Tony Abbott characterised the abandonment of the $7 Medicare GP co-payment plan on Tuesday as an example of his government "listening, learning and improving" – which was correct in a sense. The co-payment had been widley criticised as iniquitous and likely to lead to cost-shifting within the health system. Indeed, so unpopular was it that virtually all the minor parties and independents in the Senate opposed its introduction. But now, having cut the Medicare rebate for bulk-billed GP visits instead (and exempted pensioners, children under the age of 16, veterans and concession card-holders from being charged an extra $5 by doctors looking to recoup the rebate cut) the government may just have convinced the Senate's crossbenchers to reconsider their opposition. In fact, the government will be able to implement the rebate reduction by regulation alone, but given the Senate's power to disallow regulatory changes like this, additional support for the new co-payment is essential.
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The savings from the original $7 co-payment ($3.6 billion over four years) had been earmarked for the creation of a medical research future fund. But, thanks to some other changes (freezing Medicare fees paid for all services by GPs, specialists, optometrists, and other health practitioners until July 2018, and introducing a new free structure intended to discourage quickie consultations), the government claims the research fund will still receive the forecast $3.6 billion, albeit at a slightly slower rate. Best of all, according to Mr Abbott, the Coalition has preserved its ambition of introducing more price signals in the system.
Had the government not (apparently) lost sight of the need for adequate safeguards in its quest to put health care spending on a more sustainable footing, it could have saved itself considerable grief – and preserved precious political capital into the bargain. That it failed to do so may perhaps be attributed more to its belief in the ability of deregulated and competitive markets to deliver "efficiencies" than any conscious desire to disadvantage vulnerable Australians. Tony Shepherd's Commission of Audit last May (which provided the inspiration for the GP co-payment) contained many other sensible recommendations on reform health care besides that particualr measure. That the government chose to make it the first cab off its health reform rank, however, suggests that some of its more influential frontbenchers may have been dogged by the idea that GP waiting rooms around the nation are being overrun by malingerers and hypochondriacs, and these could be cleared with the application of a "price signal". In fact, it is Australia's rapidly expanding (and ageing) population that is responsible for doctors' surgeries and hospital emergency departments becoming busier by the year.
The ACT, where GPs who are prepared to bulk-bill remain in a small minority, and where many surgeries stopped taking new patients long ago, is an example of the fallacy of imagining that an increase in GP co-payments will, in and of itself, enable the health system to cope better with rising health services costs. Medicare could certainly profit from reforms to reduce or eliminate over-servicing, fraud and other inefficiencies. However, our aging population and the expectation of Australians that they should have access to the latest developments in medical technology and pharmacology means government spending on health will continue to rise: from around 4 per cent of GDP in 2011-12- to an estimated 7 per cent by 2059-60.
Acknowledgement of that fact, uncomfortable as it might be for budget-conscious governments, would allow for a more mature debate about increasing the Medicare levy, the most sensible way to deal with increasing demand. But the Coalition's ideological antipathy to universal health care and tax increases of any kind seems to have condemned it to doggedly pursuing market-based solutions, even though the evidence that this actually produces better health outcomes is scant.
Having talked recently about the need to clear one or two barnacles "still on the ship", Mr Abbott has certainly dealt with one of the larger encrustations impeding his govenment's progress. The revised co-payment and the rebate freeze has angered the Australian Medical Association, but otherwise it is a politically astute move. Whether it works as an effective "price signal", however, is still open to consideable doubt.
