Medical and psychology groups have been protesting loudly since the May budget, when the federal government announced that $1.5 billion in mental health investments over the next five years would be partly funded by a redirection of $580.5 million from the Better Access program.

Their concerns are being considered by the Senate Community Affairs Committee’s inquiry into Commonwealth Funding and Administration of Mental Health Services.

However, the issues involved are more complex than is being suggested by some of those protesting against the Better Access cuts, and go to fundamental questions about equity, and the fairness and sustainability of fee-for-service models of care.

To understand the issues involved requires looking at the differing mechanisms of the Better Access initiative, and the Access to Allied Psychological Services or ATAPS program, which is getting a modest funding boost.

Better Access funding is through a fee-for-service Medicare rebate for each visit to the psychologist at the bequest of a GP who receives a rebate for collating a Mental Health Plan.

While each visit to the psychologist generates a Medicare rebate, it is different from the fee-for-service arrangement for seeing GPs, or specialists, or having surgery, in that the number of visits with the psychologist is capped. Ten sessions and it’s over. It is very popular and the number of patients involved has been increasing about 20% per year.

The ATAPs program (ATAPS) is tiny, costing the government less than $50 million per year compared to Better Access, which costs about $550 million per year.

Funding for ATAPS is completely different. The money is distributed to Divisions of General Practice (now Medicare Locals) to administer in ways that suit that division.

The aim has been to provide services to groups that had been identified as not accessing much care at all, i.e. rural dwellers, young people and indigenous Australians.

There are significant differences in the programs, which in part reflect the funding mechanism. ATAPS delivers 45% of its services to people in rural and remote Australia. Better Access delivers 25%, similar to the delivery of other Medicare rebate services.

Patient co-payments are zero for over 75% of patients in ATAPS and where they do exist, they are between $5 and $20. For Better Access, however, only 35% of psychology consultations have no co-payment and the average co-payment is $35.

Given these figures, it is not surprising that use of Better Access is 10% lower for the poorest fifth of the population compared to the richest. That should be of concern as it is well recognised that health status and outcomes are inversely related to socio-economic status.

One might, however, regard the programs as complementary. That is the federal government view. Better Access provides the majority access to psychologists and ATAPS picks up the pieces. ATAPS is the safety net for the fundamentally flawed funding mechanism of Better Access.

Fee for service with co-payments almost guarantees some patients will not be able to afford the treatment. The capacity to charge fee-for-service plus co-payment contributes to providers staying in areas where they can get co-payments, rather than working in poor and rural areas. With continued financial and geographical barriers to access guaranteed, the safety net of ATAPS is crucial.

Apart from problems with access, there are other concerns with Better Access and with fee-for-service funding generally. The first is the issue of flexibility to meet local needs in innovative ways. It is identified by the report on ATAPS by the Department of Health and Aging. The current ATAPS initiative enables divisions to utilise a model of service delivery that meets local needs.

Better Access, as with all Medicare subsidised services, offers a universal model (that is the same model for the entire Australian population) and does not have the flexibility to be modified to meet the needs of sub‐populations. It is recognised that Better Access mental health services are not always accessible to all consumers.

ATAPS, a fundholding arrangement rather than a fee-for-service system, delivers to the most needy. It could be expanded slowly to be a major component of our health system. The allocation of funds could be on the basis of need rather than just population.

We need to be looking at major structural changes to how we fund our health system.

Gradually increasing our use of fundholding and decreasing our dependence on fee-for-service warrants much more serious consideration than it has been given to date.

*For a longer version of this story, and for more debate on the issue, visit Crikey‘s health blog Croakey