all ages in the country. Where the decline was notable in the males between 10-14 years in which mortality rates decreased by 60% in the past 20 years. Female specific mortality rates were a decline of 50% for infants and of 47 % for the ages between 50-54 years. Most deaths in Australia are now reported in people over 70 by non-communicable diseases.

The healthcare system in United States is unique for industrialized countries. They do not have a uniform healthcare system and they do not have a universal healthcare coverage like Australia. The healthcare system has no nationwide approach for health insurance like Australia ( Hall, 2005). Well the word “system” is misleading for the country as it is being run by individual organization that includes non-profit, government and for profit organizations. 26% of the citizens were covered by public insurance and 70% of them were covered by private insurance. The 26 % that are covered by public insurance are covered by two major plans that are “Medicare” and “Medicaid”. Both of these insurances were introduced in the year 1966. Medicare is a healthcare plan that is uniform for disabled and aged individuals. This is a federal health insurance scheme for 65 years or older adults or for adults with disabilities. It is divided into four parts that are:-Part A that is for hospital insurance, Part B that is for medical insurance, Part C that has Medical advantage plans that cover hospital and medical costs for private hospitals, and Lastly Part D that covers prescription medicines (Foley & Steel, 2017),( Yeung et al., 2017). Part A is funded by the Medicare Tax that is like the Social Security Tax whereas the other parts are covered by monthly premiums that account to 25 % and general taxes that account to 75% of the funds. But the patient is not fully covered even then as they have to pay a deductible for most of the services as well as for long hospital stays. Therefore many people purchase a Medigap Insurance that is a private insurance that is being provided by insurance companies where they pay or reimburse the medical bills that are not covered by Medicare. Another public health insurance that is Medicaid is for the economically weak sections of the society. It is jointly funded by the state and the Federal Government. It is governed by each state. The federal government matches funds for the state government that can range between 50%-77% that depends on the state per capita income (Ridic et al., 2012).. The coverage under this public insurance varies from state to state. Therefore the eligibility varies too, usually the aged, disabled and dependent children families are covered under this plan. The federal government has a basic package for health insurance where they cover nursing home services, physician, and hospital fees but some states have more coverage (McCalman et al., 2017). So some states provides a more generous coverage and benefit package under the Medicaid. This is the only insurance program that provides long term hospital stays but it only covers 12 % of the United States population. In this about 61% of the insurance was employment related insurance which ensures huge savings in group plans for the employer. Sometimes they do not buy insurance from an external party but sponsor an internal health insurance system with the premiums from the employee and employer. A firm that is fully insured sponsors all health care costs for the employees, whereas a partially insured firm purchases “stop loss” coverage that protects them from excess expenditure over a given amount. Less than 30 % of the employees enjoys the benefit of the conventional health insurance plan where unrestricted coverage for health is provided. But even this coverage has mandatory second opinions for surgery, preadmission certificate, and reviews for long hospital stays. Usually the employment plans depend on the deductibles and co-payments that are being made by the employer and the employee. The employers prefer to use the services of managed healthcare insurance plans where some selected providers integrate finances and delivery of services by selecting a tailor made set of services for members. These are called as MCO’s or Managed Care organization that are HMO’s or Health Maintenance Organizations and PPOs or Preferred Provider Organizations. HMO is an organization that combines the producer and insurer functions. These are usually prepaid and therefore provide numerous services to the users. PPOs are third party payers that provide incentives to users in financial terms by providing low out of pocket prices for a list of pre decided list of hospitals and doctors. (Randall, 2013).

There are about 16% of the United States population that is uninsured which means these individuals lack health cover but this does not mean that they cannot access health services. As there are numerous health clinics, and other healthcare services that are being funded by charities. In terms of production methods the United States Health care system is diversified. Undocumented immigrants are the only section of the population that is without health access but hospitals that are under the Medicare funds are to provide emergency medical services to any patient in need. Therefore many states do allow the undocumented immigrants to benefit from this and also provides beyond “stabilization” care. United States unlike Australia has a fragmented governance of its healthcare system where even the funding is fragmented and is very complex to even work smoothly. ( Greenfield et al., 2017).

The healthcare system is financed by the public spending that accounted for about 48% for the year 2013. Medicare is financed through a combination of federal general revenues, payroll taxes, and premiums. Medicaid is fully tax funded. According to the data made available for the year 2013 by OECD, United States per capita expenditure was the highest in OECD countries that was about $9086. For the year 2015 the GDP percentage spent on health climbed to 5.8% that accounts for $3.2 Trillion being spent. It stands for $9990 per capita (Gandjour, 2013). But even after spending so much they are on a flat trajectory when it comes to life expectancy. As figures show that the three times higher spending on health than any other developed country is not ensuring higher life expectancy. Life expectancy is United States is 78.94 in comparison to Australia where it is 82 even when they are spending way less per capita. According to a research done by Imperial college of London and World Health Organization US was among the lowest life expectancy countries in the list of rich countries. This study also predicted that by 2030 they would manage to reach to 83 years for women and 79 years for men. Which is similar for Mexico and Croatia. This may also be dependent on the fact that it is only OECD country that does not have a universal health coverage. They are subjecting their citizens to high inequality in healthcare which may be responsible for poor life expectancy rate in comparison to other OECD countries. (Oberlander, 2010).

According to the Bloomberg Index that shares the results of the surveys done on health care spending, GDP and life expectancy United States healthcare system is among the world’s most inefficient. They conducted a survey for 55 countries in the year 2015 and United States was 50^th on that list. With the per capita spending of $9990 for the year 2015 these numbers are poor. Only countries like Azerbaijan, Russia, Jordon, Brazil and Colombia ranked lower than the United States of America (Karamitri et al., 2015), (Musich et al., 2016). This is due to the fact that the healthcare system of United States is less coordinated due to its fragmented structure. It cannot be organized which makes it less efficient. Healthcare expenditures of countries like Czech Republic, and Cuba are way less but their life expectancy rates are similar to US. Among all the measures such as Acceptable that is for “able to be agreed on or just being suitable”, appropriate that is being proper or suitable for a situation, effective that is being successful in creating a desired outcome, Safe that is not likely to cause harm and the last being efficient that is a system which is achieving the maximum productive outcome Australia’s Healthcare system is efficient in every way. Through this essay and the data that was made available, we know that the healthcare system in Australia is way more efficient and cost effective in comparison to United States of America. Australia healthcare with programs like Medicare provides cradle to Grave healthcare to all its citizens. Public hospitals provide free treatment and even after that people who purchase private insurance enjoy exclusive benefits. The country has a high standard of living and an excellent health care system that is covering the health of majority of the population. Data predicts that by the year 2055 the life expectancy of an average Australian would cross 95 years. The recent addition of Affordable Care Act by the US will move the country towards a system that is more efficient. With the right management and policy direction even United States can enjoy such an efficient healthcare system (Bakris, 2010)..

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