The Guardian • Issue #1966

The destruction of Medicare by stealth

Without warning, the government announced changes to more than 900 Medicare rebates, mostly in private hospitals, to commence 1st July. Uproar followed the announcement, with comparisons being made to Labor’s 2019 election “Mediscare” campaign. As damaging as some of these changes might be, they are not the source of the real threat to Medicare.

While the full details have yet to be revealed, the changes cover general surgery, orthopaedic surgery, cardiac surgical services, vascular services (e.g. varicose veins), general practice, and primary care.

The present uproar comes mostly from private practitioners and private health insurance (PHI) companies. They are up in arms because they been given only three weeks to negotiate pricing of services (surgery, etc.) and insurance payouts for surgery. They say the process could take months, not weeks, of negotiations.

Medicare pays surgeons, anaesthetists, etc. in private hospitals a rebate based on a schedule of fees. The PHI company contributes an amount and the patient any gap. Prior to any procedure, patients need to know if and by how much they would be out of pocket.

The short notice creates little time to negotiate costings, and considerable uncertainty for patients booked into a private hospital for surgery or other procedures in July and the following months. They have no idea how much they might be out of pocket. It could be thousands of dollars more than they had expected.

The changes do not affect public patients in public hospitals where patients do not pay a fee for surgical procedures that Medicare covers.


The defining features of Medicare are:

  • Universal access to bulk billing – no gap payments
  • Universal access to free public hospitals.

Bulk billing involves the GP, pathologist, or other health professional providing services at no fee for patients. Medicare pays the provider a rebate based on the Medicare Benefits Schedule (MBS) – a list of items and corresponding fees. This rebate is presently set at seventy-five per cent of the scheduled fee. These fees have undergone an extensive review and are now being changed at short notice.


Medicare was and still is extremely popular. However, over the past thirty years, successive governments – Coalition and Labor – have failed to fully index or have even frozen Medicare rebates. As a result, funding for Medicare has fallen by more than $1 billion in real terms, and bulk-billing doctors have seen their rebates shrink compared with rising costs.

The cuts to the rebate resulted in GPs being forced to choose between bulk billing for very short sessions – what is known as churning – or continuing with best practice of longer sessions and charging patients a higher fee, leaving them out of pocket. In the long run, churning only adds to costs as serious conditions go undiagnosed until they require far more expensive treatment.

In 2014, the Coalition government attempted to introduce a $7 co-payment for Medicare services. It was forced to abandon its plans. Instead, by freezing rebates, GPs are forced to do the dirty work for them.

The Australian Medical Association has its own list of recommended fees for its members. For a standard consultation (up to fifteen mins), the fee is $85, leaving the patient $40 out of pocket after receiving their Medicare rebate. For a long consultation, the fee is $140 with a co-payment (gap) of $70.

In the wealthier suburbs and some regional areas, it is difficult to find a GP who still bulk bills. The failure to increase Medicare rebates has opened the door to a corporate take-over of GP practices. Doctors can make a killing (no pun intended) by bulk billing five-minute consultations. Five minutes is completely inadequate to practice good medicine – to get to know a patient, to deal with mental health and other complex issues.


The private hospital system is unsustainable and incapable of standing on its own feet. Successive governments have poured billions of dollars into the system by subsidising the premiums for private health insurance. In its latest budget, this subsidy was more than $7bil. It is falsely claimed that this takes the pressure off bed shortages in public hospitals.

It doesn’t. It robs the public sector of $7bil+ with which it could do more than the private sector. Well-funded public hospitals put care first, not private profits and the interests of shareholders.

A troubling trend has developed with the blurring of public and private. Public hospitals have been taking in private patients for more than ten years and pocketing revenue from private health insurance. In 2017-18, public hospitals received $1.25bil in revenue from private health insurance – an important source of income to underfunded hospitals.

All too often when someone attends the emergency department, they are asked if they have PHI. Legally patients have a right to be treated for free, regardless of whether they have private cover.

Conversely, the public sector pays for public patients in private hospitals, which assists them in filling their beds. That money would be better spent on opening beds in the public sector.

Once privatisation occurs profits, not care, become the driving motive. Health services become businesses, and health care a commodity for sale to those who can afford it.


The public health system is starved of funding. There were only a few crumbs for public health in the last budget.

The public health system is stretched beyond its limits, with hospital beds closed, staff overworked and under stress, and at times lacking the necessary resources. Deaths have been reported, including those of children and babies, because of the underfunding of public hospitals. Ramping [queuing] of ambulances is commonplace, wasting the time of paramedics who face an increase in demand.

Funding and opening of new beds have not kept up with increasing demand. Staff are doing more with less.


Throughout the pandemic, nurses and other frontline workers were praised by state and federal governments as heroes, putting their lives on the line for others. But when it comes to backing that praise up with action, the NSW government treats them with total disrespect.

Nurses have come up against a brick wall when attempting to negotiate with the Berejiklian Coalition government for an increase in hospital staffing levels. They are demanding mandated nurse-to-patient ratios like those already in place in Victoria and QLD.

Nurses in Sydney and across regional NSW walked off the job or closed hospital beds over a two week period earlier this month. They did so in a way that would not endanger patients’ lives.

“This is unprecedented action where members have had a gut full of being ignored and that they’re having to take this level of action in order to stand up for safe patient care,” NSW Nurses and Midwives Association General Secretary Brett Holmes said.

“If the government can’t and won’t recognise the value of nurses after what they have been through in the last nearly 18 months, then when will a government ever recognise properly the work that nurses and midwives do to keep the people of NSW safe when they go into their hospitals and healthcare system?”


On the 10th of June, NSW paramedics took unprecedented industrial action over a twenty-four-hour period. They refused to attend all calls except where lives were at risk. The action was in response to the state government’s refusal to negotiate on wages. The government is offering a paltry, below inflation, 1.5 per cent increase. NSW paramedics are the lowest paid in Australia.

Like the nurses, they were praised as heroes during the height of the pandemic as they risked their own lives transporting COVID-19 patients. Now, they are offered an insultingly low wage rise.

Over recent years their workloads have increased significantly without a corresponding increase in staff and equipment. They are also hampered by the crisis facing underfunded public hospitals, wasting hours ramping to handover patients to hospital staff.

The government’s only response is to tell paramedics to “wait for the budget and wait for the package of things that we are giving to our workers.” By then it will be too late. The decision will have been made and locked in.


When the borders are opened up, or even before then, COVID-19 is very likely to break out in the community. Or it might take a strain that is resistant to existing vaccinations to expose the public hospital crisis. Australia is not prepared for such a situation. Private hospitals are neither interested in nor equipped to cope with COVID-19 patients. Nor is the public hospital system, which is stretched beyond its limits.

Additional funding is urgently required for the public health system, for public hospitals but also for GPs. The more than $7bil wasted on subsidising private hospitals through the private health insurance rebate should be redirected to the public health system.

The public hospital system was used during the pandemic in 2020 and must be strengthened to be able to cope with any further outbreaks or future pandemics.

The pandemic and botched private distribution of vaccines demonstrate the superiority of public health services and the need to nationalise the private sector.

Health care is a basic human right.

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