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Medicare is bleeding to death. Will Labor ever do anything about it?

GP visits are down 37% since the government took office. But all we get is spin.

When your next Medicare card arrives, it will look a little different. There will be an exciting new logo in the top left-hand corner. “40 year anniversary 1984-2024”, it will say.

This is the Albanese government’s way of applauding its record in health: celebrating an achievement 40 years ago of a very different Labor government.

You can’t really blame them. They haven’t got much else to crow about.

At the end of last year, the Albanese government got a fright. After the debacle of a failed referendum, they suddenly saw their own political mortality. The polls weren’t looking good. There was a sense that the government had lost whatever direction it once had. On the ABC’s AM the host, Sabra Lane, asked the Prime Minister four times if he’d “lost his mojo”.

After the Christmas break, they were desperate to be seen as serious, dedicated reformists who knew what they wanted and how to get there. The problem was that most reform needs money, and they didn’t have any. They’d already committed to throwing away hundreds of billions by implementing two of their opponent’s budget-wrecking decisions: nuclear submarines and the stage three tax cuts.

Rejigging the tax cuts didn’t require spending any more. It went down well, and Labor felt it was getting somewhere. But with the health system in a state of accelerating collapse, they had to get a press release out. What to put in it?

Some more money for GPs had been announced in the budget nine months before, but it needed a new angle. This was found in a minor variation in the bulk-billing rate that coincided with the introduction of the new money early in October.

“Bulk billing on the rise” declared the release. “The GP bulk billing rate has risen by 2.1 percentage points in the first two months since the Australian government tripled the bulk billing incentive.

“The landmark budget initiative is a key part of the government’s $6.1 billion Strengthening Medicare reforms and is the largest investment in bulk billing in Medicare’s 40-year history”.

None of this is true, but let’s look first at the bulk billing figures issued by the health minister, Mark Butler:

Journalists around the country bought the spin. The story that the Albanese government had turned Medicare around was pervasive and, presumably, widely believed.

But if those journalists had looked a little more deeply into the figures – the ones Mr Butler didn’t give them – they would have seen a difference picture. And they didn’t have to look far, just back to the average for the previous financial year.

The average rate for the previous year was 80.2%. The 2.1% “increase” that Mr Butler was talking about was in fact a 2.5% decrease compared to the year before:

Data published by the Australian Institute of Health and Welfare gives a broader, and more revealing, view than that coming from the Health Department. The bulk-billing rate doesn’t tell you about the people who aren’t bulk-billed. The AIHW’s figures, on the other hand, show what Medicare’s contribution is as a percentage of doctors’ bills for all patients, not just those who are bulk-billed.

This chart uses the AIHW data to show a state-by-state breakdown of Mr Butler’s selective (and misleading) figures, and the broader picture. Mr Butler’s figures, for the last three months of 2023, are in blue: they show an apparent improvement.

But the figures for the whole year tell a very different story. They’re in red. Over the year, and despite the government’s increased incentive, Medicare rebates fell further behind actual fees, leaving patients with out-of-pocket costs that are higher than ever.

The proportion of GP fees covered by Medicare has never been as low as it is now. The slight uptick at the very end of this graph shows the relative insignificance of the government’s claims about increases in bulk-billing.

The capacity of Medicare to cover patients’ costs reached its zenith under the Hawke-Keating governments. In March 1996, the month Labor lost the election, the figure was 93.3%. It’s now 85.3%.

The spike in 2021 can be attributed to people getting their early COVID-19 vaccinations from GPs. These were bulk-billed.

For people who are not bulk-billed, those costs can be crippling. Surveys by the independent data firm Cleanbill show how heavy that load can be.

The month-to-month figures for actual GP services – broadly, the number of times people go to the doctor – is volatile but the trend since the beginning of Medicare is clear and follows the capacity of the scheme to cover the cost of fees.

Practices which don’t bulk-bill everyone will often bulk-bill pensioners and concession-card holders – and these groups account for a majority of GP visits. So other patients have to cross-subsidise those. The more a practice bulk-bills some patients, the more other patients have to pay. It has become a zero-sum game which is unfair to everyone. And this is precisely the sort of conundrum Medicare was designed to solve.

If you’re not a concessional patient – and that includes almost anyone with a full-time job – you will not only have to pay for yourself but also for those who are being bulk-billed. That’s partly why these out-of-pocket costs are so high.

