Bills Digest 47 1996-97 Health Insurance Amendment Bill (No. 2) 1996

Numerical Index | Alphabetical Index

This Digest is prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest was available from 23 October 1996.


Passage History

Health Insurance Amendment Bill (No. 2) 1996

Date Introduced: 17 October 1996
House: House of Representatives
Portfolio: Health and Family Services
Commencement: Unless otherwise indicated in the Main Provisions section of the Digest, 1 November 1996.


The changes in the Bill relate to:

  • the requirement for medical graduates to complete post-graduate education in order to gain access to Medicare benefits;
  • to allow regulations to be made to reduce the Medicare benefit payable where multiple services are rendered; and
  • to increase the maximum amount that a patient may be required to contribute towards certain medical procedures.


The Bill results from the 1996 Budget decision to restrict access to the Medicare system in future to those doctors who have post-graduate qualifications. While often referred to as a decision to restrict the number of Medicare provider numbers available, which must be held for a doctor to access Medicare benefits, the scheme also focuses on the need for further education, rather than a system of, for example, a ballot of available provider numbers. The move is designed to reduce the growth in Medicare payments through a reduction in the supply of general practitioners and is estimated in Budget Paper No. 1 1996-97 to save $25.9 million in 1996-97, $106.1 million in 1997-98, $181.8 million in 1998-99 and $256.2 million in 1999-2000.

The issue is strongly linked to the supply of doctors in Australia. It has been reported that the Australian Institute of Health estimates that there is an oversupply of 4 500 general practitioners in metropolitan areas and a shortage of 500 general practitioners in rural areas.(1) The differences between the supply of GP s in metropolitan areas and rural areas are indicated in the following figures taken from the 1991 Census:

NSW: there were 183.2 GPs per 100 000 people in Sydney, while the lowest number recorded was 67.9 per 100 000 people in the Murrumbidgee;

Victoria: Melbourne had 162.1 GP s per 100 000 people, while the lowest rate in the State was 70.7 per 100 000 in the Mallee;

Queensland: There were 176.8 GP s per 100 000 people in Brisbane, while the Central West district had 67.5 per 100 000;

Western Australia: Perth had 159.2 GP s per 100 000 people while the lowest rate was 58.7 per 100 000 in the Midlands; and

South Australia: Adelaide had 194.6 per 100 000, while the lowest rate was 62.3 per 100 000 in Murray Lands.(2)

(The areas referred to are Statistical Divisions)

While the above examples give the best and worst cases in various States (the metropolitan areas had the highest ratio in all States and Territories), the same pattern in reflected in all areas away from the capital cities, so that the lower number of GPs per person in rural areas when compared to metropolitan areas is true for all of Australia.

There have been previous recent attempts to reduce the supply of GPs in Australia. Most noticeable was the attempt by the former government to restrict the number of people entering medicine courses. That attempt involved a planed reduction of approximately 200 student per year, but failed when the Australian Vice-Chancellors Committee could only identify approximately 20 places that could be removed in the long term.

Other relevant statistics for the medical profession are:

  • in December 1994, there were an estimated 45 591 practitioners in Australia, with an additional 423 on extended leave and 145 looking for work in medicine;
  • of these, 94.3% were clinicians, with 45.1% primary care practitioners, 12.1% hospital non-specialists, 36.1% were specialists and 6.7% were specialists in training;
  • in December 1994, 5.2% of clinicians and 9.4% of primary care providers practiced in minor rural and remote areas which had 16.2% of the population;
  • in 1994, 235 overseas trained doctors qualified for practice in Australia, which increased to 317 in 1995;
  • in 1994, 1 235 students completed undergraduate medical courses; and
  • the number of Medicare medical practitioner providers increased by 3% between 1993-94 and 1994-95 compared with a population increase of 1.2%. The increase in GPs was 2.6%.(3)

(Under the definitions used in the survey, a person may be both a clinician and a primary care provider. A clinician is defined to be a person engaged in the diagnosis and/or treatment of patients. A primary care provider is defined to include those practitioners registered by a number of bodies and can be equated with GPs.)

