Labor’s health pitch (and why it
won’t work).
Undeliverable promises about bulk-billing ignore an entire health system in slow collapse. Labor has lost its capacity for transformative change and the Liberals are – well, the Liberals.
The Liberal Party has a decades-long reputation for being
good at economic management. They haven’t deserved that reputation but it endures.
The Labor Party has an 80-year reputation for being good at
health policy. It deserved that reputation once but does no more. That misjudgement
also persists.
Whitlam also introduced free public hospitals, which before
had only been seen in Queensland. Fraser left that one more or less alone.
The era of big reform began in 1944, when the Curtin and
Chifley governments tried to introduce a comprehensive National Health Service,
four years before Britain did so. Ferocious opposition to ‘socialised medicine’
from Australia’s doctors and their allies in the conservative parties prevented
Labor’s plans from working here. Only one component, a truncated version of a
Pharmaceutical Benefits Scheme that Labor had envisaged, survived under the
subsequent Liberal government of Robert Menzies.
For the past four decades, Labor has coasted on the
reputation and determination of Curtin, Chifley and Whitlam. Since 1984, the
only significant – and failed – attempt at reform came from Kevin Rudd. That
episode introduced only a slightly different way of handing out the same money.
It was not significant reform.
Only the appalling performance of the conservatives has
allowed the ALP to remain the people’s choice for health policy. They
successfully blocked a National Health Service; delayed the PBS by five years
and then eviscerated it; bitterly opposed Medibank and then, under Fraser,
privatised it; and then equally bitterly opposed the Hawke government’s
Medicare.
“Medicare has added between $3 billion and $4 billion to the
federal budget. Enormous savings can be achieved by radical changes in this
area which restore the right of choice and incentive for health provision.
Medicare is one of the great failures of the Hawke government.”
For almost all of this time, the coalition’s policies were
deeply unpopular with the majority of voters. Finally Howard, in time for the
1996 election which he won, grudgingly promised to safeguard the scheme he had
so long opposed.
“It’s not a question of whether it’s become better,” he
said. “It is a question of us believing that Medicare is seen by the
overwhelming majority of the Australian community as an important part of the
social security infrastructure.”
Under Howard, the Liberal and National parties continued
their war on Medicare by stealth, professing to defend it but continually
introducing measures to weaken it and to prop up private health insurance.
Then Wooldridge introduced Lifetime Health Cover,
effectively forcing people to take out private cover if they wanted to avoid
massive cost hikes if they didn’t. By propping up insurance companies rather
than public hospitals, the Liberals have consistently made health funding less
efficient and less equitable.
In 2023-24, the insurance companies received
$5.5 billion more in premiums than they paid out in benefits, representing
overheads of 18.7% of revenue. The equivalent figure for Medicare is about
3.5%. If Medicare was providing that health insurance rather than the
companies, there would have been a saving of $4.5 billion – enough to treat
almost 700,000 public hospital patients.
When the Turnbull government proposed outsourcing Medicare’s
back-office payments system, a research fellow at the Per Capita think tank,
Warwick Smith, summed
up the coalition’s long-term tactics.
“They can't dismantle Medicare, as John Howard wanted so
badly to do, because it's too popular,” he wrote.
“Instead they have tried to incrementally erode its universality
and effectiveness through the creation of incentives to take up private health
cover, the tightening of bulk-billing criteria and the proposed introduction of
GP co-payments, to name just a few. This proposal could be a continuation of
that long-standing death by a thousand cuts approach to Medicare reform, or it
could be a genuine attempt to improve service and efficiency. History would
tell us the former is more likely.”
Australia no longer has universal healthcare. The Albanese
government now faces an immense challenge if it wants to make it fit for
purpose once more, but has so far been content to present minor tinkering as
major reform. There is no sign that the Labor Party will undertake the
transformative, difficult and expensive reform of which it once was capable,
but is not any longer.
The health minister, Mark Butler, makes bold claims about
the scope and success of the government’s health measures but a closer look at
these claims reveals the chasm between what is being promised and what needs to
be done.
General
practice: back on track?
The big item is the government’s promise to increase
bulk-billing in general practice from 75%, where it is now, to 90% by 2030. To
do this, $8.5 billion has been promised over the next four years, by increasing
the incentive payments for practices which bulk-bill and by increasing the
Medicare rebates for each service.
Bulk-billing incentive payments are
not new. They began in 2004, under the Howard government, and were
originally limited to regional areas. The idea evolved and, by the time Labor
came into office in May 2022, were being distributed on the basis of relative
remoteness.
In 2023 the Albanese government increased the payment and
applied it to children under 16, pensioners and other Commonwealth concession
card holders, at an estimated cost of $3.5 billion over five years. Indexation
of Medicare rebates was increased to 3.6%, though general inflation at that
time was running at 6%.
The most recent change applies the incentive payment to all
patients but, to benefit, practices must enter into an agreement to bulk-bill
all their patients.
Together, these measures probably replace the amount lost by
the five-year rebate
freeze between 2013 and 2018, with some to spare. They otherwise do not
address the increased costs associated with running a practice – rents, wages,
power, supplies and so on – which have increased significantly faster than
rebate indexation.
For practices which now sign on to bulk-bill 100% of their
patients, the extra government payments will principally replace the money
currently charged to patients. It will do much less to solve the chronic and
increasing financial problems experienced by general practices around the
country.
It’s important to
understand that general practices do not usually employ doctors. Almost all GPs
are free agents, potentially able to move to another practice – and perhaps take
their patients with them – if they’re unhappy. They decide when they work and whether
they bulk-bill their patients. If a practice-wide policy is to apply, the
doctors must agree.