The collapse on Labor’s watch

The cost-of-living crisis and the failure by successive governments – including this one – to fund Medicare adequately have put healthcare out of reach for an alarmingly high proportion of Australians. And since the Albanese government was elected in May 2022, the number of people going to the doctor has fallen off a cliff. Between the election and the end of 2023, the proportion of people accessing GP services has fallen by 37%.

It's happening all around the country:

Though some states (NSW, Queensland) have lower rates than others, the decline in all jurisdictions is remarkably similar.

The decline has occurred in all age groups but children are particularly affected. For people aged 15 and under, the rate of GP services has fallen by 49%. For those aged 16 to 64, it fell by 35.3% and for people over 65 by 36.8%.

There’s a common myth, subscribed to by politicians and GP organisations, that the decline in general practice is sending large numbers into public hospital emergency departments and contributing to overcrowding. The figures show this is untrue.

If more GP patients were going to EDs, presentations in the lowest triage category – non-urgent – would have risen. In fact, they have fallen sharply. There was a temporary surge during the pandemic, followed by a precipitous fall. In 2022-23, the number of non-urgent presentations was 17.6% lower than the pre-pandemic average. Again, this has happened during Labor’s time in power.

The decline is most evident in the jurisdictions with the greatest pressure on public hospitals: Victoria, Tasmania and the Northern Territory. There are no good data on why non-urgent (and semi-urgent) people are staying away from emergency departments, but staff commonly say it’s because of very long waiting times and because many people want to avoid putting even more pressure on their hospitals.

If people are not going to the GP, and not going to emergency either, there is only one possible conclusion: very large numbers of Australians are not getting the medical care they need from anyone.

It depends on where you live

Medicare’s capacity to cover costs varies enormously around the country. In some communities, the system still seems to work. In others, it does not.

In some, practices still manage to keep their fees low enough for Medicare to cover.

These maps show how access to a functional Medicare differs across local government areas in our capital cities. Practices in lower-income areas usually have lower fees – which makes Medicare more relevant – than those in more prosperous areas. In Sydney, the division is clear: the proportion of fees covered by Medicare is far higher in the western and south-western suburbs than in the inner city. The Waverley council area in the eastern suburbs has a rate of 75.4%; at Fairfield in the western suburbs, it’s 98.1%.

It's a similar story in Melbourne: 74.8% in the Bayside council area and 94.6% in Dandenong.

Because the Brisbane City Council area is so big, some of the variations don’t show up in these figures. Again, though, the division persists.

In Perth, Medicare covers less of the costs of GP services than in any other state capital. Both the lowest score (68.8% in Cottesloe) and the highest (87% at Gosnells) show people in Perth get less out of Medicare than do people in other cities.

Adelaide is not much better. Only two council areas, both in the northern suburbs, have rates above 90%.

Tasmania has the nation’s oldest, poorest and sickest population, so Medicare’s low contribution to costs – and consequently high out-of-pocket charges – hits harder here than in most other places. In many quite poor areas, Medicare’s share is unusually low: Sorell (77.6%), Brighton (78.5%) and Derwent Valley (78%).

Only the Northern Territory bucks the trend.

The comparable figure for the ACT (which doesn't have a council and doesn't show up among local government areas) was 72.3%.

Bulk-billing clinics: rare and endangered

The Cleanbill data reveal how few clinics in Australia still routinely bulk-bill all their patients. The rates vary massively around the country, again throwing doubt on whether Australia still has a universal health system.

The disparities between city and country are substantial, but the differences between the states are much bigger. In Sydney, 48.7% of all general practices still bulk-bill all their patients. In Hobart, 1.9% do.

In regional Victoria, 21.1% bulk-bill; in regional Tasmania, none do.

The chart below shows a major reason why Medicare now covers an increasingly low proportion of patient costs. It’s because of a sharp and fairly sudden decline in the willingness of practices to stick with bulk-billing. In just one year, the percentage of clinics that bulk-billed all patients fell nationally from 34.7% to 23.6%. This seems to have coincided significantly with the election of the Albanese government.

The reasons for this are unclear, but one possible factor could be that practices hoped the new government would move quickly and decisively on rebates and, when that did not happen, the cost pressures that had built up for many years finally proved too great to resist any longer.

The chart shows two sets of state-wide figures, 12 months apart.

Urgent care clinics: a solution?

