Progressivity of out-of-pocket costs under Australia’s universal health care system: a national linked data study

Abstract

ABSTRACTBackgroundIn line with affordability and equity principles, Medicare—Australia’s universal health care program—has measures to contain out-of-pocket costs (OOPC), particularly for lower income households. This study examined the distribution of OOPC for Medicare-subsidised out-of-hospital services and prescription medicines in Australian households, according to their ability to pay.MethodsOOPC for out-of-hospital services and medicines in 2017-18 were estimated for each household, using 2016 Australian Census data linked to Medicare Benefits Schedule (MBS) and Pharmaceutical Benefit Scheme (PBS) claims. We derived household disposable income by combining income information from the Census linked to income tax and social security data. We quantified OOPC as a proportion of equivalised household disposable income and calculated Kakwani progressivity indices (K).ResultsUsing data from 85% (n=6,830,365) of all Census private households, OOPC as a percentage of equivalised household disposable income decreased from 1.16% in the poorest decile to 0.63% in the richest decile for MBS services, and from 1.35% to 0.35% for PBS medicines. The regressive trend was less pronounced for MBS services (K = −0.06), with percentage OOPC relatively stable between the 2nd and 9th income deciles; while percentage OOPC decreased substantially with increasing income for PBS medicines (K = −0.24).ConclusionOOPC for out-of-hospital Medicare services were mildly regressive while those for prescription medicines were distinctly regressive. Actions to reduce inequity in OOPC, particularly for medicines should be considered.