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Unexpected side effect: Out-of-pocket costs, financial toxicity and medical treatment

Thursday 18 October, 2018

This is the first Perspective in a three-part series by the McCabe Centre for Law and Cancer’s Treatment and Supportive Care Team on Informed Financial Consent.  In this Perspective, we discuss how out-of-pocket costs are driving up the costs of cancer treatment and affecting Australians undergoing medical treatment for cancer.

The impact of the financial costs of treatment on Australian patients and their families—and high out-of-pocket costs in particular—is a growing concern.  Recent media coverage, research reports and the announcement of a Ministerial Committee on out-of-pocket costs has thrust this issue into the national spotlight.[1]

Although Australia has one of the highest performing healthcare systems in the world in terms of quality and outcomes, the total amount of out-pocket-costs paid by Australians has been rising and is now estimated to be 20 per cent of total healthcare expenditure.[2]  This is significantly more than other countries with a comparable healthcare system such as the United Kingdom, Canada and New Zealand, as well as France, whose healthcare system is largely funded by social security.[3]

Out-of-pocket expenses, which are the extra costs a patient must bear for therapeutic goods and/or services not covered by private health insurance, Medicare (Australia’s universal public health insurance scheme), or the Pharmaceutical Benefits Scheme (Australia’s subsidised pharmaceutical medicines scheme) are a particular problem for people with cancer and other chronic illnesses.[4]  Out-of-pocket costs include, but are not limited to, the costs of over-the-counter medicines, pathology and imaging tests, medical devices, and the difference between the fees set by doctors and the government rebates for those medical services.  

High out-of-pocket costs can have a significant impact, including on a person’s health.  'Financial toxicity’ is the distress or hardship arising from the financial burden of cancer treatment, and is increasingly considered a side effect of cancer treatment.[5]  Over the total lifetime of treatment, cancer patients pay about 15 per cent of the cost of their cancer care from their own pocket.[6]  Many patients experience ‘bill shock’ in not knowing what these out-of-pocket costs will be prior to their treatment.[7]

A recent Consumer Health Forum of Australia (CHF) survey found that more than a quarter of respondents having treatment for cancer incurred costs of more than $10,000 over a two year period;[8] and it is estimated that between half and three-quarters of cancer survivors have experienced financial stress as a result of their treatment.[9] Counterintuitively, those with private health insurance may face at least almost double the out-of-pocket costs for cancer treatment than those treated publicly, largely due to higher out-of-pocket costs for direct medical expenses including surgeries, chemotherapy, radiotherapy, diagnostic tests and specialists’ visits.[10] For example, a woman without private health insurance pays about $3,600 in out- of-pocket costs, compared to $7,000 for a woman covered by private health insurance.  These costs are due to gaps in the coverage provided by private health insurance funds and Medicare, and can rise to around $21,000 for women whose private health insurance does not offer comprehensive coverage.[11]

One in six respondents to the CHF survey also reported that health related costs had a significant impact on their lives,[12] with some respondents reporting skipping medications for financial reasons, or being unable to cover other expenses because of the costs of treatment. 16.2 per cent of Australian adults report skipping medical consultations due to cost, well above the Organisation for Economic Co-operation and Development (OECD) average of 10.5 per cent.[13] Avoiding or failing to complete treatment can make simple health problems into complex ones, while financial stress has an especially harsh effect on vulnerable and disadvantaged groups.[14]

The problem of out-of-pocket costs cannot be solved by capping doctor fees.  Under the Australian Constitution, doctors are free to set their own fees.[15] Moreover, high specialist fees alone aren’t the cause of high treatment and out-of-pocket expenses. There are additional and significant structural difficulties with Australia’s mixed public-private healthcare system that need to be addressed. These include the fee-for-service system; medications and some tests and services not being subsidised; treatments and services not being covered by private health insurance; and the failure of Medicare rebates to reflect the actual costs of health services.[16]

Clearly, action must be taken to prevent Australians from being burdened with financial stress in the process of their treatment and recovery.  Patients are entitled to know the likely cost of their proposed course of treatment, a concept known as ‘informed financial consent’.  In particular, ‘bill shock’ can be prevented by requiring full disclosure of the likely costs of treatment by health professionals and private health insurance providers.  Informed decision-making is vital to helping those with conditions, such as cancer, feel in control of their disease.[17]  This includes being able to make informed decisions about treatment costs and options. 

