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Issue #1639      May 21, 2014

The attack on Medicare

In the same breath as declaring “the government is committed to Medicare,” Treasurer Joe Hockey laid out the first steps in the government/big business plans to destroy Medicare and the public hospital system. “This is the murder of Medicare. Ending bulk billing will go down in history as the worst health policy decision in over 40 years,” said Doctors’ Reform Society (DRS) national president, Dr Con Costa. If the health measures in this budget are passed by the Senate, it will spell the beginning of a very painful destruction of Medicare over coming years and the full privatisation and Americanisation of health care in Australia.

Medicare was a reoccurring issue addressed by the March in May protestors in Sydney. (Photo: Linda)

The budget goes right to the fundamental underpinnings of Medicare – attacking universal access to quality care, bulk billing and no-fee public hospital care. Bulk billing means the patient does not pay a cent when seeing a medical practitioner, having pathology or other tests or treatment. People pay through their taxes including the Medicare levy according to income. Medicare pays the provider directly out of central revenue raised through the taxation system.

The introduction of a $7 co-payment is the death of bulk billing. It is dishonest to cover up the destruction of Medicare by referring to patients paying a $7 or any other co-payment, as being “bulk billed”.

Concession card-holders and children under 16 are hit with the $7 charge for the first 10 services in a year and then no fee. The co-payment will be waived for a few small groups of patients such as those with chronic disease management items.

One GP wrote to the DRS saying:

“I see about 150 patients a week, maybe 25 are middle class uni students whose Mum would pay $7 for a consult plus or minus a bit more for their STI [sexually transmitted infection] screen. My other workplaces are a clinic for homeless young people (zero chance of collecting co-payment), two hostels for the severely mentally ill (zero chance of collecting co-payment) and a general practice in a community health centre in Brisbane’s poorest suburb where I see pensioners and the working poor (might extract a co-payment from a few but difficult).

“It’s not like I have rich patients who I can charge $70 to subsidise the others. And of course I can see more life-threatening, untreated pathology in an afternoon than a GP in a politician’s home suburb sees in a year. I can also see more doctor-threatening patients in an afternoon than the aforementioned GPs in a year, and I don’t think attempting to extract a co-payment would improve their mood.

“I think we need to be clear that both the co-payment and rebate reduction suck, this is Americanisation of our health system, people didn’t vote for it, and Tony is giving us a great big new sick tax. He’s also attacking doctors who treat the sickest people in our society.”

The co-payment is a tax on the poor. If they cannot pay the tax, they are denied access to health care – a position indicative of the contempt the government and big business hold for working people. It spells the death of universal access. The only other alternative is for a GP to forgo the co-payment. But then, as the Brisbane doctor points out, the GP is hit by the government with an $11.80 penalty – their rebate is cut by $5 and they miss out on a $6.80 low gap incentive payment when concession-holders pay the $7 co-payment.

Many GPs and pathology services have already stopped bulk billing following several decades of frozen and below CPI increases in rebates. They did so for economic survival as an alternative to fast tracking patients and reducing the level of care.

The co-payment will see many GPs in poorer suburbs or regional or rural areas forced to move to more prosperous areas or go fully private – charging high fees instead of the $7 co-payment.

Most bulk billing GPs have running costs around 40-50 percent of gross income and bulk billing GPs working in Medical Centres as contactors pay the medical centre owner around 50 percent of their rebates. While the rebate is cut, the costs of running a practice remain the same, so the outcome is a net reduction in income of 30-50 percent or more. There are also the added administrative and accounting costs of collecting the co-payment.

The $7 co-payment to be paid by all, like all other payments in the budget, will increase in future years but the Abbott government did not have the political guts to say when or by how much.

“Pensioners, the elderly the sick and the poor have all been targeted – but also a clear signal is being given to GPs to stop bulk billing or they will be bankrupted,” Dr Costa said.

“If GPs stop bulk billing, the cost to see a GP will be around $72 (the Australian Medical Association rate) and thus the co-payment will then be $36 for the GP and $36+ for the blood test and $36+ for the Xray. Health costs will quickly become out of the reach of many Australians.”

A private billing GP on the other hand will still get $70 and their patients will receive $5 less in their rebate under the Budget proposals. The wealthy won’t notice it.

The proposed new safety net thresholds at which Medicare rebates increase are $1,000 for families, $700 for singles and $400 for concession-card holders. Historically, the majority of people accessing the general safety net are on higher incomes – those on low incomes are more likely to rely on bulk billing.

Medications hit hard

The budget also hits the sick with hefty increases in the cost of medications. In 2015, the $36.90 co-payment (price of script) is to rise to $42.70 and the annual safety net threshold by $176.60 to $1,597.80 for scripts after which the co-payment would fall to the concession card-holder rate.

This concessional rate is also targeted with an increase from $6 to $6.90 per script. The present concessional safety net threshold is $360 – set at 60 scripts in a year – after which scripts are free. The budget proposes to increase this to 62 scripts in 2015 lifting the threshold to $427.80. It also includes future rises of two scripts per annum up to 68 in 2018.

At the same time the government avoids making a tough deal with Big Pharma on the price we pay for generic off-patent medications, which would save billions of dollars. For example, the Australian government pays $42 for off-patent cholesterol tablets Simvastatin, but in New Zealand they only pay $3 and in Great Britain $2!


The government is moving towards means testing Medicare, compulsory private health insurance for medical and hospital cover. Neither the government nor the Audit Commission provide any evidence for their claims of unsustainable health spending. It is one of many lies that underpin the government’s attempts to try to justify the unjustifiable.

The budget allocates half a million dollars in 2014-15 to “market test the delivery of a commercially integrated payment system.” This includes identifying “potential alternative approaches to the delivery of health payments.” Or in other words, the privatisation of the Medicare payments system.

The government is abandoning responsibility for the health of the Australian people.

There is already a direct correlation between socio-economic status and health outcomes. The gap will only widen as more people on low incomes cannot afford health services or medications.

The Australian people have one of the cheapest and most efficient health systems in the world. Treasurer Joe Hockey might think “the age of entitlement is over”, but as far as the people of Australia are concerned, basic human rights, including health care, are not up for sale. The co-payment and other increases in health care and cuts to the health budget must be nipped in the bud, before they become almost impossible to reverse.

Next article – Kidnapped girls become tools of US imperial policy

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