Federal Politics

Private sector to deliver Medicare benefits under radical government proposal

Medicare payments and other health benefits could be delivered by the private sector under a major shake-up being considered by the Turnbull government.

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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.

Health Minister Sussan Ley has confirmed the government is examining possible changes, after reports a plan to outsource the government payments is well-advanced and could be a key feature of the May budget.

Ms Ley says that between Medicare, aged care and the Pharmaceutical Benefits Scheme, the government processes over $42 billion worth of payment transactions every year but departments haven't kept up with new technologies.

Medicare and other benefits could be delivered by the private sector under a radical proposal being considered by the ...
Medicare and other benefits could be delivered by the private sector under a radical proposal being considered by the government. Photo: Marina Neil

"This is why the Department of Health is investigating ways to digitise its transaction technology for payments to a more consumer-friendly and faster format," she said.

"This is part of our commitment to ensuring the government embraces innovation and is agile and responsive to changes in the digital economy."

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The government remains committed to Medicare, Ms Ley said.

"At this stage no decisions have been made, and the work continues."

Health Minister Sussan Ley has confirmed the government is examining possible changes.
Health Minister Sussan Ley has confirmed the government is examining possible changes. Photo: Alex Ellinghausen

The $50 billion-plus outsourcing would be the first time the private sector had delivered a national service subsidised by the government, replacing back-office operations currently done by bureaucrats.

A new taskforce run by bureaucrat John Cahill is believed to have proposed a "proof of concept" trial for next year. Australia Post, eftpos providers, Telstra and the big banks are reportedly showing interest given they have online payment structures.

Opposition Leader Bill Shorten has seized on development: "My message to Malcolm Turnbull and his Liberals is 'hands off ...
Opposition Leader Bill Shorten has seized on development: "My message to Malcolm Turnbull and his Liberals is 'hands off Medicare'." Photo: James Boddington

Opposition Leader Bill Shorten has seized on the development, calling the government "anti-Medicare".

"The Liberals are always running around attacking Medicare. They did it in the 2014 budget, they did it in the 2015 budget," Mr Shorten told reporters.

This is part of our commitment to ensuring the government embraces innovation and is agile and responsive to changes in the digital economy.

Heath Minister Sussan Ley

"And It looks like Malcolm Turnbull is no different to Tony Abbott. They just want to flog off Medicare and privatise services.

​"My message to Malcolm Turnbull and his Liberals is 'hands off Medicare'. The Australian people love their Medicare and you have no right to trash it."

The Department of Health earlier confirmed the existence of the "Digital Payments Services Taskforce" and says it is exploring "innovation in the current payment systems to improve the consumer experience".

"The government has made no decisions about this and is simply seeking additional capability to the department to consider options and progress market testing work that was publicly undertaken in late 2014," a spokeswoman said in a statement.

The spokeswoman said the taskforce had asked an official panel of consulting firms to provide "specialist commercial, technical and other resources not readily available within the department and to operate for a concentrated period".

The Australian Medical Association has argued against the privatisation of Medicare payments and the Community and Public Sector Union says any such move could lead to thousands of public servant job losses.

But policy consultant Terry Barnes, a former health advisor to Tony Abbott who is considered the architect of the ill-fated Medicare co-payment plan, says as long as a private provider can protect personal privacy the plan is sound. 

"For what it's worth, this isn't about privatising Medicare and the PBS, it's about making complex and bureaucratic payments systems more efficient and secure," he said.

"Medicare Australia is an overloaded, lumbering elephant, when what's needed is a lithe data-handling panther."

However he questioned whether the government would have the "political courage" to commit to such a controversial policy in an election year.

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