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Until the pips squeak

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Freezing the price of Medicare benefits will be more effective than the ill fated copayment

An amendment to our constitution after the 1946 referendum (s51 [xxiiiA]) gave the Australian Government the power to set prices for medical services.1 This amendment has often been incorrectly interpreted as the power to set doctors’ fees. It is frustrating to see old misunderstandings distorting current considerations of health financing policy.

In reality, the federal government has no control over whether a doctor charges $5 or $500; nor to whom such a fee is charged. Doctors can charge what they choose, provided it can be justified as “fair and reasonable”.

Dabbling in price signals

For the best part of a year, the health debate has swirled around a proposed copayment for general practice services.2 All the government needed to do, if it was seeking to reduce Medicare outlays on general practice services, was to reduce the price it pays for those services. That was the apparent basis for the ill fated initiative in January 2015, directed at the short consultation. Getting into an area of price signals by unnecessarily flagging a copayment simply complicates matters.

When, in 2005, the government removed the disincentives for bulk-billing by allowing these services to be priced at 100% (ie, the Medicare rebate for…