Age, Herald-Sun and Australian items: Click the icon below to access the Echo news items search engine (2003 file) and enter the following word(s), with just a space in between them.
Sections in this issue outline (in order):
1. What they said. 2 The issue at a glance. 3 Background. 4 Internet information links. 5 and 6 Arguments for / against. 7 Further implications on this issue. 8 Newspaper items used in the compilation of the outline.
2003/10: Are the proposed changes to Medicare desirable?
What they said ...
'I announce today a $917 million package, A Fairer Medicare, to strengthen Australia's universal health care system by making general practitioner (GP) services more available and more affordable' John Howard, the Prime Minister of Australia (Please note, the $917 million is to be spent over five years.)
'Last week we saw what the Government touted as "the biggest shake-up of Medicare in twenty years". Reform costing less than $250 million a year in a budget of $60 billion - $30 billion of which is Federal - is more like a rattle than a shake' Dr Kerryn Phelps, retiring federal president of the AMA
The issue at a glance
On April 28, 2003, the Prime Minister, John Howard, and the federal Minister for Heath and Ageing, Senator Kay Paterson, issued media releases announcing changes to Medicare. The package was presented as 'A Fairer Medicare'.
These changes were presented as a series of improvements that would not alter the fundamental strengths of the Medicare system.
The principal features of the changes were as follows. Doctors were to be offered financial incentives to bulk bill pensioners and Commonwealth cardholders. Non-bulkbilled patients would be able to pay only the gap between the Medicare rebate and their doctor's fee, rather than having to pay the whole amount upfront and then apply for the Medicare rebate. It would, for the first time, be possible for people to take out private insurance to cover the gap between their doctors' fees and the Medicare rebate. Further there were measures to ease the administrative costs of doctors and a bonding scheme intended to increase the number of doctors in rural and outer metropolitan areas.
Despite the apparently positive nature of these changes, critics are concerned that they will create a two-tier system in which only the poorest in the community rely on Medicare while the majority rely increasingly on private health insurance to cover their medical expenses. There is also concern that the new changes will encourage an acceleration in doctors' fees. Underlying these concerns is the belief that the Government is not devoting sufficient resources to guarantee equitable and adequate medical care in Australia.
Background
a) The history of the original "Medibank" under the Whitlam Government - 1975
The Whitlam Government introduced Medibank in 1975. The scheme was introduced with the intention that all Australians would have medical insurance funded by taxation payments. Under the scheme the government effectively became the national health insurer. The federal health minister at the time, Mr Bill Hayden stated, that the purpose of Medibank was to provide the 'most equitable and efficient means of providing health insurance coverage for all Australians'.
b) Bulk billing or upfront patient payment
Under Medibank doctors could receive re-imbursement for their services in either of two forms. They could charge their patients no upfront fee and apply directly to Medibank for payment. This is referred to as bulk billing. Doctors also had the option of charging their patients the consultation fee upfront and their patients then had to apply to Medibank for reimbursement.
Medicare provided 85% rebates on doctors' fees based on a common fee schedule. Bulkbilling doctors received only the 85% rebate, others received the rebate plus whatever additional charge they made their patients. Doctors who chose not to bulk bill were thus free to set their own fees.
The Government was, and remains, a health insurer, not an employer of medical practitioners.
c) Medibank under the Fraser Government 1975 - 1983
Medibank operated for only a few months in 1975 before the removal of the Whitlam Government. The Fraser Government then progressively dismantled Medibank to the point where in 1978 medical benefits were reduced to 75 per cent of the Schedule fee and bulk billing was restricted to holders of Pensioner Health Benefits cards, and those deemed by the doctor to be, in the then Health Minister's words, 'socially disadvantaged'. By 1979 most patients paid the first $20 of the scheduled fee plus any charge above the scheduled fee set by his or her doctor. From 1981 onwards access to free hospital and medical care was restricted to pensioners with health care cards, sickness beneficiaries, and those meeting stringent means tests.
d) The introduction of Medicare under the Hawke/Keating Governments 1983 - 1996
The Hawke Government introduced a national health insurance scheme similar to the original Medibank on October 1, 1983. The scheme was titled Medicare.
Dr Blewett in his Second Reading Speech in September 1983 described the legislation as 'a major social reform' that would 'embody a health insurance system that is simple, fair and affordable'. He also emphasised the 'universality of cover' as being 'desirable from an equity point of view' and 'in terms of efficiency and reduced administrative costs'.
Funding for Medicare was to be 'offset' by a Medicare levy, originally set at 1 per cent of taxable income, with a low income cut-off point of $7110 per year for a single person and $11 803 for married couples and sole parents. By 1995 the levy had been increased to 1.5 per cent of taxable income.
e) The history of Medicare under the Howard Government 1996 - present
In July 1997 the Howard Government introduced the Private Health Insurance Incentive Scheme, providing a capped means test rebate for hospital and ancillary health insurance.
