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The saga of trying to put Medicare on ice

- Featured Image

By Professor Stephen Leeder, Emeritus Professor Public Health, University of Sydney

Frozen indexation has meant effectively a cut in income for general practitioners who bulk bill their patients. Although small, it mounts up when multiplied by the number of patients they see. 

If Medicare rebates on consultations lasting less than 20 minutes (the most common type of consultation) had not been frozen in 2014, instead of being $37 now they would have risen to about $40 this year if indexed to the consumer price index. That is according to a fact sheet produced by the Royal Australian College of General Practitioners.

Bulk-billing is hard to freeze

Although this may be thought to serve as a disincentive to bulk-billing, the Federal Health Minister Greg Hunt is quoted in the March 19th issue of The Australian as “highlighting the record increase in bulk billing rates, which have risen 3.5 per cent since the Coalition won Government”. So it does not seem to have reduced bulk billing?

Mr Hunt went on to say: “In the last half-yearly figures that are just out, we’ve gone from 84.7 per cent, to 85.4 per cent, so in other words, Medicare funding is up and bulk billing rates are at their highest ever on a half-yearly basis.”

Why freeze?

Associate Professor Helen Dickinson, a public service research academic at UNSW, explained the origin of the freeze a year ago in the Conversation and reported on ABC: “Although the Coalition is largely associated with this issue, Labor first introduced the Medicare rebate freeze in 2013 as a “temporary” measure, as part of a $664 million budget savings plan … A continuation of the indexation freeze, initially for four years starting in July 2014, was further extended in the 2016 budget to 2020. It has been estimated this will save $2.6 billion from the health bill over six years.” 

The intention in the proposed 2014 Federal Budget was that the freeze would work alongside a co-payment and reduced reimbursement for short consultations. The continued freeze was the only measure that cleared the Senate.  Although the justification for these proposed imposts on general practice included the absolute costs of primary care, these costs included a lot of activity other than general practice.  According to the Australian Institute of Health and Welfare, health expenditure in Australia in 2014-2105 was $161.6 billion.  

A freeze, or frost bite? 

In 2013-2014 $58.8 billion was spent on hospitals and $54.7 billion on ‘primary care’ but as just said, this includes general practitioner services (about $9 billion), other health practitioners, community health care, dental services and medications.  So with a total annual health budget of $161 billion, general practitioner services amounted to $9 billion or 17 per cent. The predicted savings from the freeze, each year, represent 0.25 per cent of total health expenditure. Has such a small saving been worth it?

If seeking to save money in health care, it is probably best to look first at the big expenditure items.  This is why the review of the Medicare Benefits Schedule makes good sense and why, universally, there is an interest in demanding greater efficiency from our hospitals.

But as those who have had the responsibility for running a big and complex organisation know full well, it is wise to assess the likely flow-on from any cuts. Impositions on primary care are not likely to lead to the political pushback that cuts to high-powered specialty services will elicit.  But if they demoralise this workforce, heaven help you in trying to integrate care for patients with complex chronic problems.  And that will cost you far more in the long term than you will save by freezing general practice rebates.

Is a freeze on Medicare fair?

My final point concerns equity. How come private health insurance premiums rise each year whereas general practice fees do not?  Private insurance premiums are heavily subsidised (30 per cent or $6.5 billion in the 2016 budget) by the federal government.  So the Government does not worry about indexing its contribution to private health insurance but it does for Medicare. Work that one out if you can.