Medicare needs some CPR

Medicare is in urgent need of some CPR. Not just the pulmonary and cardio, but a resuscitation of every part of the human body and the medical procedures that can be applied to it. 

The death by a thousand cuts of Australia’s once proud universal free medical insurance scheme continued unabated this month.

The annual inflation adjustment applied to the schedule of fees was set at 3.5 per cent – once again below the real rate. And it was not applied to all items.

The indexation has been frozen in the past by governments from both sides. And the indexation applied has not be wages indexation or health-costs indexation but general inflation.

In short it means that GPs, especially bulk-billing ones, are paying the price for government parsimony. Small wonder, then, that medical graduates are deserting general practice for more lucrative specialised medicine.

A survey by Medical Deans says it is the career choice of just 13 per cent of medical students and the trend is downward.

Small wonder, then, that people find longer waits for a GP appointment and fewer and fewer bulk-billing GPs; that hospital emergency rooms are clogged with non-urgent cases seeking treatment because it is free; and that some GPs who bulk-bill are pushing patients through like a sausage machine.

All the accounting associated with Medicare is now hopelessly out-dated and out of proportion. Government spending on health is at around 7 per cent of GDP. Private spending adds a further 3 per cent.

Yet the Medicare levy sits at 2 per cent with a surcharge for higher incomes of up to a further 1.5 per cent which very few people pay because they have private insurance and are exempted.

The Medicare schedule fees are unrealistically low and make it almost impossible for medical practitioners, especially GPs to make a decent living commensurate with their long training periods without much income and costly overheads.

Most schedule fees need to double. For standard consultations that would be a bit under $100 – even then it would be around the call out fee for a plumber these days.

Then two elements which have been part of Medicare since its inception should be changed – bulk-billing and hypothecation.

Hypothecation is an awful word, but it basically means quarantining money raised from taxes in particular area for spending in that area and not being siphoned off for general government spending.

For a long time, motorist organisations whinged that fuel taxes and registration fees were not all spent on roads but disappeared down an accounting rabbit hole into general expenditure.

When Medicare was designed, it was thought that hypothecation was unnecessary because the Medicare levy would never have a surplus to disappear into general revenue. But that, surely, is an excellent reason for hypothecation, not against it. If we had a separate health account, the inadequacy of the Medicare levy would be apparent to all and raising it could be more easily justified.

Opinion polls are rife with evidence that people want better government services and that they are prepared to pay for it with higher taxes. If the tax is matched with the spending in health, voters would be more likely to accept it.

The second element for change is bulk-billing. Its design from the outset was defective. Bulk-billing GPs get only 85 per cent of the schedule fee for therapeutic or diagnostic procedures, sometimes less. That lower payment is a disincentive to bulk-bill.

Rather than discounting for bulk-billing, GPs should be paid extra, say 115 per cent of the schedule fees.

Patients have to pay the GP’s full charge at the time of consultation and get a rebate later from Medicare (usually straight into their bank account). Many patients do not have enough money on hand to do that and often run up extra credit-card debt.

It would be an extra incentive to bulk-bill if patients only had to pay the gap at the time of consultation and for the GP to get the Medicare rebate directly.

Those changes, coupled with a significant increase of the schedule fees would make bulk-billing almost universal. It would end the appalling rate of people not seeking health care because of the cost and would take non-urgent cases from emergency rooms.But it has to be paid for. Labor created Medicare and champions it. The Coalition has incessantly undermined it while sanctimoniously stating it supports it.

Labor should apply vigorous CPR to Medicare and make it an election issue. The levy should be at least doubled and some cunning changes applied. The levy should be imposed on gross income – that is before negative gearing; the capital-gains tax concession; and other accounting tricks that lower taxable income.

The surcharge should be applied to higher incomes irrespective of private-insurance status. And the private-insurance tax rebate – which costs the Budget $3 billion a year – should end.

There are precedents. Child support payments are based on income before negative gearing is applied. Also, if child care is ruled as non-deductible “private” spending, so should private health insurance.

Further the Lifetime Health Cover Loading should be abolished. It apples to people without private health insurance from the age of 30. It blackmails them into private cover they do not want. Health insurance should be deregulated like other insurance and insurers charge according to risk.

Without massive government subsidies, inefficient private health insurance would collapse and Australia could return to free, universal quality health care – not a safety net but a right.

Just as the Coalition has artfully chiselled away at Medicare for more than half a century, so Labor should strengthen and reinforce it. 

The Government should aim to change any public perception that people can only get the security of prompt, quality, affordable health care with private insurance, when demonstrably they cannot. Rather it should aim for a public understanding that a bolstered Medicare could and should provide that care. 

After all, even the richest privately insured person is treated in the public system if the injury or illness is serious enough. 

Crispin Hull

This article first appeared in The Canberra Times and other Australian media.