The government has long spruiked its establishment of urgent care clinics across the country as a solution to these problems. During the 2022 election campaign, Anthony Albanese unveiled the policy as a centrepiece of health reform. “These clinics are a key part of Labor’s plan to strengthen Medicare,” he said.

At every opportunity since, the PM and his ministers have lauded these clinics. During the Dunkley by-election, posted on Facebook: “Our Medicare Urgent Care Clinic in Frankston has helped more than 11,000 people see a doctor for free.”

So far, 58 of these bulk-billing clinics have been established. All have been within existing practices, so there is no net increase in the number of primary care clinics. In the last federal budget, $358.5 million was set aside over five years for the program. That’s $71.7 million a year, or 0.8% of the amount Medicare spent on general practice last financial year.

Every patient’s treatment will be paid for with a claim on Medicare.

These clinics, though welcome in their way, are a minor, cheap policy that is almost entirely irrelevant to the overall capacity of primary care in Australia.

Access to specialists is even worse

General practice has managed to keep going, more or less, until now. But Medicare’s relevance to most specialist services collapsed long ago. In only two areas – diagnostic imaging and pathology – does Medicare still serve its main purpose of providing near-universal coverage. But that’s because these are highly automated industries that have built their business models on massive throughput and declining costs. These two industries tend to skew the overall figures for specialist services in a way that hides the true impact.

The government does not release details of most specialties, but what’s happening with anaesthetics is a good indication of a broader malaise through most areas of surgery. Medicare was intended both to deliver access to healthcare for everyone and to help control fees. If most doctors bulk-billed, the rules of competition would put pressure on the others to modify their charges.

In the specialties, and particularly in surgery, both those aims failed quickly and fundamentally, leaving patients with only two options: pay for most of the bill themselves, or rely on an increasingly underfunded and overstretched public hospital system.

Obstetrics has followed a similar path, though the pain here is concentrated on one social group: women aged between 18 and 40.

Inevitably, and as with general practice, there is an impact on patients’ capacity to afford treatment, even for serious conditions.

The “other Medicare services” category covers a range of services, including for cancer and heart disease. For most of the past 40 years, the numbers of people receiving these services rose steadily, in line with increasing diagnoses, growth in rates of chronic illness and improved treatment options. But that steady increase has now stopped, with treatment levels flatlining at the level of 20 years ago. This is of major concern.

Where’s the money?

When the Keating government left office in 1996 Medicare, at least for general practice, was functioning at its peak. Then, it covered over 93% of the money charged by GPs. That figure is now 85%.

Even this masks the full impact of Medicare’s erosion. With the decline and fall of bulk billing, the system no longer has any real influence over fees. Practices are now accustomed to charging their patients, and patients are accustomed to paying. We have effectively exchanged universal healthcare for an unpredictable and inadequate safety-net.

When the Gillard Labor government froze the Medicare rebate in 2013, it was meant to be for a year but the incoming Liberal government continued that freeze for five years. An analysis by the Australian Medical Association last year found this had taken $3.8 billion out of primary care. And because, when indexation started again it was from a permanently lower base, the loss by 2027-28 is forecast to climb to $8.3 billion.

But the malaise began much sooner than 2013. For decades, indexation of the rebate has failed to keep up with costs or with the usual measures of inflation and wage costs.

Since 1996 the rebate for a standard GP consultation has risen from $24.50 to $41.10, a nominal rise of 69%. But in that time, both consumer price inflation and average wages have gone up much more.

If rebates had been indexed to CPI, the cost to the government would now be a 33% higher than it currently is. And if wage growth was taken as the benchmark, the cost would be double.

The appropriate figure probably lies somewhere between these two extremes. But whichever measure is chosen, restoring the system to a functioning level will need serious money. But it will also require a major reform of a system that was designed for a health system that existed in 1968 and which exists no longer.

So far, the Albanese government has given us a great deal of spin and very little substance. A prime example of this was the misleading and dishonest statement issued by the health minister on the 40th anniversary of Medicare.

We’ve already covered the minister’s shonky use of statistics to disguise a fall in bulk-billing as a rise. But the release also claimed:

  • The fall in bulk billing began “when Peter Dutton froze Medicare rebates as health minister”.

A lie. It was actually the Gillard Labor government in 2013. And despite the freeze continuing, and putting undoubted strain on practices, the GP bulk-billing rate continued to rise. The fall coincided with Labor coming into government, but Mr Butler’s release didn’t say that.