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Nimetic · 02-16-2006, 03:57 PM

It's interesting to me, the tradeoffs between private and public run systems.

On the one hand, government run stuff is generally considered innefficient. There is no direct competition driving performance increases - and at least in AU, we seem to have a proliferation of forms, procedures and stuff in government departments that look silly to an outsider.

However.... there is a flipside.

In AU, the only country that I have direct experience of, government is such as big buyer (or subsidiser... to me more accurate) that they have a strong influence on prices. The two examples that I can think of are general practice billing costs and drug costs.

Looking at general practice. Doctors can charge whatever they like, but in effect they are a bit of a club. The AMA (medical association) sets fees in a way that would not be acceptable in some other industries (petrol sales for example).

Ok then. The government here gives us a rebate on GP visits. Now - if the doc charges no more than this amount, then we can see a GP without paying a cent and there are arrangements for the bill to be settled directly between Medicare (govt) and the doc/centre. On the other hand - if the GP charges more, the patient pays it all upfront, then partially recoups the cost from the government later.

In effect, there's a strong pressure on GPs to charge no more than the govt set fee, at least in poorer areas.

Looking at drugs, we have a different situation with some similar outcomes. We pay a set fee for most drugs, now about AU $20 I think, regardless of their actual cost. The government rules on which drugs are eligable for support. For new drugs, my understanding of the process is something along the lines of

1) Drug company offers drug. Price per pack $500 say.
2) Govt agency says, no. Too expensive. Not effective enough.
Not enough need to get on the supported list
3) Drug company says, if approved, we can sell in volume for $450
4) Negotiation
5) Sale price, $400. Government pays $380. Patient pays $20. Volume
sales occur.

Obviously there are pros and cons. I'm not a policy expert. I'm just hoping that some of this is interesting/useful. I'm not saying that this is the best method or anything.

02-16-2006, 03:57 PM	#29 (permalink)
Nimetic Junkie Location: Melbourne, Australia	It's interesting to me, the tradeoffs between private and public run systems. On the one hand, government run stuff is generally considered innefficient. There is no direct competition driving performance increases - and at least in AU, we seem to have a proliferation of forms, procedures and stuff in government departments that look silly to an outsider. However.... there is a flipside. In AU, the only country that I have direct experience of, government is such as big buyer (or subsidiser... to me more accurate) that they have a strong influence on prices. The two examples that I can think of are general practice billing costs and drug costs. Looking at general practice. Doctors can charge whatever they like, but in effect they are a bit of a club. The AMA (medical association) sets fees in a way that would not be acceptable in some other industries (petrol sales for example). Ok then. The government here gives us a rebate on GP visits. Now - if the doc charges no more than this amount, then we can see a GP without paying a cent and there are arrangements for the bill to be settled directly between Medicare (govt) and the doc/centre. On the other hand - if the GP charges more, the patient pays it all upfront, then partially recoups the cost from the government later. In effect, there's a strong pressure on GPs to charge no more than the govt set fee, at least in poorer areas. Looking at drugs, we have a different situation with some similar outcomes. We pay a set fee for most drugs, now about AU $20 I think, regardless of their actual cost. The government rules on which drugs are eligable for support. For new drugs, my understanding of the process is something along the lines of 1) Drug company offers drug. Price per pack $500 say. 2) Govt agency says, no. Too expensive. Not effective enough. Not enough need to get on the supported list 3) Drug company says, if approved, we can sell in volume for $450 4) Negotiation 5) Sale price, $400. Government pays $380. Patient pays $20. Volume sales occur. Obviously there are pros and cons. I'm not a policy expert. I'm just hoping that some of this is interesting/useful. I'm not saying that this is the best method or anything.