Govt releases report on future of medicine and health

A preliminary report by Australia's Productivity Commission has concluded that advances in medical science have benefited Australians, but have also been a major driver of increased spending on health.

The report, The Impact of Advances in Medical Technology in Australia, has implications for the future of Australia's burgeoning biomedical, pharmaceutical and medical-device industries.

It also found that technologies in the development pipeline are likely to accelerate the trend, requiring urgent policy responses from government.

The federal government commissioned the inquiry to examine the impact of advances in medical technology on public and private healthcare expenditure, and the associated costs and benefits to the Australian community.

Commissioner Helen Owens, who headed the inquiry, said there was a pressing need for governments to explore decision-making processes that would deliver "acceptable and appropriate access to costly new medical technologies".

Among other things, the report found that people consume more health services as they become wealthier, recognising the link between good health and quality of life.

The commission's modeling suggested that income growth accounted for at least 10 per cent, and as much as half, of the growth of Australia's real healthcare spending over the past decade.

Consumer perceptions of what constituted a desirable level of health were increasing - for example, what was today considered an acceptable level of chronic pain or discomfort probably differed significantly to a few decades ago.

Consumers are also becoming more aware of medical technologies through the internet, and a greater belief in, and acceptance of, the benefits of new technologies was an important driver of demand for health services.

Health expenditure per person aged 65 and over was around four times higher than in those aged less than 65 years. The commission estimated that the rapid aging of Australia's population, would add 25 per cent to projected government spending on healthcare over the next 40 years.

In a summary of its preliminary findings, the Commission concluded that that increased spending by governments, insurers or individuals was not necessarily a problem - the critical issue was whether the benefits outweighed the costs.

It said that, in most cases, increased expenditure on medical technology was reflecting improved treatment, and expanded access by the community, resulting in longer life, and better quality of life.

But it was not possible to say precisely what impact such advances had had on the overall cost-effectiveness of the health system. The cost effectiveness of individual technologies varied widely, or was unknown, suggesting there was room to expand the use of some technologies and restrict the use of others - at least, to certain groups.

The commission said appropriate use of technology ultimately would depend on the incentives to consumers, clinicians and those funding purchases of technology.

If public hospitals were driven by annual budget constrains, they would be unable to purchases technologies that could reduce costs elsewhere in the system, or which had long-term payoffs.

With universal access to health care, incentives to use technology would continue to be divorced from the requirement to pay for it, perpetuating tension between community expectations and budgetary priorities.

The report predicted such tension would only intensify with the advent of revolutionary technological advances, that were expected to provide significant benefits to Australians over the next decade or so.

But this trend, in combination with growing demands for health services from a rapidly aging population, strong personal income growth and strong community expectations that new technologies should be accessible to all, made for a potent mix that would place increasing pressures on health systems.

Differential access to advances in medical technology, between the private and public systems, high- and low-income groups, and indigenous and non-indigenous patents, would be heightened if existing health system arrangements persisted, posing challenges to governments and health funds.

The Commission said there was a pressing need to explore the institutional and incentive structures that would deliver acceptable and appropriate access to new technologies.