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Issue #1705      October 7, 2015


Privatisation behind rhetoric

The Coalition government has launched yet another attack on Medicare with a new round of cuts. The cuts come in the guise of a review of items covered by Medicare. Health Minister Sussan Ley speaks in terms of removing items that do not reflect “contemporary best clinical practice”. The review is not just about removing items, but also aims at reducing rebates and opening the way for private health insurance funds to offer “gap” coverage for Medicare items.

The Medicare Benefits Schedule (MBS) is a listing of Medicare services including GP visits, Xrays, surgery etc, which are subsidised by the government. The Schedule specifies the amount that Medicare pays bulk-billing service providers and to fee-paying patients when they claim a refund.

The Turnbull government has set up a Medicare Benefits Schedule Review Taskforce chaired by Professor Bruce Robinson and made up of a range of medical professionals and academics.


The government denies its “spring clean” of the Schedule is a cost-cutting exercise. If it were just a matter of removing obsolete items, the government would not be making savings. But it plans to make huge savings. Treasurer Scott Morrison plans to put them towards balancing the budget.

“Efficiency” cuts to the Medicare rebate will not save patients any money. They will mean smaller Medicare refunds and higher co-payments or out of pocket costs for patients who will still pay the same GP fees. Doctors will not lower their fees because the government has cut the rebate.

The MBS review – read cuts – are more about privatisation of Medicare (and increased out of pocket costs to patients), part of a bigger review of the health sector and its complete privatisation.

There are 5,769 items on the MBS ranging from a six-minute GP visit, to Xrays, blood tests through to the most complex surgery.

“Doctors and patients alike have raised various issues from over-testing and outdated or unproven treatments to unnecessary referrals, duplication, inefficiencies and systemic waste,” Ms Ley said.

No one can argue against the need for a review.

The ABC 4 Corners program Wasted (September 28, 2015) revealed some common tests and procedures that were not necessary, not backed by research and in some instances could have harmful consequences. Procedures such as arthroscopies and back surgery are not evidence-based.

And it is not just a question of whether an item should be on the list. The scheduled fee is also extremely important.

Specialists are charging monopoly prices. They rarely bulk bill their patients. A great deal of health spending is wasted on bloated specialist fees. Procedures such as colonoscopies, endoscopies and cataracts have become quicker and simpler.

Labor tried to reduce the scheduled fee for cataracts. Ophthalmologists, using state-of-the-art technology, run assembly lines spending minutes with each patient. They proved too strong, and they continue to rake in the same obscene fees.

A Coalition government is not going to tackle specialists, whether they be ophthalmologists, orthopaedic surgeons or gastroenterologists. But they do have their sights set on GP services and other MBS items.

Gap insurance

For several decades the Medicare rebate paid to doctors and other items has not kept up with rising costs. The Abbott government froze them for four years in its 2014 budget. This freeze is having the same effect as a direct co-payment. It is forcing GPs to abandon bulk billing for pure economic reasons. Many patients who were previously bulk billed are now $30, $40 or more out of pocket for a GP visit or blood test.

At present the private health insurance industry is not allowed to provide cover for the gap between the Medicare refund and GP’s fee. The freeze on GP items and any cuts arising from the review will make it far easier for the government to argue for private insurance to cover the gap.

Revamp of Medicare

The MBS Taskforce, in a discussion paper released on September 29, states as one of its objectives: “clarify and align expectations of the MBS, including its scope and the rules that underpin MBS payments.” (Emphasis added)

“The Taskforce will provide expert guidance to the government on reshaping the MBS …”

Cuts and gap insurance by private funds are not the only aims of the government. The MBS review is one of a number of reviews underway that aim to privatise Medicare and the public health system.

Treasurer Scott Morrison last week called on the states to hand over the running of public hospitals to the private sector.


In addition to cuts and gap insurance, the government is seeking to privatise Medicare and the public health system, including the MBS. The MBS review is one of three “reform” areas the government announced on April 22 with the label a Healthier Medicare.

It has set up a Primary Health Care Advisory Group led by former Australian Medical Association President, Dr Steve Hambleton to investigate options for the care of people with complex and chronic illness (eg mental illness, diabetes).

It also released a discussion paper on September 29.

The government also announced that it would “develop clearer Medicare compliance rules and benchmarks”. This looks to be a vehicle for restricting tests and procedures, which would ultimately fall to private health insurance funds.

This would be a huge step towards the US system where private health insurance companies decide whether diagnostic testing and other medical procedures are “required” – in practice whether they will be covered.

“Primary Health Networks could also pursue opportunities with private health insurers to ensure that care pathways recognise the need for patients with and without private health insurance in their regions.”

In other words the government would allocate an amount for the private health insurer to cover people with chronic and complex health conditions.

“Working together with Local Hospital Networks, other health service providers and also private health insurers, Primary Health Networks will be able to better coordinate services and support new and innovative programs that deliver better health outcomes.”

The 4 Corners program revealed the problems with a fee-for-service model. Ley is using the problems that fee-for-service creates, not to nationalise the system but to privatise Medicare.

The CPA policy supports the retention of Medicare with universal, fee-free access, quality care which is funded out of central revenue. It supports salary payments for GPs and specialists, especially in aged care, and a greater emphasis on primary health care. It strongly opposed government cuts and privatisation which will only worsen the present situation where far too many people are not receiving the care they need.

The next step will be public consultations. Those wishing to make a submission have up to November 9 to do so.


Next article – The choice facing the people of Portugal

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