On January 1, 1999, the Howard Government introduced an uncapped 30 per cent private health insurance rebate, replacing the private Health Insurance Incentive scheme.
By June 30, 1999, the percentage of the population with private health insurance was at a low of 30.5 per cent.
In July 2000 lifetime health insurance cover was introduced. 'Lifetime Health Cover' in private health insurance requires health funds to set different premiums depending upon the age at which a member first takes out hospital cover with a registered health fund. It aims to discourage 'hit and run' behaviour thereby contributing to the stability of the private health insurance industry.
By 2002 44.1 per cent of the population had private health insurance.
By 2002 the number of doctors who bulk billed had fallen from 80 per cent in 1996 to 69 per cent. The AMA has complained that this is largely because the Government-determined scheduled fee has failed to keep pace with inflation.
Internet information
'A Fairer Medicare: better access, more affordable' is the media release in which the Prime Minister and the Minister for Health and Ageing, Senator Kay Patterson, outlined the Government's proposed changes to Medicare. It was put out on April 28, 2003.
It can be found at http://www.pm.gov.au/news/media_releases/2003/media_release2263.htm
Fact sheets and a Question and Answer segment dealing with 'A Fairer Medicare' has been put out by the Australian Department for Health and Ageing. This can be found at http://www.health.gov.au/fairermedicare/
Department of the Parliament Library, 'Medicare - Background Brief' by Amanda Biggs, Social Policy Group. This e-brief provides an introductory background to Medicare, covering its history and development, including the establishment of Medibank, and outlines how the system currently operates. It is clear, brief and quite comprehensive. It forms the basis of the background notes supplied with this issue outline. It was last update on June 2, 2003.
It can be found at http://www.aph.gov.au/library/intguide/SP/medicare.htm
Department of the Parliament Library, Research Note, 'Is Medicare Universal?' by Amanda Elliott, Social Policy Group. This is a clear and detailed account of the different interpretations that can be put on the word 'universal' in the Medicare debate. It also gives a clear account of the constitutional impediments that prevent universal bulk billing being mandated by any government. It was written on May 13, 2003.
It can be found at http://www.aph.gov.au/library/pubs/rn/2002-03/03rn37.pdf
In 2000, the Medical Journal of Australia published a report titled 'Medibank: from conception to delivery and beyond' by Richard Scotton, one of the architects of the original Medibank. This is an excellent account of the original intentions of Medibank and the manner in which it has since developed. It can be found at http://www.mja.com.au/public/issues/173_01_030700/scotton1/scotton1.html
On November 22, 2000, the Prime Minister, John Howard, gave a Melbourne Press Club address it which he detailed his and his government's political philosophy. It outlined the importance of fostering individual responsibility and self-reliance and has particular bearing upon the Government's attitude toward Medicare.
This speech can be found at http://www.pm.gov.au/news/speeches/2000/speech549.htm
On March 4, 2003, the ABC's 7.30 Report's political reporter Fran Kelly, produced a report titled 'Opposition claims Government will means test Medicare'. The report included comments by both the Prime Minister, and the Treasurer, Peter Costello, claiming that bulk billing had never been intended to be universal.
This report can be found at http://www.abc.net.au/7.30/content/2003/s798182.htm
On May 7, 2003, the AMA's retiring president, Dr Kerryn Phelps, gave an address to the National Press Club, Canberra. The address was largely a response to the Government's 'A Fairer Medicare' package announced the week before. It is a detailed criticism of many aspects of this package presented from the perspective of Australian doctors. It can be found at http://www.ama.com.au/web.nsf/doc/WEEN-5MB7EV
On April 3, 2003, the leader of the Opposition, Simon Crean, called a press conference to give the Labor Party's position on Medicare and especially the maintenance of bulk billing. This can be found at http://australianpolitics.com/news/2003/04/03-04-03a.shtml
On March 4 Labor MP Stephen Smith gave a speech attacking the Liberal Party's limited view of who should qualify for bulk billing. This speech quotes former Health Minister Neal Blewett at some length. It can be found at http://www.alp.org.au/media/0303/20003814.html
On June 20, 2003, Jenny Macklin, the Opposition's acting spokesperson on Health and Ageing released a press statement detailing the further decline in bulk billing in Australia and the Labor Party's plans to address this.
This statement can be found at http://www.alp.org.au/media/0603/20004867.html
On April 29, 2003, Catholic News published a report on the criticisms Catholic Health Australia had made of the Government's 'A Fairer Medicare' package. The report is titled 'Catholic Health says Medicare package ignores low paid and families'.