Of the approximate 1 200 medicine graduates a year, plus the overseas trained doctors who qualify each year, it is estimated that approximately 600 go on to specialist education, 400 undertake GP training, others go on to hospital and clinic positions or non-practicing areas and the remainder mostly directly entering general practice. It is the last group that will be effected by the measures contained in this Bill. While accurate numbers of the people effected is very difficult to establish, it is reported that the measure would effect between 300 and 700 graduate doctors (see below).

The aspect of the measures that restricts the supply of GPs is a limitation on the number of training places available to those graduating in medicine. The figures on the exact number of post-graduate students who will be able to access such education is, as with other matters in this area, difficult to precisely predict. It would appear that the number of specialist trainees (approximately 600) and those entering post-graduate GP education (approximately 400) will remain the same. In addition to this number must be added training positions available in the Defence Forces and other government agencies. It has been reported that the Minister estimated the number of training positions at approximately 1 280 training positions available per year.(4) In Question Time on 15 October 1996, the Minister responded that there would be approximately 1 220 training places available per year.

While the measures contained in the Bill and the aims of both reducing the supply of GPs and boosting education has the support of the major medical organisations, including the Royal Australian College of General Practitioners (RACGP) and the AMA, concern has been expressed about those graduates who will not be able to find available post-graduate training positions. In a letter to the Media and Federal Parliamentarians urging the passage of the Bill, the RACGP stated:

Whilst the Minister is seeking to reduce the number of medical practitioners accessing Medicare benefits, it is the profession's view that those medical graduates who have not first fulfilled vocational training requirements should not be entitled to provider numbers as they do not have the required skills to be practicing independently. </ ul>

Again there are a number of estimates of the number of people who will be affected. The AMA is reported to estimate this to be approximately 700 people per year. The RACGPs reported estimate is lower, at between 300 and 400 graduates per year.(5)

The major concern expressed is that such people will have undertaken a long and expensive course of education with the expectation that at the end of the course they will be able to chose whether to undertake further education or enter the workforce as a GP. In this regard the measures may be seen to be retrospective as they change the situation between when the person entered medical education and when they graduate. However, it may also be argued that very few professions, such as the military and police, guarantee a job or a certain income at the end of education and that a changing labour market is common in most industries and industry flexibility has become a major factor in the Australian economy.

Two modifications to the governments policy relating to the attraction of doctors to rural areas were announced by the Minister during Question Time on 15 October 1996:

  • where a doctor cannot access Medicare benefits but acts as a locum to relieve a doctor in a rural area 'we will issue a temporary provider number, provided that they are going in to relieve rural practice'; and
  • following discussions with the RACGP, it was determined that if a young doctor goes to work in a country hospital they 'will have guaranteed access to a training program after a period of time'.

At that time the Minister also announced that he hoped to make an announcement regarding the position of overseas trained doctors, most of whom enter Australia as spouse nominees.(6)

Main Provisions

Access to Medicare Benefits

Schedule 1 of the Bill will amend the Health Insurance Act 1973 (the Principal Act) in relation to medical practitioners.

Item 1 will insert a definition of 'general practitioner', which will be a person:

  • who is recognised by the RACGP as a Fellow and the RACGP has given a notice that the person is eligible under the regulations for a determination that they are a GP. In such a situation, the Health Insurance Commission (HIC) must recognise the determination that the person is a GP (proposed section 3EA);
  • in respect of whom the RACGP, or another body specified in the regulations, has given notice to the HIC that the person is eligible for registration in accordance with the regulations (proposed amendments to subsection 3F which currently provides that the RACGP may certify that a person is a GP even if they do not comply with the regulations); or
  • is a medical practitioner of a kind specified in the regulations.

If a person has been recognised as a GP under proposed section 3EA and the GP requests the HIC to revoke the recognition or the RACGP gives a notice that the person is either not a Fellow or the regulation require the recognition to be revoked, the HIC is to revoke the recognition after giving the person notice that the recognition is to be revoked (proposed section 3EB).

