The Budget’s proposed $7 GP co-payment fee seems quite benign to many people. After all, if you are genuinely sick or concerned about your health, why would $7 make a difference?
But there simply is no logic behind it, and the more you think about it, the more twisted any possible logic becomes.
For example, to believe that the fee will deter time wasters but not genuine patients, you must invoke some idea that people know beforehand whether their ailment is time wasting or a sign of something more serious.
It’s like saying if people already knew the diagnosis they would get from the doctor, then they would be able to determine whether they actually need to visit the doctor.
This ignores the very purpose of general practitioners.
To be clear, medical services as usually classified in economics as credence goods. They are goods or services that we can’t properly judge will be beneficial to us or not. All expert advice falls into this category.
For example, I could hear a strange engine noise and take the car to the mechanic. They could say that it is something minor and not to worry until the next service.
Would I be a mechanic time-waster? What if it turned out to be something serious that needed immediate attention?
Underlying the whole idea of a the $7 GP fee for bulk-billed patients is an irrational belief (see comments section) that medical services are being over-utilised.
If that were truly the case, we would see government advertising that told us to stay home when we thought we were getting sick, rather than what we in fact do see, which is a blanket message to better monitor our health with more regular check-ups and preventative health screening tests.
But that’s not the end of the failed logic.
If you still hold the irrational belief there are time wasters over-utilising GPs because the service is free, to believe that a price signal will remedy the problem requires a great deal of faith that the price will deter only the time-wasters and not those with genuine medical needs.
If the price does not discriminate in this way, there will be health costs accompanying the budget savings.
The best evidence we have for the price effect on medical care choice is the 8 year long RAND Health Insurance Experiment, run from 1974-1982. It found that greater cost-sharing “reduced “appropriate or needed” medical care as well as “inappropriate or unnecessary” medical care”.
In fact the experiment also found that the poorest in society are most likely to defer medical treatment when the price increases, meaning that the health costs of this policy will disproportionally fall on our poorest citizens, including the unemployed and the elderly.
If I can digress for a moment and tell a personal tale. When my youngest son was just a week old he had a few signs of illness including a rash, a fever, and lack of appetite. I was not overly concerned, but my wife took him to the GP in any case. Our GP had some concerns about meningitis and we were sent for various tests, including a rather traumatising (for Mum) lumber puncture, and ended up in hospital for two nights awaiting various other results, with baby being closely monitored. It turned out not to be meningitis but some other a mystery infection.
Had there been a GP fee for us at the time we may have delayed the visit another day or so. If we did, and it had been meningitis, we may received treatment too late avoid serious long term damage.
I’m sure there are thousands of similar stories about how an early visit to the GP, that may have seemed a little like time wasting, ended up preventing serious illness or even savings lives.
While $7 doesn’t seem like much of an issue to many, we should acknowledge that the economic logic for doing so is not sound. This policy is taking the exact opposite approach to what we know to be effective.
If it makes sense to charge patients for GP services to improve health outcomes, then by that logic we should charge parents to vaccinate their children. We don’t, because we know the benefits to having universal access to vaccinations provides massive health benefits to the individual and society as a whole. The same applies to GP health services.
Maybe we should trust the experts themselves, the doctors, on this one.