It can be found at http://www.cathnews.com/news/304/138.php
Arguments in favour of the proposed changes to Medicare
1. Bulk billing was never intended to be universal
The Prime Minister, Mr John Howard, has made this point repeatedly. In a statement made on the ABC's 7.30 Report on March 3, 2003, the Prime Minister, Mr Howard noted, 'It is simply not possible for the Government ...and it was never the design or within the contemplation of the former government that we could guarantee bulk billing for every Australian citizen.'
On the same program the federal Treasurer, Mr Peter Costello, was reported to have said, 'The Government's view on bulk billing is that bulk billing is important for people who are on pensions or who are on low income, but bulk billing was never intended to be universal.'
The Prime Minister has cited former Labor Health Minister, Dr Neal Blewett, in support of his claim that bulk billing was never intended to be universal. Dr Blewett oversaw the introduction of the Medicare scheme that replaced the dismantled Medibank scheme in 1983. Mr Howard has cited Dr Blewett in Parliament as saying. 'This scheme is about the less well off in our society. We have said to every doctor in the country that he is free to bulk bill any patient he wishes.
We have indicated particularly to doctors that the people who are chronically ill, the people who most regularly go to doctors, are the most appropriate people to be bulk billed ...
We have said that for families with young children who may have a lot of illness doctors can bulk bill and we will automatically pay the 85 per cent ...
We have given the less well off in our society the opportunity to be bulk billed by their doctors. I am glad to say that a significant proportion of the medical profession has taken up that challenge and that something like 45 per cent of all services are bulk billed under Medicare.'
2. The proposed changes will not reduce the availability of bulk billing
This point has been made by the Government's Health Minister, Senator Kay Patterson. In an opinion piece published in The Age in May, 2003, Senator Patterson said, 'There has been misrepresentation of the Government's "A Fairer Medicare" package. The truth is all Australians will remain eligible to be bulk billed.'
Senator Patterson appears to be arguing that doctors will still be able to bulk bill other of their patients than pensioners and concession cardholders and that patients who desire to be bulk billed should be able to shop around for a doctor or a practice which is prepared to bulk bill them.
Christopher Pearson made a similar point in an opinion piece published in The Australian on May 10, 2003. Mr Pearson stated, 'Bulk billing will remain even in Double Bay and Toorak. At the moment most pathology and imaging services are bulk-billed, presumably because this reduces transaction costs and makes for more profitable businesses.
There is no reason the same thing should not apply to other aspects of general practice service and every reason to believe that practices in outer metropolitan areas will continue to bulk bill. There the capacity of doctors to charge a gap without suffering a fall-off in patients is limited ...'
Mr Pearson is arguing that bulk billing offers administrative advantages that will continue to make it attractive for many doctors, while those practising in less affluent suburbs will not be able to abandon bulk billing because many of their patients would not be able to afford to pay the gap.
A general commitment to bulk billing was made by the Prime Minister on Paul Murray's Radio 6PR talkback program on April 17, 2003. The Prime Minister stated, 'Well we're certainly committed to bulk billing and we're certainly committed to it in the spirit of the original Medicare arrangement which always allowed for the fact that not everybody would be bulk billed. I mean we have this more recent Labor Party construct that the whole idea of Medicare was that you'd have 100 per cent bulk billing. That was never the intention if you look at what Dr Blewett said way back when Medicare was introduced. But we certainly want to provide incentives and assistance to doctors to keep levels of bulk billing high ...'
3. The proposed changes will help to ensure that pensioners and cardholders are bulk billed
When announcing the 'A Fairer Medicare' package, the Prime Minister, Mr Howard, stated, 'Incentives will be available for GPs to bulkbill pensioners and Commonwealth concession card holders. GPs agreeing to bulkbill these patients will receive incentive payments on a sliding scale depending on the degree of remoteness of their practice. For example, GPs in small rural towns and remote areas could receive an average annual payment of $22,050. This arrangement will strengthen the availability of bulkbilling for many thousands of Australians on low incomes.'
The Government's Health Minister, Senator Kay Patterson, has given further detail. 'There'll be incentives for doctors to bulk-bill their healthcare card holders and it works out at about $3500 for a doctor in a metropolitan area, if they have a high number of healthcare card holders that figure could double. In non-metropolitan cities, the incentive will amount to about $10,250. In rural centres, around $18,500 and in outer rural and remote areas around $22,000.'
In addition to this, doctors who agree to bulk bill all their pensioner and cardholding patients will be able to receive direct payment from Medicare for the rebate component of their other patients' accounts and then charge their patient the rest of the account as an upfront fee. This is a further incentive for doctors to bulk bill pensioners and cardholders.
4. Medicare rebates, free public hospital treatment and access to pharmaceutical benefits will remain universal
In the Prime Minister's March 29 speech to the Victorian State Council, he defined his view of Medicare's universality. He claimed it means the right of every Australian to free treatment in a public hospital ward; the right to receive the Medicare rebate for GP consultations; and participation in the Pharmaceutical Benefits Scheme. These, he claimed, are 'the three great universal principles of Medicare'.