Item 10 will insert a new section 3GA dealing with the Register of Approved Placements. The HIC is to maintain such a register and a medical practitioner may apply for registration, which is to be granted if:

  • a body specified in the regulations gives the HIC a notice that the applicant is enrolled in or undertaking a course or program that is of a kind specified in the regulations and the period during which they will be undertaking the course or program; or
  • a notice that the person is eligible for registration under the regulations.

A person is to be removed from the register if the RACGP gives a notice that they no longer comply with the requirements of proposed section 3GA (proposed section 3GB).

The major provision of the Bill is proposed section 19AA which provides that Medicare benefits will not be payable in respect of services rendered by certain medical practitioners. Benefits will not be payable in respect of:

  • a service rendered by a person who becomes a medical practitioner on or after 1 November 1996 where the person is not a specialist, a consultant physician, a general practitioner, a person registered as an approved placement under proposed section 3GA, or a person who entered under a temporary visa to practice medicine and in respect of whom the Minister has made a declaration that they are a medical practitioner; and
  • a service rendered on behalf of a medical practitioner unless the practitioner satisfies the above criteria.

In respect of a person who has an approved placement under proposed section 3GA, benefits will only be payable in respect of the time and location of the approved placement or in accordance with the regulations.

If a person has not commenced working as a medical practitioner, has not completed their training as an intern or is not an Australian citizen or permanent resident on 1 November 1996, they will be deemed to have become a medical practitioner on 1 November 1996 and so be subject to the new rules.

A medical practitioner, or someone acting on their behalf who is not eligible to receive benefits because of proposed section 19AA will be guilty of an offence if they render a service without first explaining to the patient that benefits are not payable in respect of the service (proposed section 19CC).

Level of Medicare Benefits

Schedule 2 of the Bill will introduce fees for multiple services.

Proposed section 4AAA, which will be inserted into the Principal Act by Item 1 of Schedule 2 of the Bill, provides that where a medical service, other than a diagnostic imaging or pathology service, and another service, which may be a diagnostic imaging or pathology service, are provided to the same patient, the regulations may provide for a reduction of the fee in relation to the first service provided.

Similarly, proposed section 4AB deals with the situation where a diagnostic imaging service is performed and another service is rendered on the patient and provides that the regulations may provide for a reduction in the diagnostic imaging fee.

Section 11 of the Principal Act provides that increased fees are payable in respect of certain complex procedures. The section will be repealed by Item 5 of Schedule 2 of the Bill. However, Item 9 contains transitional provisions that provide that claims made before commencement (ie. a date fixed by Proclamation) and appeals initiated before commencement will be determined according to the law as it currently stands.

Increase in the Greatest Permissible Gap

Section 10 of the Principal Act provides that where the Schedule fee for a service exceeds the benefit payable by more than the greatest permissible gap, the amount of benefit payable is the Scheduled fee less the maximum permissible gap, so that the maximum the patient will contribute towards the cost of the service is the maximum permissable gap. The maximum permissible gap is currently approximately $29.30 and is due to increase through indexation to $30.20 from 1 November 1996.

Item 3 of Schedule 2 will increase the maximum permissible gap to $50 and this amount indexed for later years. The proposed increase was not mentioned in the Coalition's Health Policy document, A Healthy Future.


  1. The Australian, 22 August 1996.
  2. Medical Workforce Data Review Committee, Annual Report 1994, pp. 20 & 21.
  3. Australian Institute of Health and Welfare, Medical Labour Force 1994, p. 3.
  4. The Courier mail, 11 October 1996.
  5. The Age, 7 October 1996, Australian Doctor, 30 August 1996.
  6. House of Representatives, Hansard, 15 October 1996, p. 5252.

Contact Officer and Copyright Details

Chris Field Ph. 06 277 2439
22 October 1996
Bills Digest Service
Parliamentary Research Service

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

PRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1323-9031
© Commonwealth of Australia 1996

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Published by the Department of the Parliamentary Library, 1996.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 23 October 1996

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