The Medicare rebate freeze is here to stay. Despite the Federal Government announcing it had heard the electorate expressing their concerns about Medicare at the election the Prime Minister is ploughing on, claiming that savings must be made, that people should pay a copayment if they can, and anyway the bulk billing rate is going up so patients aren’t missing out.

Do savings need to be made?

Countries increase their spending on health care as they get richer. In the last decade Australia has increased spending on health care from 8.8% of GDP to 10%, a figure very slightly above the median for OECD countries (1).  Our budget deficit is lower than almost every OECD country.

Even if we decide to improve the deficit, it can be done with either increased revenue or decreased spending. There is ample scope for both approaches but the decisions do not amount to need, they are political, practical, and ideological.

Reducing government health care costs are not necessary but it is sensible to spend more efficiently and to save on unnecessary or ineffective care.

Government health care costs have increased by 52% over the decade (2). In that same period total general practice Medicare rebates have increased 35% (3).

They constitute just 5% of Government health funding. In 2005 the figure was 5.6%. It has fallen. The main drivers of government health care costs do not include general practice.

Other options for savings

The taxpayer funded Private Health Insurance (PHI) rebate has increased by 63% in that same period (4).

If the Government is really concerned about savings in the health care system it could start by paying world market prices for pharmaceuticals and saving $1 billion per year, freezing and gradually abolishing the PHI rebate, ($8 billion per year), addressing private and public hospital inefficiencies ($1 billion per year), and other savings as outlined by the Australian Health Care Reform Alliance (5).

The claim that the Medicare rebate freeze is about saving is deceptive and dishonest.

The second justification for the freeze is that those who can afford a copayment should do so. This argument centres on moral hazard (the danger that if a service is free at the point of delivery it promotes overuse).

The problem is that the Federal Government itself does not believe it. Thus, it happily supported a trial by Medibank Private to have their members not pay the copayment when they visited GPs. The Government also supports No Gap PHI policies which remove copayments.

The third justification (post hoc) is that the bulk billing rate has risen to an all time high of 83.7% in the July 2016 quarter despite the freeze being in place for 2 years. The Federal Government refuses to reveal precisely what items the figure covers (standard GP visits, health checks, medication reviews, case conferencing, etc). Thus, if there has been an increase in use of items which have usually been bulk billed anyway, the figure may be misleading.

Even if it is accurate, other factors may be pushing the rate up. Since 2005 there has been a 26% increase in the number of GPs per 100,000 people (full service equivalent) (6). Competition helps to control prices as the Federal Government would readily acknowledge and encourage. It doesn’t necessarily help quality.

Rebate freeze hits hard

Most GPs aim to provide a first class service but time and financial pressures are a reality. The rebate freeze will result in a 5% decrease in Medicare income for GPs unless they see more patients.

GP practices which have onsite pathology can be getting thousands of dollars rent to supplement their income, thereby enabling them to limit patient copayments, although the Federal Government plans to reduce that, thereby putting more pressure on GP income.

If GPs do not accept a pay cut forced on them by Government ideology the response to that can be new copayments for previously bulk billed patients, higher copayments for those already paying, reduced access to patients who are poor, and/or faster lower quality services. All of these options will make patients suffer.

GP copayments to patients have increased to $35 in June 2016, a 65% hike in the last decade (3). Patients vote with their feet when faced with increased costs. They may simply not attend the GP.

The Australian Bureau of Statistics survey indicates that 5% do not see a GP because of costs(7). They risk becoming sicker by not seeking care when they need it. This may ultimately cost them and the taxpayer more. They may attend a hospital Emergency Department, or go to a corporate bulk billing clinic if available.

But continuity of care is central to the management of many chronic illnesses, and is less likely to occur in corporate vertically integrated bulk billing medical centres or Emergency Departments.

Primary health care is accepted around the world as the most efficient and effective part of the health system if supported properly. The Government refuses to accept evidence.

Late on Friday 5th November the Health Minister’s department issued details of policy regarding the Health Care Homes initiative. No politician or senior public servant releases details of policy at such a time unless the hope is that it will not be noticed, lost in the 24 hour weekend news cycle.

It indicated that patients who enrolled for chronic disease management care would have to pay full price if they developed another problem eg leg ulcer that required more than 5 visits a year. The policy was rescinded as a mistake within days.

But it indicates that the Minister for Health or her department continue to have a cost cutting agenda without understanding the health system they are administering and without a care for patients.

The bulk billing rate has fallen in the quarter to September 2016 (3). It may indicate that the desired effect of the Medicare rebate freeze is finally occurring, or it may be a simple fluctuation in the figures.

Anecdotal reports of practices abandoning bulk billing and charging pensioners and health care card holders $30 are widespread. Copayments however just keep on rising, another $1.50 this quarter, following the 65% hike over the last decade, way above inflation. ))

The real agenda

The freeze was introduced to make patients pay. Making patients pay makes them more interested in private health insurance to help them afford payments. This is the real agenda, to gradually move away from our public health insurance scheme for everyone to an increasing reliance on user pays private health insurance. In 2009 the then Opposition Leader, Malcolm Turnbull stated on ABC radio (8)

“In an ideal world, every Australian would have private health insurance. That would be the best, that would be the best outcome.”

That has always been the agenda of the Coalition. It has pursued it relentlessly, sometimes rashly, often insidiously, pretending the agenda is otherwise.

The rebate freeze is one strategy in that agenda. Reducing the Federal Government’s share of public hospital funding is another. Reducing the support for public dental care is another. Promoting PHI in primary health care is another.

The challenge for the Government is to do it without scaring the vast majority of Australians who want Medicare to remain and be improved. That is all Mr Turnbull has learned from the Federal Election result.


  1. Australian Institute of Health and Welfare (AIHW) Health Expenditure Australia 2014-5
  2. Australian Institute of Health and Welfare (AIHW) Health Expenditure Australia 2014-5 Table 3.3
  4. Australian Institute of Health and Welfare (AIHW) Health Expenditure Australia 2014-5 Table 3.5
  5. Efficiency Opportunities in the Australian Health Care System: Position Paper .
  6. GP Workforce Statistics 2004-5 to 2014-5
  7. Patient Experience in Australia: Summary of Findings 2014-5
  8. ABC Radio PM – Friday, 15 May , 2009