The same points are made on the Australian Department of Health and Ageing's Internet site. The following claims are made with regard to the 'A Fairer Medicare' package. 'The three pillars of universal Medicare available to all Australians are the Medicare rebate, together with access to free treatment in public hospitals and subsidies for pharmaceuticals through the Pharmaceutical Benefits Scheme. "A Fairer Medicare" maintains universal coverage for all patients through the Medicare Rebate.'
At the end of the press release announcing 'A Fairer Medicare', the Prime Minister stated, 'While "A Fairer Medicare" introduces some new features to our health system, the things we value about Medicare will not be changed. "A Fairer Medicare" does not introduce a co-payment for GP consultations or a means test. All Australians will remain eligible to receive the Medicare rebate when they visit a doctor and all doctors will remain at liberty to choose whether they bulkbill or not, as has been the case since the introduction of Medicare. "A Fairer Medicare" reaffirms the Government's commitment to Australia's universal health care system.'
5. The proposed changes will allow patients to insure against the gap between Medicare rebates and the actual fees their doctors charge
Prior to these new proposals it has not been possible to take out private insurance cover to protect patients against the gap between the Medicare rebate and whatever additional fee their doctor may charge.
The new suggested arrangement would allow patients to insure privately to cover the gap, once it exceeds $1000 in any calendar year.
The Prime Minister has claimed that the new arrangements include 'New safety nets to protect against high out-of-pocket medical costs'.
The 'A Fairer Medicare' package allows for 'private health insurance cover for all out-of-pocket costs for out-of-hospital services exceeding $1,000 in any year for [patients who are not bulk billed].'
The Prime Minister has noted, 'The new private health insurance cover will attract the Government's 30% Rebate, will be available for a very modest annual premium and will not require other cover for hospital or ancillary costs to be taken out.'
6. The proposed changes will encourage those who can to take more responsibility for their health coverage
Encouraging individual responsibility and self-reliance among Australians has always been a major feature of John Howard's political philosophy and that of the Government he leads.
In a Melbourne Press Club address made on November 22, 2000, the Prime Minister stated, 'We believe, as we always have, that "the only real freedom is a brave acceptance of unclouded individual responsibility" ... in making policy since we took office, that encouragement of self reliance, of giving people choice, of rewarding those who can and do take responsibility for themselves and their families has been at the forefront of our efforts.'
Referring specifically to health policy, the Prime Minister stated, 'The incentives for private health insurance encourage people to accept responsibility for their own family's health.' The proposed changes to Medicare, which open up an additional area of expense against which individuals can take out private health insurance is in accord with this policy.
The Prime Minister also gave his view of Medicare in this address. He referred to the principle of 'a fair go' and claimed that 'each one of us deserves a leg up if times get tough'. He then stated, 'For this reason, we have held as immutable an unwavering commitment towards both Medicare and the social security safety net.'
However, it is clear that the Prime Minister favours government assistance only for those who most need it and wishes to develop self-reliance among those whom he judges do not. The Prime Minister argues for limits on government assistance to individuals and contrasts the Australian welfare system favourably with those of many European nations. 'We've eschewed the excessive paternalism of some European societies, which leave individuals dependent on bloated and unsustainable public sectors.'
7. A mix of Government-funded and private health insurance will help to ensure the continued viability of the Government-funded system
The Government contends that if private insurance were allowed to run down to levels that put the private health insurance industry at risk, this would have dire consequences for the rest of the Australian health care system, including Medicare.
According to this line of argument, under the Hawke/Keating Government the number of Australians with private health insurance declined from two-thirds coverage to around one-third. This halving of the rate of membership of private insurers significantly increased the demand on public hospitals as, it is claimed, without private insurance people were not able to attend private hospitals. The Government claims that this trend put excessive demands on public hospitals and excessive demands on Medicare.
In the documents accompanying the 1999 Budget, the Government stated, 'To ensure the future financial viability of the Australian health system, a plan was needed to stabilise the levels of private health insurance and so preserve the public hospital system, Medicare and the private sector's future in health care.'
It has also been claimed that without an increase in private health insurance, and a willingness on the part of most patients to pay more directly for health care services, Medicare would be unable to meet the increasing demands placed on the system by an ageing population. Christopher Pearson has made this point in an opinion piece published in The Australian on May 10, 2003.
Mr Pearson states, 'As the population ages over the next two decades, the demand for increasingly expensive medical services is going to grow while the revenue base will shrink. Some form of co-payment is therefore inevitable and likely to get bigger over time.'
