Healthcare on Ice; Medicare Rebate Freeze

For the first story I wrote, I wanted something easy; an obscure magical form of alternative medicine that we could shout at until we felt better about ourselves and go away happy. I wanted a nice, easy topic because writing is hard, and putting your opinions online for all to see invites criticism that can have real-world consequences. People could find me. I could attract Youtube comments. But something has happened recently that no one seems to care about, and it scares me because this really matters. Our healthcare system is great, and people are trying to break it and so far the only people who care haven’t made much of an impact.

If only I were funny or witty, this would be easy.

I chose to write about the Medicare rebate freeze that has been part of the budget since 2013, and was recently extended by the Coalition government until 2018. It’s a finicky piece of legislation that sounds boring but could well change our entire medical system.

There’s a bunch to say, so for a quick synopsis skip to the end, where I summarize literally tens of words:

Doctors and patients may soon be joining this innocent card in its icy block of despair

Medicare is a mammoth beast of a system, with as many responsibilities as the hairs on that mammoth, and as many tiny problems as the fleas slowly feasting on its blood. Talking about the rebate freeze requires a quick explanation of some policy, so brace yourself for words. Medicare is a universal public health insurance system that was introduced in the 70s, rescinded and then reintroduced in the 80s, and since then has barely changed. It’s the bouncy ball of federal politics, and we love it so much that every time someone has tried to change it we have voted them out. It basically gives rebates for medical procedures that we performed in the 70s, because as we all know medical evidence stopped being produced in the Grand Science of ’79. The important thing here is that the rebates are pretty much set; sometimes they are increased or fall, but overall they usually stay basically the same aside from one thing, which is an increase each year*. This increase is indexed to the rate of inflation, and so means that rebates have kept the same value in real terms despite the creep of years (the average growth is about 2.2%).

It’s important to note at this point that the rebates are paid to the patient. Whilst practitioners can bulk-bill (meaning forgoing a charge to the patient and instead claiming the Medicare rebate directly) this is not what the system is designed to do. If you are paying privately for a service, the rebate has a direct impact on how much that service costs you (and changes to the rebate directly impact your likelihood of paying privately, but we’ll come to that later).

GPs are a really good example to use when looking at rebates, because they are the biggest group providing services that you can claim under the MBS (Medicare Benefits Scheme), and a lot of them bulk-bill. The rebate for a bread-and-butter-less-than-20-minute (aren’t hyphens great?) level B consult is $37.05, unchanged since 2013. A quick calculation based on the average 2.2% growth shows that the rebate should have risen to $40.41, which equates to anywhere from $5-$50k yearly depending on how many patients GPs see and what percentage they are billing privately vs. bulk-billing. This is in comparison to costs, which have been rising at more than the rate of inflation; wage growth in particular. From the paragraph above you may also notice that someone seeing the GP a lot and paying privately for the service would also be less well off by a fair bit, which is important when you consider that other professions (like specialists) don’t bulk bill nearly as much.

Here’s where it gets sticky (don’t worry, chocolate is also sticky and we love that).

Pictured; health policy in action

In 2013, the then Labor government decided as a budget saving measure that they would freeze the rebate for eight months. This wasn't considered such a big deal, because there is a very strong trend in healthcare to move from single practitioners with very high overheads to a more corporate style of service where various health professionals come under one roof in an endless blood bath that ends only when the victor tears the beating heart out of his dying enemy**. This measure was quite well-accepted by Labor’s natural enemy, the Liberal National Party (to be distinguished from their unnatural enemy, the Ghostly Greens), so much so that when they avalanched into power on a wave of speeches and flags the next year, they kept the rebate freeze and have been extending it every year since then.

Keep in mind that this means that every year since 2013 the rebate has been falling in value in real terms.

GPs have, by and large, borne the brunt of this rebate freeze on their businesses. Remember those numbers I mentioned before? Wages have been rising steeply, and the real value of a consult has fallen, which means that the profit margins, particularly for those GPs still working by themselves in a private practice, have fallen quite steeply. I have personally talked to a number of GPs who have had to close up shop and move in with big businesses because it is simply too expensive to keep managing their own practice.

