Is Medicare under threat? Making sense of the privatisation debate

Many Australians went to the polls on July 2 believing the future of Medicare was at stake. In a sense it

Many Australians went to the polls on July 2 believing the future of Medicare was at stake. In a sense it is – but not because of the government’s plans, now ditched under the heat of a campaign, to outsource IT functions.

The greater threats to our national public health system lie in the increasing role of consumer co-payments and the power of vested interests that stifle policy innovation in health.

Mediscare campaign

The Labor Party headed into the election with its Medicare banner hoisted high. Labor promised it alone can “save Medicare” from the incremental privatisation that higher co-payments and increased outsourcing may herald.

But while Labor’s claims about the need to defend universal health care from creeping co-payments are genuine and important, it is hard to accept the party’s recent claim that the Liberals’ interest in outsourcing claims and payment services for Medicare and the Pharmaceutical Benefits Scheme (PBS) is an existential threat to Medicare.

While any changes would need to be handled carefully, in reality our antiquated system needs to be modernised in the most cost-effective way possible.

The public, though, is wary about how that modernisation occurs. An Essential Report poll conducted in February asked about the public’s attitude to outsourcing:

It has been suggested that the government may outsource the administration and payment of Medicare, pharmaceutical and aged care benefits to the private sector. Would you approve or disapprove of this?

Public attitude to outsourcing of government payment systems, including Medicare, to the private sector

Grattan Institute

The answer was clear – the public opposes outsourcing but its opposition probably reflects the government’s failure to sell the idea rather than a settled view.

Privatising service delivery has been ruled out

The “Mediscare” campaign appears to have been effective, irrespective of its substance. Prime minister Turnbull has emphatically ruled out any outsourcing of Medicare services, stating that:

I am making a solemn commitment, an unequivocal commitment that every element of Medicare’s services will continue to be delivered by government. Full stop.

Of course, Turnbull may forget this commitment soon after July 2. The dishonouring of pre-election commitments is a proud tradition on both sides of the aisle. Julia Gillard famously reneged on her vow to never introduce a carbon tax. Tony Abbott’s raft of broken election promises exceed the word limit for this article. Voters will decide whether they believe this prime minister will be different.

Turnbull’s words may later be claimed to provide wiggle room, as the original media release also announced that the proposal “does not include the face-to-face services provided by Medicare”.

Privatising funding is a greater threat

Outsourcing is only one form of privatisation, and nowhere near the most pernicious. While privatisation of service delivery is now off the table, greater privatisation of funding (that is, the share of health costs met by private insurance or patient co-payments) is still very much on the cards.

The Liberals remain committed to a $5 increase in PBS co-payments – a zombie policy that has been stuck in the Senate since 2014.

Although the Coalition has given up on legislating its $7 GP co-payment, its Medicare rebate freeze is effectively designed to sneak it in through the back door. The freeze means that until 2020, doctors will be paid the same as they were in 2014. With a growing gap between income and costs, they will eventually pass the difference on to their patients.

Both policies, which Labor opposes, will have a real impact on the integrity of the public health system.

The underlying promise of Medicare is universal access to health services irrespective of a person’s age, illness or bank balance. While outsourcing IT systems or service provision may not affect this promise, the same is not true of co-payments.

Australia already has a very high level of out-of-pocket costs. Raising them further will have an immediate effect on the ability of people on a low-income to access the care they need.

As skipped GP visits lead to an increasing number of avoidable hospital admissions, costs will rise rather than fall for the health system.

Medicare needs evidence-based reform

Medicare is vital to Australia’s social policy fabric. But in order to survive, it needs to be modernised, not preserved in aspic.

Over the past year, substantive ideas to increase the quality and sustainability of Medicare services have repeatedly gone down in flames. Poorly designed policies are being retained for the benefit of private providers, not patients.

Opportunities for improved sustainability and service delivery have been put on the back burner because of fears of political campaigns by owners of pharmacies and other providers.

Meanwhile, government backdowns have led to share price rallies, as we saw when Pathology Australia struck a deal with the government to abandon its Don’t Kill Bulk Bill campaign.

We need to remember that every dollar of health expenditure is a dollar of some provider’s income.

The long-term solution to Medicare sustainability lies not in higher co-payments but in substantive reform. This includes investing in cost-effective prevention and in a better designed primary care system .

What are your thoughts on the Medicare issue? Do you think the system needs review and amendment?The Conversation


Stephen Duckett, Director, Health Program, Grattan Institute
This article was originally published on The Conversation. Read the original article.
  1. Sandra McFarlane  

    I am a 70 year old pensioner who, until April this year felt safe and protected with Medicare. I had a cataract operation on one eye, with the promise the second would be within a fortnight. Not so. Up until then I knew of four friends who’d had both eyes done within two weeks. My surgeon told me because of government cutbacks (liberals) he couldn’t tell me when it would be done. I contacted the local Lib office who told me I had my wires crossed, that it had always been an 8-10 week wait, which was an absolute untruth as this Minister actually brought in the change in April this year. I then received a letter from John Day (new health minister) assuring me I’d been put on a waiting list and should be done in 8-10 weeks. This was two months in to my wait. Maybe 4 months now before its done. If you’ve ever experienced having one good, one bad eye and glasses that only suit one eye, you would understand my concerns with loss of balance and having to read via magnifying glass. They are doing all this by stealth, goodness knows what the future will bring when things are done in such an underhanded manner.