8. The proposed changes will promote better medical services in the bush
The Prime Minister has stated, 'A major objective of A Fairer Medicare is to address the shortage of doctors in certain areas, particularly in rural and outer-metropolitan areas. Many Australians living in these areas cannot easily find a doctor when they need one.'
The new package takes a number of steps toward solving the problem of too few doctors in rural areas.
Mr Howard has claimed that one of the aims of the 'A Fairer Medicare' package is to put 'More doctors where they are needed most'. He has stated, 'We will provide more doctors by increasing the number of places in medical schools around Australia by 234 every year and by increasing the number of GP training places by 150 every year. The additional medical school places will be bonded to areas of doctor shortage and the additional training places will be targetted to rural and outer-metropolitan areas.'
The package intends to increase the number of training places and to make these positions available to students prepared to be bonded to practise in rural and outer suburban areas.
The new package also gives a greater financial incentive to GPs in remote areas and small rural towns to bulk bill pensions and Commonwealth cardholders. The Prime Minister estimates that these incentives could be worth 'an average annual payment of $22,050' for doctors in such practices.
9. The proposed changes will be more convenient for patients and doctors
The Prime Minister also announced in the 'A Fairer Medicare' package that there world be 'Direct payment of the Medicare rebate to doctors for all services.' The package allows for 'GPs agreeing to bulkbill pensioners and concession cardholders ...[to] receive Medicare rebates for all services within two days via HIC Online.' This is intended to be more efficient for doctors. It means that payment for patients who are bulk billed will be received more quickly than previously, while there will be only a two day delay in receiving the rebate component of the payment made by patients who are not bulk billed. Doctors are also being given government subsidies to encourage them to get the hardware and software necessary to bring their practices online.
The Government has claimed that this arrangement will also be far more straightforward for patients. The Prime Minister's Medicare reform press statement claimed, 'This will be a major new benefit for patients who are not bulkbilled and currently have to pay the doctor's full fee and then complete and lodge a Medicare claim form. This is often time-consuming and inconvenient. Now, they will just pay the difference between the doctor's fee and the Medicare rebate and there will be nothing more to do.'
The Minister for Health and Ageing, Senator The Hon Kay Patterson, has also established a GP Red Tape Taskforce to reduce GP administrative and compliance costs from Commonwealth programmes. The Taskforce will consult and work closely with the medical profession in an attempt to ensure 'that doctors can spend more time with patients and less on paperwork'.
Arguments against the proposed changes to Medicare
1. Under both Medibank and Medicare it was only external limitations that prevented bulk billing being universal
Mr Bill Hayden, the Health Minister in the Whitlam Government who introduced Medibank, has stated, 'I initiated universal health insurance, as Medibank, in 1975. Bulk-billing was a central feature, available for all, without means test, for medical services provided by doctors who participated in this facility.'
The only limitation on the availability of bulk billing was the willingness of doctors to provide the facility. Both Mr Hayden, who introduced Medibank, and Dr Blewett, who introduced Medicare, have claimed that they wanted bulk billing to be universal and that it was in the spirit of each of these Government funded health insurance programs that it should be.
The only impediment to this was that many doctors did not want to effectively be government employees. This meant they wanted the discretion to set their own fees and not to bulk bill. The Australian Constitution allowed them this freedom.
Dr Blewett has stated on ABC radio that Australia's Constitution limited the ability of governments to ensure universal bulk billing by doctors because it forbade compelling doctors to provide particular services.
The 'civil conscription' clause in the Australian Constitution (an amendment added during the Chifley Labor Government's post-war administration) prevents a national government from coercing or conscripting doctors; one of the consequences of this is that the government cannot force doctors to bulk bill.
Section 51, clause 23A of the Constitution includes among the legislative powers of the Parliament, the power to make laws with respect to 'the provision of ... medical and dental services (but not so as to authorize any form of civil conscription)'.
Dr Blewett has claimed that, given his Government never had the power to coerce doctors to bulk bill, it was the Government's priority that the most needy in the community receive bulk billing, but it was its desire that all Australians should do so.
2. The proposed changes do nothing to close the gap between doctors' charges and the rebate
Currently the Medicare rebate is set at 85 per cent of the schedule fee. Many doctors dispute that the schedule fee is sufficient and charge significantly above it. This means that patients are required to meet both the difference between the scheduled fee and the rebate and the difference between the scheduled fee and the fee their doctor actually charges.
The Howard Government has refused to increase the scheduled fee to a level that meets doctors' costs and allows for a profit margin they find acceptable. Dr Kerryn Phelps, the retiring president of the AMA, has stated, 'In today's terms, Medicare Benefits Schedule fees are close to $2 billion under funded.'
This has made it increasingly likely that GPs will charge above the scheduled fee and thus not bulk bill. The changes the Howard Government is making do nothing to address this issue.
