Technological advances in health care can save lives, improve the quality of care, and reduce long term hospitalization – but they also come at a high cost. In fact new technologies for the diagnosis and treatment of disease and new drugs are the primary reasons for the escalating costs of health care.
Unfortunately, our system of health care funding and delivery exacerbates these rising costs and results in unequal access to the new developments. For example, the more effective stents that are used to keep open previously blocked coronary and cerebral arteries (and thus reducing the likelihood of stroke or heart attack) can cost between $2400 and $3600 each – depending on the type of hospital that administers the care.
Public hospitals have greater bargaining power and tighter budgetary constraints than private facilities and are able to drive a much tougher deals with suppliers. Public hospitals have also been more restrained in their use of new technologies. In Victorian public hospitals for example, a patient must meet a list of nine clinical indicators to demonstrate the likely benefit of using a stent before the treatment can be authorized. On the other hand, for privately insured patients there is no such requirement to justify treatment. As a result one recent calculation estimated that when the treatments given to similar public and private patients are compared, 90% of private patients receive the new stent, whereas the figure is only 30% for public patients.
The additional costs of this discrepancy between the treatment of public and private patients is passed on to consumers through higher insurance premiums as well as to taxpayers generally through the 30% rebate on private health insurance contributions.
Source: Productivity Commission, Impacts of Medical Technology in Australia: Progress Report, April 2005
Dr James Gillespie
Sesquicentenary Senior Lecturer in Health Policy (School of Public Health)
Australian Health Policy Institute
at The University of Sydney
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