Potential cost to Western Australia of proposed patient co-payments according to healthcare organisational structure: A preliminary analysis

Abstract

The Australian federal government has proposed an AUD $7 patient co-payment for a general practitioner (GP) consultation. One effect of the co-payment may be that patients will seek assistance at public hospital emergency departments (EDs), where currently there is no user charge. We studied the possible financial impact of patient diversion on the Western Australia (WA) health budget. We constructed a spreadsheet model of changes in annual cash flows including the co-payment, GP fees for service, and rates of diversion to emergency departments with additional marginal costs for ED attendance. Changes in WA cash flows are the aggregate of marginal ED costs of treating diverted patients and added expenditure in fees paid to rural doctors who also man local emergency centres. The estimated costs to WA are AUD $6.3 million, $35.9 million and $87.4 million at 1, 5, and 10 per cent diversion, respectively. Commonwealth receipts increase and expenditure on Medicare benefits declines. A diversion of patients from GP surgeries to ED in WA caused by the co-payment will result in increased costs to the state, which may be substantial, and will reduce net costs to the Commonwealth.