Michael Costello, a former secretary of the Department of Foreign Affairs and Trade and the Department of Industrial Relations has stated, 'This is no accident but deliberate government policy. There is no more effective way to reduce bulk billing than this.'
The difference in emphasis can be seen when the Government's proposed changes are contrasted with the Labor Party's policy on Medicare. The Labor Party has declared that once in government it will immediately lift the Medicare patient rebate for all bulk-billed consultations to 95 percent of the scheduled fee. It ultimately aims to increase the rebate to 100 percent of the scheduled fee. Neither the Government nor the Opposition addresses the supposed inadequacy of the scheduled fee, however, the Labor Party's position is a clear attempt to lessen the gap between doctors' fees and patients' rebates and so to encourage bulk billing for all patients.
3. The proposed changes will encourage doctors to increase the gap between their charges and the Medicare rebate
Under the new proposals, doctors who do not bulk bill will be able to have their patients pay only the gap between their fee and the Medicare rebate and then apply to the HIC for the rebate. This means that if the gap is $5, $10 or $20, this is all the patient will be required to pay up front.
It has been argued that this requirement that only the gap be paid up front will be a large incentive for doctors to increase their fees.
Currently, given that the standard rebate is $25, if a non bulk billing doctor were to increase his or her fees by $15 the patient would be required to pay $40 immediately and then apply to Medicare for the $25 rebate. $40 is a substantial jump from $25 and is likely to generate significant patient resistance.
Under the new system the patient would merely pay the $15 gap with no need to apply for a rebate. Patients would be paying less up front and would be saved the inconvenience of applying for rebates. This is likely to make any fee increase less noticeable, more palatable and thus more likely.
Matt Price, a commentator for The Australian, has stated, 'Howard's changes would save millions of Australians accustomed to paying for doctors visits a trip to the Medicare office to claim their rebate. Many will welcome this. Yet the temptation for GPs to increase fees will be irresistible.'
4. The proposed changes will leave many of those on low incomes worse off
Patients who are not pensioners or who are not on a Commonwealth concession card, typically those with an income of more than $32,300 a year, are likely to be worse off under the new Medicare arrangements.
Doctors will be offered a financial incentive to bulk-bill pensioners and Commonwealth concession cardholders. GPs agreeing to bulk-bill these patients will receive incentive payments on a sliding scale depending on the degree of remoteness of their practice. However, the changes do not address the overall decline in bulk billing and are likely to result in doctors increasing their fees when not bulk billing. This will have an adverse impact on low-income non-cardholders.
Francis Sullivan, the chief executive officer of Catholic Health Australia, has claimed that the Federal Government's Medicare reform package 'disproportionately hits the hard up and the sick and erodes the value of the Medicare entitlement for people without concession cards ... There is no direct compensation for lower income people not bulk billed.
Even if privately insured, they still must run up $1000 of fees a year before any benefit arrives. Families and people on meagre incomes will find bulk billing elusive and will gain little from private insurance that must be paid for from an already over stretched household budget and which only applies for annual above gap doctors' fees of more than $1000.'
5. The proposed changes may result in people on lower incomes seeking less medical attention
Studies from a number of nations other than Australia have shown that an increase in cost prevents people from using medical services.
The Rand Health Insurance Experiment was conducted in the United States to find out the impact of user charges. The main finding was that the higher the out-of-pocket expenses, the fewer services people used, including doctors' services, hospital services, medicines, dental and mental health services. Other studies in Britain, Canada and the United States have shown the same thing.
It appears that the cost of medical services has the greatest impact on low-income groups and increases their likelihood of serious illness and death.
In his 1957 Chifley lecture, Gough Whitlam anticipated these findings. He stated, 'The fear of debt deters many people from seeking medical attention sufficiently early or undergoing a full course of treatment. The fear of ill health is the greatest economic hazard in our community.'
It was for precisely this reason that the Whitlam Government introduced Medibank in 1975. It believed that access to medical care was a right and should not be determined by one's ability to pay.
The Public Health Association of Australia has recently reaffirmed this objective. It states, 'Access to appropriate health services should not be related to ability to pay and cost should not be a barrier at the point of use. There should be no differential in the quality of care based on ability to pay.'
6. The proposed changes may result in a two-tier system that discriminates against the poor
Dr Stephen Duckett, professor of health policy and dean of the faculty of health sciences at La Trobe University, has stated, 'To regard bulk billing as being a system for the poor would introduce undesirable stigmatisation of poor people, and would represent a major shift in policy to the pre-Medibank era of the 1950s and 1960s.'
As the gap between the Medicare rebate and the general fee charged by doctors widens, bulk billed patients will become increasingly less financially desirable for doctors. This may contribute to a situation where it becomes increasingly difficult to staff medical centres in lower socio-economic areas where a high percentage of the clinics patients are likely to be Commonwealth cardholders and so seek to be bulk billed.