In our next McCabe Centre Perspective in the Informed Financial Consent series, we further discuss the importance of disclosing the costs of medical treatment to patients and how this forms part of a doctor’s legal duty of informed consent.

 

For more information contact:
Elle Spring, Communications and Stakeholder Engagement Manager, McCabe Centre, +61 420 803 471, elle.spring@cancervic.org.au

 

[1] See, eg, Olivia Willis, ‘Medical bills: How Out-of-Pocket Costs Can Get out of Control’, ABC News (online), 28 May 2018; Consumers Health Forum of Australia, Out of Pocket Pain Research Report (2018).  On 2 January 2018, the Ministerial Advisory Committee on Out-of-Pocket Costs was established to provide advice to the federal Health Minister on matters relating to out-of-pocket costs.

[2] Organisation for Economic Co-operation and Development, Health at a Glance 2017: OECD Indicators (2017) Eric C Schneider et al, Mirror, Mirror 2017: International Comparison Reflects Opportunities for Better U.S. Health Care (2017), The Commonwealth Fund.

[3] Organisation for Economic Co-operation and Development, Health at a Glance 2017: OECD Indicators (2017).

[4] See, eg, Consumers Health Forum of Australia, Out of Pocket Pain Research Report (2018); Breast Cancer Network Australia, State of the Nation Report, (2018).

[5] Louisa G Gordon et al, ‘Financial Toxicity – What it is and How to Measure it’, (2017) 41(2) Cancer Forum 30.

[6] Christine L Paul et al, ‘Impact of Financial Costs of Cancer on Patients – the Australian Experience’ (2017) 41(2) Cancer Forum 4.

[7] See, eg, Breast Cancer Network Australia, The Financial Impact of Breast Cancer (2017); Anthony Lowe and Jamie Reid, Private Health Insurance Bill Shock: What Can Insurers Do to Help? (Paper, Actuaries Institute, 2017)

[8] Consumers Health Forum of Australia, Out of Pocket Pain Research Report (2018).

[9] Nikki McCaffrey, ‘Overview: Cost of Cancer to the Patient’ (2017) 41(2) Cancer Forum 1.

[10] Consumers Health Forum of Australia, Out of Pocket Pain Research Report (2018).

[11] Breast Cancer Network Australia, The Financial Impact of Breast Cancer (2017).

[12] Consumers Health Forum of Australia, Out of Pocket Pain Research Report (2018).

[13] Organisation for Economic Co-operation and Development, Health at a Glance 2017: OECD Indicators – How Does Australia Compare (2017).

[14] Consumers Health Forum of Australia, Out of Pocket Pain Research Report (2018); Stephen Duckett, ‘Many Australians Pay Too Much for Health Care – Here’s What the Government Needs to Do’,The Conversation (online) (13 July 2016).

[15] Australian Constitution s 51(xxiiiA).  See also; Wong v Commonwealth; Selim v Professional Services Review Committee (2009) 236 CLR 573; British Medical Association v Commonwealth (1949) 79 CLR 201; General Practitioners Society v Commonwealth (1980) 145 CLR 532; Breen v Williams (1996) 186 CLR 71; Margaret Faux, ‘The Constitutional Framework of the Australian Health System – Reform: What’s Possible and Realistic?’ (Presented at Australian Healthcare and Hospitals Association: 10 Year Health Agreement Blueprint Roundtable, Sydney, 18 September 2017).

[16] See, eg, Fiona McDonald and Stephen Duckett, ‘Regulation, Private Health Insurance and the Australian Health System’, (2017) 11(1) McGill Journal of Law and Health S31; Stephen Duckett, ‘Many Australians Pay Too Much for Health Care – Here’s What the Government Needs to Do’, The Conversation (online) (13 July 2016); Senate Community Affairs References Committee, Parliament of Australia, Out-of-Pocket Costs in Australian Healthcare (2014); Australian Medical Association, Guide for Patients on How the Health Care System Funds Medical Care (2015).

[17] Breast Cancer Network Australia, State of the Nation Report, (2018).