Doctors may soon turn to posing for stock photos as an alternate source of income

This brings us back to the policy itself. The LNP has long maintained its position of advocacy for a more American-style healthcare system where patients largely pay privately for their treatment, and their policies (the abortive co-payment they tried to introduce in 2014 especially) reflect this ethos. Their defence of the rebate freeze has been lukewarm at best, with claims that the freeze will not impact bulk-billing rates because competition in the market has increased, and very little other conversation around the policy. This is in direct conflict to the evidence gathered by a number of surveys of GPs with estimates ranging from 30–60% of GPs currently planning on privately billing part or all of their patients. And here I should mention; this rebate freeze is estimated to save $1 Billion over 2 years. That’s a lot of cash to lose for professionals who have already seen their real earnings drop for 4 years in a row.

We also know that the freeze has already had an impact. As I mentioned, most GPs now work in large corporate businesses, whose profitability relies on doing a lot of services and the occasional ritual sacrifice to the Forgotten Ones.

I couldn’t find a stock photo of sacrifice, so imagine this puppy is engaged in the Dark Arts

The biggest of these corporations is called Primary Health Care. They recently announced that, because of the cuts to Medicare, they would start charging at some of their clinics. This is a company that has bulk-billed all of their services for years, and in direct response to the rebate freeze they are changing their business model to cope. The LNP argument that this policy won’t affect bulk billing rates due to competition falls apart when the biggest competitor in the business decides that they need to charge.

Labor has predictably come out swinging, with a recent announcement by opposition leader and semi-professional donkey impersonator Bill Shorten that, if elected, Labor will scrap this budgetary measure and heeeee-hawwwww”***. This has been strongly welcomed by the RACGP (Royal Australian College of General Practitioners) the AMA (Australian Medical Association) and the AIJMU (Acronym I Just Made Up).

The RACGP, with a brilliantly recycled campaign from last year. Or was it the year before…

In the Labor rhetoric a central theme is the idea of a co-payment by stealth; that the Coalition government is trying to reform the Medicare system not through well-announced and debated policy measures but through a thousand tiny flea-bites to a mammoth already overheated under the hot Australian sun. And given the consistent ideological desire from the LNP to move to a more privately-billing system, it looks like they are right. It’s hard to sell ‘cuts to Medicare’ in your innovation speeches, so the LNP is taking the path less travelled instead.

When the box is your health, sometimes it’s good to stay in there

Firstly, stop right there; my use of subtitles is stunning in its perfection. Secondly, you’re right to be upset. GPs are cheap. Hospitals are not. Bulk billing rates are an important factor in getting people to go to their GP rather than present to the ED. There’s a strong argument that the Medicare system needs reform, but this is akin to knocking down the tower because you don’t like the windows. And on an individual level, regardless of whether you are going to lose your bulk-billing GP or are simply getting less money back on your consult, this policy will cost you money. It might even cost your health.

If you want to do something about any of this, there are plenty of options. Write to Malcolm Turnbull. Write to Bill Shorten. Sign the petition against the cuts and make some noise, because policy only changes when you take notice.

And here we are at the last paragraph. This is for you, lazy people. The summary of a 1000-word blog that I have slaved over, reduced down to a few paltry phrases. GPs (and other health professionals) are losing money each year because of a temporary measure brought into place by Labor in 2013 and since extended by the Coalition government. They have managed so far, but it is not a matter of ifs; the only question is when GPs who bulk bill will start to charge(some already are), and it’s looking like they are at the breaking point. The AMA has said that this will mean you pay $20 more on average to see a doctor. Labor has promised to rescind this measure if they come into power, but otherwise there’s a good chance that either your healthcare bill will go up or your GP will go out of business. If you want to know why, take 10 minutes out of your time and read the rest.

Follow me here or on twitter @Gidmk for more of the same.

*An exception to this was in the mid-2000s when bulk-billing incentives were introduced and Medicare rates were increased.

**DISCLAIMER; this description may have been enhanced whilst the author was watching cool videos on Youtube about the Aztecs and is potentially a mild distortion of the truth.

*** This may or may not be based on a real quote.

Epidemiologist. Writer. Podcaster. Twitter FB Email