It may also become standard practice to attempt to increase the through rate with bulk-billed patients by giving them shorter consultations. The retiring president of the AMA, Dr Kerryn Phelps, has stated, 'Recent Australian Institute of Health and Welfare research shows that the average amount of time a GP spends with a patient in Australia is 14.6 minutes.' One solution to the problem of how to increase return from patients for whom their Medicare rebate is sole payment would be to significantly reduce the amount of time spent with them.
Interestingly, doctors working in depressed socio-economic areas claim that their consultation times need to be longer, not shorter. Vera Boston, chief executive officer of the North Yarra Community Health Centre, has stated, 'A lot of our patients have complex medical conditions, mental health issues and drug problems. Many don't speak English and need interpreters.' Research indicates that the health status of the poor is lower than that of the more affluent. Reducing their consultation time would hardly address their needs.
Another, equally undesirable option is that, despite government incentives, doctors in such lower socio-economic regions may not bulk bill all economically disadvantaged patients with the result that they make less use of medical services or fall into debt gaining the medical attention they need.
7. The proposed changes to Medicare could reduce public support for the government-funded health insurance system
Because all Australians benefit equally under the current system, that is, all receive the Medicare rebate for their doctor's services, the scheme is an extremely popular one with the Australian electorate.
Were the full rebate to become available only to the unemployed and those in the lowest income groups, while large sections of the Australian electorate had to take out additional private insurance to protect against medical expenses, then support among voters for the government-funded scheme would be likely to decline.
It has been claimed that those paying substantial levels of taxation come to resent the taxpayer-funded services made available to those who are either unemployed or paying far less tax.
This development has been described as 'downward envy'. Labor MP Mark Latham has described it in this way, 'Those who add value to the economy and pay their taxes increasingly resent the transfer of these resources to recipients not involved in the production process.'
There is concern that if Medicare ceases to be seen as universal, then it will lose electoral support and will ultimately be dismantled by governments who would prefer to avoid the cost of supporting it.
Amanda Elliot, a research officer for the Federal Parliament, has stated, 'One of the reasons for the popularity of Medicare is its universalism (that is, universal access to the Medicare rebate) ... one of the benefits of having a universal system of welfare services and benefits is that it will be supported and thus defended by most of the society in which it operates. Consequently, universal, institutionalised welfare systems are much more difficult to dismantle.'
8. The financial incentives offered to doctors are insufficient
The principal doctors' association, the AMA, has claimed that the Government is simply not prepared to spend sufficient to address health issues. Dr Kerryn Phelps, the retiring president of the AMA has stated, 'Last week we saw what the Government touted as "the biggest shake-up of Medicare in twenty years". Reform costing less than $250 million a year in a budget of $60 billion - $30 billion of which is Federal - is more like a rattle than a shake.'
One of the major concerns of the AMA is that the new Medicare package does not address the inadequacy of the Medical Benefits Schedule. The AMA has long claimed that the fees Schedule so undervalues medical services that many doctors simply cannot afford to bulk bill.
Dr Phelps has stated, 'Unfortunately the package does not address the under funding of the Medicare Benefits Schedule or the inadequate indexing of patient rebates.' She further observes, 'successive Governments have eroded the value of the Medicare Benefits Schedule so as to render [Medicare] virtually meaningless as a "universal insurer"...In today's terms, Medicare Benefits Schedule fees are close to $2 billion under funded, and rebates are $1.7 billion per annum under funded. Half of that is in general practice.'
Dr Phelps argues that unless the scheduled fee is increased significantly, doctors cannot be expected to bulk bill. She notes, 'As time went by, and the Medicare rebate failed to keep up with the cost of running a practice, Medicare, as an insurer, fell further and further behind. It reached a point in fairly recent years where doctors had to look at their practice expenses versus practice incomes and say, "what's the point in me continuing?"'
It has further been argued that the proposed increase in health expenditure does not acknowledge the growing demands on Australia's health system. The Australian Government has offered to increased Australian Health Care Agreement moneys by 5.4%. Dr Phelps has commented, 'Growth of 5.4% is not generous in the face of an ageing population.'
With regard to the financial assistance to go online, Dr Phelps has stated, 'The Government is offering $750 to $1000 to assist each practice to go on-line. However, the experience of our members has shown that the costs to the practice are far higher - over $17,000 in start-up costs for a seven-doctor practice. This does not include purchase of computers.'
9. Bonding doctors is not a fair or effective way of promoting rural practice
The AMA has expressed strong concern at the prospect of some trainee doctors being forced by bonding to work in rural areas.
Dr Kerryn Phelps has stated, 'Young doctors and medical students are appalled at Government plans to 'bond' these medical school places.
