Federal Politics

Medicare and other government payments to be privatised

The Turnbull government is preparing to privatise a swath of government payments in a bid to drag the Commonwealth's under-funded and outdated payment delivery systems into the digital age.

Modernising Medicare?

The government confirms it wants to modernise the Medicare payments system amid reports it intends outsourcing the process to private companies.

But the move will expose the Turnbull government to a gathering pre-election scare campaign about wrecking Medicare, shedding Australian jobs, and endangering the privacy of Australians by handing their medical records to private companies.

Several companies are understood to be circling for what could be one of the most lucrative government contracts in years. One of the organisations being discussed is Australia Post - itself on the list of potential asset sales.

John Deeble says the outsourcing suggestion would not alter Medicare but would profit the private sector.
John Deeble says the outsourcing suggestion would not alter Medicare but would profit the private sector. Photo: Jim Rice

That possibility has raised speculation that Australia Post could be deliberately "fattened" for market by gaining the extra commercial value of the Medicare and other payments contacts.

The politically risky move means billions of dollars currently disbursed through Medicare, Veterans Affairs, and the Pharmaceutical Benefits Scheme would be outsourced, with the new system geared for instant online transactions using smart phones and contemporary digital applications.

The controversial plan is well advanced within the government but has received mixed reviews outside, with one of Medicare's original architects saying there is "no need" to outsource its payments.

The government is bracing for a political fight if it goes ahead with the opposition and cross bench senators likely to campaign strongly against the change.

Health Minister Sussan Ley says the government is committed to Medicare.
Health Minister Sussan Ley says the government is committed to Medicare. Photo: Andrew Meares

In an early example of that, independent senator Glenn Lazarus slammed the prospect of Australian public service jobs heading offshore.

"Call it whatever you want, privatisation leads to work and jobs being sent overseas," he said.

Labor vows to fight medicare changes

The government is reportedly considering outsourcing the medicare payments system. Labor says it would fight such a move at the election. Courtesy ABC News24.

"The people of Australia do not want their hard-earned taxes being spent overseas on creating jobs in Asia. They want their money spent right here in Australia."

Health groups warn that patients' health records must be protected, although at least one key organisation, the Consumers Health Forum, expressed qualified support saying: "Provided there were firm guarantees regarding protection of personal patient data, service cost and efficiency, and a clear case for better levels of customer service from processing agencies, CHF would not oppose it."

Health Minister Sussan Ley confirmed on Tuesday that the government was examining Medicare's payment technology.

Labor immediately leapt on the proposal in Parliament, in a sign its plans for an anti-GST campaign could be replaced with another aimed at "saving" Medicare.

Responding to the first question of the opposition, Prime Minister Malcolm Turnbull made no attempt to play down the plans, first reported in Perth's West Australian newspaper.

"The Government is, as always, totally committed to Medicare," he said.

"What we are looking at, as we look at in every area, is improving the delivery of government services ... looking at ways to take the health and aged care payment system into the 21st century. This is about making it simpler and faster for patients to be able to transact with Medicare, to get the services they are entitled to."

John Deeble, who co-authored proposals in 1968 that were used to form the Hawke government's Medicare and, before that, the Whitlam government's Medibank, said he had "no problem" with efforts to make payments more consumer-friendly and faster, but was opposed, on principle, to outsourcing back-office tasks currently performed by public servants.

While he conceded the move might save the federal government money, he said the private sector would ultimately profit from such a move. "It won't necessarily alter Medicare because it's the structure of Medicare - what money you get for what service - that matters, not who does the running of it."

Australia Post, eftpos providers, Telstra and the big banks are reportedly showing interest given they have online payment structures. Fairfax has been told that international companies including US firm Sutherland Global Services (Healthcare Solutions) met with health groups on the prospect of taking over Medicare payment systems after the department of health called for expressions of interest in 2014.

The $50 billion-plus outsourcing would be the first time the private sector had delivered a national service subsidised by the government.

A new taskforce run by bureaucrat John Cahill is believed to have proposed a "proof of concept" trial for next year.

The Australian Healthcare and Hospitals Association's chief executive officer, Alison Verhoven, said the group did not hold strong views on whether Medicare would be best managed in the public or private sector.

"Citizens and providers have a right to expect that whatever service is running this is secure, safe and totally reliable and trustworthy," she said.

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