Formally, Medicare
rebates are paid to the patient, who in most cases also has to pay an
out-of-pocket amount to make up the fee being demanded.
All fees, with the
exception of practice incentive payments, go to the doctor, not to the
practice. Normally, the GPs pay 35% of their gross income to the practice.
The new incentive scheme will be far more attractive for
those practices which are already bulk-billing all or most of their patients,
or whose out-of-pocket charges are small. Some will take up the option; many,
perhaps most, will not. Much of the money to be spent under this scheme is
therefore likely to be wasted, paying for patients who are already being bulk
billed.
The new policy is aimed at people aged 16 to 65, where
bulk-billing rates are much lower than for older and younger people. New South
Wales and Victoria are most likely to benefit; Western Australia, Tasmania and
the ACT the least likely.
But will it
work?
We should be able to gain a clue about whether the new
incentive policy will work by looking at the earlier version introduced in
2023. So far, the results are mediocre. Bulk-billing rates for people under 15
and over 65 have always been much higher than for the rest, pushing up the
overall rate. Most older and younger people are covered by concession
arrangements, often treated for less than the cost of providing care.
Therefore, they are cross-subsidised by those in the middle.
The whole ramshackle system is being kept afloat by overcharging non-concessional patients – and that’s almost anyone with a job – so the others can be under-charged.
The 2023 measure has produced an apparent but still-minor
improvement nationally, though the rates remain well below their level when
Labor won the election in 2022.
By looking back to the beginnings of Medicare in 1984, we
can see how the scheme’s relevance has changed. The Australian Institute of
Health and Welfare puts together data that gives a more complete picture of
Medicare’s contribution to GP fees by counting everything: not only rebates but
also incentive payments and other funding streams.
As the following chart shows, the scheme prospered in its
first few years, at least in general practice. By the time the Hawke-Keating
government lost to Howard in 1996, 93% of all GP expenses were covered. That’s
as close to total bulk-billing as we’ve ever likely to get.
Under John Howard’s Liberal government, coverage plummeted
and then partly recovered only to decline again. The lack of policy initiatives
under the Labor governments of Rudd and Gillard are evident in the data.
Under the next Liberal government, cost coverage was
generally maintained as practices absorbed rising costs despite the five-year
rebate freeze. The rate even, briefly, reached the level last seen in 1996
before plunging. Practices could no longer afford to absorb costs and many cut
back on bulk-billing or abandoned it altogether.
The decline began before the 2022 election but accelerated
after Labor took office, spurred perhaps by the new government’s failure to
offer any substantial policy change.
The decline may not be Labor’s fault but the claims made by
the health minister, Mark Butler, are disingenuous and wrong.
Mr Butler, using a highly curated set of numbers, has
claimed the rate was in free-fall under the Liberals and has risen by 1.9%
under his watch.
In fact, as the next chart shows, most of the free-fall
happened after Labor was elected, not before. When the election was held, 87.3%
of GP attendances were bulk-billed; in November 2024 it had dropped to 77.5%.
That’s a fall of 9.8%, not a rise of 1.9%.
It’s a very long way back to the rate Mr Butler inherited in
May 2022.
The situation is far worse in the smaller states. No
practice in Tasmania will bulk-bill new patients and average out-of-pocket
costs there are the nation’s highest, at $54.26 per consultation.
It is not credible that the new measures – now supported by
both major parties – can fundamentally change this situation. The policy is too
small and falls too far short of systemic reform to achieve more than minor
improvement.
Staying away
Of even greater concern is the decline in the number of
people going to the doctor. Until fairly recently, GP attendances had been
rising, not only because the population is ageing but also because there is now
more that medicine can do. The introduction of new drugs such as those for
cholesterol and blood pressure and the availability of more tests and scans are
behind this trend. So too, though, are the massive inadequacies in specialist
care for a range of conditions, including mental health. GPs have to manage too
many patients who ought to have access to specialists but who find that care is
not available, unaffordable, or both.
When Medicare began, the number of GP attendances rose
sharply as more people could afford to go to the doctor. Under John Howard, the
rate fell; but then, between 2013 and 2021, partly driven by a surge in COVID
vaccinations after 2020, rose to the highest-ever rate. Then it plunged.
People under 65 have borne most of the impact of declining
access. Children, adolescents and adults of working age were hit hard.
The Australian Bureau of Statistics estimates that in 2022-23
alone, 1.6 million people who needed to see a GP avoided or delayed doing so
because of cost. And 1.2 million whose doctors had prescribed a medicine couldn’t
afford to fill it.
The cost-of-living crunch which followed the pandemic was
the result of the previous government’s policies but occurred during Labor’s
watch. People who find themselves abandoned by a health system that claims to
be both universal and fair are unlikely to make fine distinctions about which party
was most responsible. They’ll look to the government – the one that’s there now
– for answers.
However important general practice is, it’s a relatively
small part of this country’s total expenditure on health.
In 2022-23, Medicare spent $8.1 billion on non-referred GP
attendances. That’s 32% of the federal government’s total spending on Medicare,
24% of all fees paid to GPs (including out-of-pocket costs), 9% of the
Commonwealth’s total health spending and 3% of the amount the whole country
spends on health services.
Looking at general practice alone will do little for
Australia’s ailing health system overall. Millions of Australians are now shut
out of a health system that still pretends to be universal. It is nothing of
the sort.
Labor cannot continue forever to blame its predecessors, no
matter how culpable they undoubtedly were. It is the government. It owns the
system and, if they continue to fail, they will rightly be blamed by the
electorate and by history.