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Medicare is designed to make health services affordable to all Australians

By Stephen Leeder - posted Thursday, 27 March 2003

Prime Minister John Howard has suggested in public debate that Medicare bulk-billing should be limited to those in special need. As President George W. Bush attacks Iraq, he is attacking the US Medicare; we appear to be following his example.

Howard's attack extends statements made by the federal government over the past six years that Medicare is not for the rich, that it is a safety net, that those with good incomes should fly business class and go private. A misleading advertising campaign suggested that unless our young people "run for cover" in the form of private health insurance, bad things will happen.

In fact, Medicare covers everyone. It may be the desire of government that Medicare is reinvented as a safety net for the poor. This would be a serious mistake in economic management and a serious lapse in social concern. It is at liberty to put that concern to the public and test it, to see whether this is what the electorate wants from Medicare. But it is wrong to suggest that this was the way Medicare was supposed to work, or that it is the way it works now.


Bulk-billed Medicare has served many people well as a way to pay for medical services from their general practitioners and medical specialists. Bulk-billed patients do not pay when they use a medical service. Bulk-billing was introduced almost 20 years ago to allow doctors to provide these services to a patient- any patient, rich or poor - without raising a bill and without asking questions about their financial status.

Bulk-billed fees originally were set at around 85 per cent of the approved fee, so that charging patients that way did not seriously disadvantage doctors who billed in bulk. Bulk-billing meant that individual accounts for each patient did not have to be processed. Doctors who bulk-billed in highly competitive settings, for example in suburbs where there were lots of doctors, had a competitive advantage over those who did not. This helped keep medical fees down.

At the back of Medicare, whether it covers public hospitals or general practice, is the principal of universality. This means that Medicare funds care for all who choose to use it, according to their need.

The flip side of universal provision of care is universal contribution of fees. Everyone contributes to Medicare through their taxes and the Medicare levy. The rich pay more taxes but have the same entitlement to use Medicare as those who are less affluent. There is no reason for rich people not to be bulk-billed or not to use a public hospital bed if they choose.

The principle of universality on which Medicare is built takes seriously the reality that sickness and accidents happen chaotically, that suffering is largely undeserved, and that a humane and caring society wishes all its citizens to have the same access to care according to need regardless of financial status.

Bulk-billing proved to be popular, and even now the majority of medical services provided through Medicare remain bulk-billed. But the rates are decreasing. In rural areas there is a scarcity of doctors and competition is less, so that rural practitioners can charge higher fees than their city cousins and not lose business. As well, all general practitioners are feeling the pinch, as Medicare rebates have not kept pace with rising costs. Some general practitioners cannot afford to charge only the bulk-billed fee. New treatments also add to costs.


While it is fashionable to claim that the ageing of the population will break the bank, the fear of an epidemic of Medicare-consuming octogenarians is misplaced. The 'grey peril' myth serves a useful political purpose. It enables politicians who want, for other reasons, to demolish the public healthcare system and replace it with a model of charity and private practice, to scare us. We should ask for the facts.

As we follow the US like loyal lemmings, so too we now have ill-informed attacks mounted on our Medicare. It is fully sustainable by our economy for the foreseeable future. Money for Medicare could be drawn for the $3Billion returned to private health insurance holders. There is no financial crisis. Medicare is one of the affluent world's most economically sound systems of paying for health care. We should take pride in it, note its history, and return to funding it properly, including bulk billing.

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About the Author

Stephen Leeder is professor of public health and community medicine at the University of Sydney, and co-director of the Menzies Centre for Health Policy.

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