Having the Government tell young doctors where they must practice for six years will only turn more bright young people away from a career in medicine ... The bonds are unfair, inequitable, constitute a fundamental change to the higher education system and only make service in areas of need even less attractive to young doctors...because it is coercive.'
Dr Phelps argues that bonding is unjust and discriminatory for the young people involved. 'Many will be only 17 or 18 years old, filled with excitement and enthusiasm and unable to make informed judgements about contractual obligations that kick in 8-12 years ahead.' She further argues, 'The penalties for breaching a bond can be savage. Not only could they have to repay the cost of their medical education (unknown, but possibly $90,000), but depending on the terms of their contract, they can be subject to a lengthy ban from the Medicare system under section 19ABA of the Health Insurance Act which would prevent them engaging in private practice.
What other student has to sign that kind of bond to get an education in this country?'
Further implications
The Government's proposed changes to Medicare are likely to lead to a situation in which 'free' health care is available only as a safety net for the most disadvantaged.
During the 1970s and 1980s John Howard was publicly opposed to Medicare and declared that he would 'get rid of the bulk billing system' other than for pensioners and the disadvantaged.
Though the declared purpose of the current reforms is not to achieve this end, critics claim that that is their real objective and likely effect.
In a statement made on the ABC's 7.30 Report on March 3, 2003, the Prime Minister, Mr Howard noted, 'It is simply not possible for the Government ...and it was never the design or within the contemplation of the former government that we could guarantee bulk billing for every Australian citizen.'
On the same program the federal Treasurer, Mr Peter Costello, was reported to have said, 'The Government's view on bulk billing is that bulk billing is important for people who are on pensions or who are on low income, but bulk billing was never intended to be universal.'
Implicit in each of these statements is that the majority of Australians should be prepared to pay an additional charge for GPs' services, beyond the Medicare rebate. Further, rather than attempting to promote the general use of bulk billing by GPs, the new scheme will give 'incentives for GPs to bulkbill pensioners and Commonwealth concession card holders.'
At the same time as the federal Government has been promoting selective bulk billing, for the use of only pensioners and the most disadvantaged, it has been promoting a user pays system for all other health service users, actively encouraging them to take out private insurance.
It is giving a $2.3 billion annual subsidy to the private health insurance system to encourage Australians to insure privately.
The Government's most recent proposed changes to Medicare will accelerate this trend toward dual provision, with the aim that a majority of Australians have some form of private health insurance and only the most disadvantaged rely on a Government funded system. Already some 44 percent of Australians have private health insurance. As part of its new 'reforms' the Government is now allowing Australian citizens to insure to cover the gap between Medicare rebates and their annual medical expenses once that gap exceeds $1000.
The Government is not conducting a frontal assault on the principles of Medicare. These are too well accepted by the electorate for that to be politically wise. Instead it appears to be dismantling Medicare under the guise of reforming it. The attempt to increase the number of GPs in rural Australia appears to be only a smoke screen; this objective could have been pursued without any 'reform' to Medicare.
The Government's partial objective seems to be cost containment. It does not want to subsidise citizens for medical services it believes they should pay for themselves.
But this is also an ideological decision. The Government has shown itself ready to spend large amounts of public money to promote private health insurance. It would clearly prefer to see citizens increase their private health insurance, rather than pay increased taxes to fully fund Medicare. It may be that the Government believes that their policy will be easier to sell to the electorate; it may also be that they are acting on their apparent belief that universal, government-funded health insurance is paternalism.
It remains to be seen whether the Howard Government will be able to convince the electorate of the value of its package and so fundamentally alter what has become an icon of Australian social welfare provision.
Sources The Age
4/5/03 page 3 news item by Liz Porter, 'Health care under stress'
5/5/03 page 13 comment by Kay Patterson, federal Health Minister, 'The truth about the new Medicare'
7/5/03 page 10 news item by David Wroe, 'Medicare change: poll shows public is wary'
8/5/03 page 15 comment by Lyn Allison, 'Medicare deserves better than these Howard "reforms"'
The Australian
2/5/03 page 2 news item by Misha Schubert, 'Doctors' groups in dire prognosis on Medicare reforms'
2/5/03 page 17 comment by Michael Costello, 'PM's sincerely busy faking it'
3/5/03 page 26 comment by Matt Price, 'PM's Medicare bluster brave and sneaky'
7/5/03 page 2 news item by Misha Schubert, 'Voters reject changes to Medicare'
9/5/03 page 6 comment by Alan Wood, 'Health spending dragging states into black holes'
10/5/03 page 18 comment by Christopher Pearson, 'Operation will be a success'
The Herald Sun
2/5/03 page 15 news item by Michelle Rose, 'Unions oppose Medicare changes'
2/5/03 page 20 comment by Nick Richardson, 'Medicare's fading pulse'