  2. facebook_elda.quinton  

    Absolutely Sandra. My private health only covers me for my own doctor in a public hospital and that is one of my fears as I await for my turn on the waiting list.

    • I don’t understand Sandra why you have to be on a “waiting list” if you have private insurance. Your doctor of choice books your surgery as a private patient in the public hospital. Your private fund should pay for a shared room bed, theatre fees and anything else in your policy. Your doctor should be telling you which date he can perform the surgery, the wait should be minimal – as a private patient. Of course, your doctor must have operating rights at the hospital your private fund nominates.

  3. facebook_elda.quinton  

    This is what they have done in the UK, outsourcing government service and it’s an absolute disaster with some people having payments cut off, people dying with no food in the pantry. People with disabilities or cancer being told they have to find a job, getting their money cut off then being found dead in their homes. WE DO NOT WANT TO GO DOWN THAT TRACK!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  4. If all comes to pass and the co-payment comes in for Drs, pathology and x-ray scan items it is going to affect those who least can afford to put there hand in their packets, US those on any form of government payment.I have at least 4 blood test every 3 months 4×5=20 $80.00 a year, scans are on a as need basis as with us all, cant even consider what the extra cost would be, then there the Drs visits I try to keep them to a dull roar but there are needs to go in between blood tests and no one can tell us what the Dr will put there hand out for.I understand the need for all the services to make some form of profit and not blame us if they dont,to double the pbs rate will be an extra $300 minimum for the 2 of us.What will happen if the reassess those on the disability and are found to be still breathing and dont qualify any more at 64 is it the dole line for me ?There will be extra cost drivers license & rego so the car will stay home and its the bus for us being out of town the bus is about 3 tiles a day. The libs have the nerve to wonder why we did not vote for them this time !

  5. As a retired nurse who worked in the public and private health sector for 30 years, I can very safely say that Medicare is unsustainable unless the public is prepared to pay a higher medicare levy or pay a gap payment. Many people on a welfare payment do not pay the medicare levy but expect immediate attention to a health problem that is not an emergency. It just cannot happen unless it is life threatening. The costs of running an efficient, first class health system costs way, way more money than what the medicare levy provides. The cost of equipment alone, would not be covered by the medicare levy. One thing that is propping up the public health sector is the contributions people pay to the private health funds as well as paying the medicare levy. This amounts to upwards of $5000 to $10000 per year for singles and families. If someone can come up with a sustainable financial plan that will ensure “FREE” health care, that person would be awarded the highest medal in the world.

    • Well.said and I agree. Please all the moaning stupid people read this. No not talking about older people more the younger oes on welfare. Can’t pay $5 to see a doctor but can pay $5 for a coffee or still big ciggies alcohol and drugs.

    • Margaret Pinney  

      Completely agree Robyn I think all working people should pay maybe 3 per cent of earnings wipe all private health funds &I we should have enough.

    • Margaret Walsh  

      As a nurse of 45 years in the public sector, I appauld your comments Robyn. The impost of asthmatics who continue to smoke, diabetics who do not take their condition seriously, and the upgrading of equipement to manage the obesity epidemic is enormous. The impact of opioid dependent patients is another issue that many people do not realise exists. Medicare and public sector health in the current format is definietly unsustainable and requires serious reform, and for general information, don’t for one minute think that private sector health provides a better product.

  6. colin  

    outsourcing to some one whose first language is not english has to stop . I am tired trying to understand some person in Bangalore or
    manilla, for banking…. all who have access to my private financial records

    election wise, Turnbull was found out, he chops the benefits and bulk bill but can give 50 billion to big firms where most profits head overseas AND due to USA law 1 billion rebate goes to their government. 1 billion to USA government but we cant afford Medicare?

  7. James  

    Mediscare! Absolute disgrace – the perpetrators of this lie should be tried for fraud!
    There is nothing for free in this world. Robyn Davies is absolutely on the money. We need to have a more efficient public health service and if that means outsourcing the data management to firms who have that as their core business, then so be it. At the arte we are going with Medicare we are heading down the same track as the NHS in the UK!

    • Herb  

      Turns out that it was NOT a Mediscare as the govt had already committed MILLIONS to investigate which of their donor mates in the private health insurance sector they would give Medicare to. Medicare is NOT FREE. It is paid for by a levy ! If that doesn’t cover it , increase the levy by 1% . It seems that like all conservative parties worldwide that there is always money for dud warmachines such as F35 jets or subs which will be obsolete by the time they’re launched ,but never for looking after the population . They also love selling off taxpayer paid for infrastructure then saying how well they manage finances. Unfortunately many believe this BS

  8. Cynthia Power  

    Medicare was the brainchild of the Australian Labor Party. Ever since its inception conservative governments have tried bit by bit to dismantle it. Nobody really believed it was to be “sold off” but most Australians were worried at what changes the LNP would make to the policy. To think that anyone would suggest a robo call or a so called Mediscare call as they walked out the door to vote on the day of the election, is delusional. We shouldn’t sell our fellow Aussies short. Most of us are switched on enough to realise that our healthcare system is under threat.

  9. Mary  

    We can afford an illegal war in the middle east but we can’t afford to look after our own citizens’ health?

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