Budget Review 2013–14 Index

Amanda Biggs

This budget includes a number of announcements around Medicare, Australia's national health insurance scheme.  

Indexation of fees for items listed in the Medicare Benefits Schedule (MBS) will shift from November to July, with the next indexation date being delayed until July 2014. This is expected to generate some $664.4 million in savings over four years.[1] Notably, some of these savings will be achieved through the Veterans Affairs portfolio, as the fees for Veterans medical services are linked to those on the MBS.

Historically, fees for MBS services have been indexed in November each year. Indexation of MBS fees were delayed once before. In the 1996–97 Budget, the newly elected Howard Government announced it would withhold the annual increase in Medicare fees due in November 1996.[2] This effectively froze fees at 1995 levels for an additional 12 months.

While doctors set their own fees, rates of bulk billing, where the doctor accepts the Medicare rebate as full payment for the service, have been high. Around 82.4 per cent of GP services were bulk billed in the March quarter 2013, the highest level ever achieved.[3] But if a doctor doesn’t bulk bill, patients can face significant out of pocket costs. The average patient contribution to see a doctor is $52.06; for GP services the average cost is $30.34, but for specialist services the average cost can be as high as $227.68, for obstetrics.[4]

The general threshold for the Extended Medicare Safety Net (EMSN) will rise from $1221.90 to $2,000 from 2015, generating savings of $105.6 million over four years. The lower concessional threshold will remain unchanged.[5] The EMSN is an additional rebate for patients who incur high out of pocket costs for out-of-hospital services. Once an annual expenditure threshold is reached, Medicare pays 80 per cent of any subsequent costs for the rest of the year.[6]

Reaction from doctors and consumer groups to these two measures has been critical. The Consumers Health Forum (CHF) warns that bulk billing rates may fall as a result of the indexation delay.[7] However, during the last freeze GP bulk billing rates fell only marginally.[8] The Royal Australian College of General Practitioners warns that as GP fees fall further behind inflation, doctors will be forced to either absorb the additional costs or charge patients a gap fee to help meet their costs.[9] The Australian Medical Association (AMA) warns that higher costs could cause people to delay seeing their doctor.[10] While the Australian Healthcare and Hospitals Association (AHHA) warns that Australians, who already face high personal health costs by international standards, will face even higher costs as a result.[11]

Other savings will come from removing double billing by GPs where they are claiming both Chronic Disease Management items and a standard consultation, resulting in a saving of $119.6 million over four years. This measure will also apply to services provided through Veterans Affairs. A saving of $10.7 million over five years will be realised by removing the Medicare rebate for certain out of hospital services that should be provided in a hospital setting. New listings on the MBS will provide $1.5 million in savings over five years, as these will provide a safer, better alternative to some surgical techniques.

Funding of $19.6 million over two years will be provided for the Medical Services Advisory Committee (MSAC) to review the safety, quality and cost-effectiveness of existing MBS-funded services, and examine the evidence for new procedures and technologies. In other new spending, $10.0 million will be provided over two years to fund a national communications campaign to inform Australians about Medicare and health related services.

In line with previous budgets, the Medicare levy low income thresholds for families will be raised. The threshold exempts low income earners from paying the Medicare levy. It will be lifted to $33,693 with $3,094 for each dependent child for the 2012-13 income year, at a cost to revenue of $38.0 million over the forward estimates. This rise takes into account movements in the Consumer Price Index.

The proposed increase in the Medicare Levy is dealt with elsewhere in this Budget Review.

[1].       Australian Government, Budget measures: budget paper no. 2: 2013–14, p. 176, accessed 15 May 2013. Unless otherwise indicated, the budget figures cited in this document are taken from this source.

[2].       Australian Government, 1996-97 Budget statement 3, 20 August 1996, p. 3-16, accessed 15 May 2013.

[3].       T Plibersek (Minister for Health), Bulk billing rates for GP services reach new record high, media release, 13 May 2013, accessed 15 May 2013.

[4].       Department of Health and Ageing, Quarterly Medicare Statistics, March Quarter 2013, Table 1.1, accessed 15 May 2013.

[5].       It will continue to be indexed annually.

[6].       However, there is an upper limit on the amount of benefit that can be paid under the EMSN for a small number of Medicare services. See Department of Health and Ageing, ‘Extended Medicare Safety Net – 1 January 2013’, accessed 15 May 2013.

[7].       Consumers Health Forum, Budget for medicines and cancer but no hip pocket relief, media release, 14 May 2013, accessed 15 May 2013.

[8].       From 79.7% to 78.9%. Department of Health and Ageing, Medicare Statistics, June quarter 2012 Table C3, accessed 15 May 2013.

[9].       Royal Australian College of General Practitioners, Delayed freeze on MBS indexation slashes $664.4 million away from primary healthcare services, media release, 14 May 2013, accessed 15 May 2013.

[10].      Australian Medical Association (AMA), Government targets sick people to reduce budget deficit, media release, 14 May 2013.

[11].      Australian Healthcare and Hospitals Association (AHHA), Health Budget delivers some gains but fails to address key health issues, media release, 15 May 2013, accessed 15 May 2013.

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