We could double the Medicare rebate tomorrow and it would be cost-neutral

Published by Australian Doctor

We could double the Medicare rebate for GP item numbers tomorrow and it would be cost-neutral.

How? Look no further than the private health insurance industry, which is doing very well in Australia.

So much so, it makes net surpluses year after year with healthy profits of more than $1.5 billion, which is predicted to grow every year by about 6% to 2020, according to a 2014 report by the ACCC.

Not bad, one would say, especially when you take into account the industry’s moves to curb the fees they are asked to pay medical specialists in tertiary settings.

And the fact that most are quite happy to pay any fee a chiropractor, naturopath, homeopath (or anybody who did not go to medical school) asks for.

These factors contribute strongly to what have become known as junk policies, which patients still willingly pay for.

All this is no more apparent than at the end of the financial year, when private health insurers run TV advertisements urging viewers to “invest in their health” and “save on taxes” by obtaining private health cover.

Many take up the call, to the tune of almost $20 billion in premium revenues last year. And don’t forget those premiums will rise again next year by another 6%.

I don’t mind that, but what I do mind is that the Federal Government also subsidises this already profitable business.

Look at the 2016 Budget papers: the taxpayer-funded private health insurance subsidy was $6.2 billion in 2015/16. It will be $6.4 billion in 2016/17, $6.7 billion in 2017/18 and will hit $7.1 billion in 2018/19.

That represents an annual indexation of 4.4%, 3.8% and 4.7% respectively. Yes, you read that correctly: the private health insurance subsidy is generously indexed above and beyond the consumer price index rate. And all the while, Medicare rebates remain frozen.

That may not matter much to the chiropractor, naturopath, homeopath or the medical specialists in a tertiary setting, but it does matter to GPs and their patients, because when Medicare rebates don’t cover the real cost of a GP consult the patient ends up being out-of-pocket.

This means patients will have to be asked to contribute financially to access high-quality GP care, which disadvantages patients who are financially vulnerable.

So, here’s a solution that’s fair and equitable: Let’s stop the taxpayer-funded and indexed subsidy to private health insurers, and transfer those savings to the most effective and efficient part of the Australian healthcare system: general practice.

This would double the Medicare rebate of all GP item numbers without costing the taxpayer a penny.

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