Bills Digest No. 108, 2016–17
PDF version [583KB]
Paula Pyburne
Law and Bills Digest Section
14 June 2017
Contents
Purpose of the Bills
Background
About Medicare
About the Pharmaceutical Benefits
Scheme
2016 federal election
2017 Budget
About special accounts
Current funding arrangements
Rationale for the Bills
Committee consideration
Selection of Bills Committee
Senate Standing Committee for the
Scrutiny of Bills
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Key issues and provisions
Guarantee Bill
The Medicare Guarantee Fund
Treasury Special Account
Health Special Account
Consequential Amendments Bill
Concluding comments
Date introduced: 1
June 2017
House: House of
Representatives
Portfolio: Treasury
Commencement: The
Medicare Guarantee Act commences the day after Royal Assent. Sections 1–3 of
the Medicare Guarantee (Consequential Amendments) Act commence on Royal
Assent. The commencement of Schedule 1 of the Consequential Amendments Act is
contingent upon the enactment of the Medicare Guarantee Act 2017.
Links: The links to the Medicare
Guarantee Bill 2017, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page.
The links to the Medicare
Guarantee (Consequential Amendments) Bill 2017, its Explanatory Memorandum
and second reading speech can be found on the Bill’s home page.
Both Bills can be accessed through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent,
they become Acts, which can be found at the Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as
at June 2017.
Purpose of
the Bills
This Bills Digest relates to two Bills: the Medicare
Guarantee Bill 2017 (the Guarantee Bill) and the Medicare Guarantee
(Consequential Amendments) Bill 2017 (the Consequential Amendments Bill). The
purpose of the Guarantee Bill is to establish the Medicare Guarantee Fund which
comprises:
- the
Medicare Guarantee Fund (Treasury) Special Account (the Treasury Special Account)
and
- the
Medicare Guarantee Fund (Health) Special Account (the Health Special Account).
The purpose of the Consequential Amendments Bill is to
amend the Health
Insurance Act 1973 and the National Health
Act 1953 to reflect the proposed operation of the Guarantee Bill.
Background
About Medicare
Medicare is Australia’s national health insurance scheme.
It covers:
- free or subsidised treatment by health professionals such as doctors,
specialists, optometrists, and in specific circumstances, dentists, and other
allied health practitioners
- free treatment and accommodation for public Medicare patients in a
public hospital
- 75 per cent of the Medicare Schedule fee for services and procedures if
you are a private patient in a public or private hospital. This does not
include hospital accommodation and items such as theatre fees and medicines.[1]
Medicare commenced on 1 February 1984, following the
passage of the Health
Legislation Amendment Act 1983 and related legislation in September
1983.[2]
Medicare operates by paying a specified benefit (in the
form of a rebate) for a health or medical service for which a claim is
submitted. Only services provided by private practitioners (the majority of
Australian doctors work in private practice) are covered by Medicare. Services
provided in a public hospital only attract a Medicare benefit if the patient
elects to be treated as a private patient.
Services covered by Medicare benefits are listed in
specified tables, published as the Medicare Benefits Schedule (MBS).[3]
Each service listed in the MBS has an item number, a descriptor which outlines
the type and scope of the service and relevant clinical requirements, the
Medicare schedule fee, the applicable Medicare benefit, and any additional
safety net benefits.
About the
Pharmaceutical Benefits Scheme
The Australian Government subsidises the cost of many
medicines for Australians through the Pharmaceutical Benefits Scheme (PBS). The
PBS began as a limited scheme in 1948, with free medicines for pensioners and a
list of 139 ‘life-saving and disease preventing’ medicines free of charge for
others in the community.[4]
It became a comprehensive scheme offering
access to a wide range of medicines in 1960.[5]
The PBS is now regarded as a key component of the National
Medicines Policy which ‘aims to improve positive health outcomes for all Australians
through their access to and wise use of medicines’.[6]
The PBS is established under the National Health Act
1953.[7]
2016 federal
election
At the height of the 2016 federal election campaign, the
Australian Labor Party (Labor) alleged that ‘Mr Turnbull wants to privatise
Medicare payments. Behind closed doors, the government has been working for 18
months to sell off the Medicare payments system to a private provider’ and that
‘is the first step towards the privatising of the whole Medicare system’.[8]
Following the Coalition's narrow win in the federal
election on 2 July 2016, it was reported that Labor’s so called ‘Mediscare’
campaign[9]
‘had worked’.[10]
2017 Budget
It is not surprising then, that in its
2017–18 Budget the Coalition sought to defuse any on-going fears about the
future of Medicare. According to the Treasurer, Scott Morrison:
Tonight, we put to rest any doubts about Medicare and the Pharmaceutical Benefits Scheme ... we will legislate to
guarantee Medicare and the PBS with a Medicare Guarantee Bill. This new law
will set up a Medicare guarantee fund to pay all expenses on the Medicare
Benefit Schedule and the Pharmaceutical Benefits Scheme. Proceeds from the Medicare
levy will be paid into the fund.[11]
And further when introducing the Medicare Guarantee Bill
2017:
The government is guaranteeing Medicare so that all
Australians can be assured Medicare is not only here to stay, but will be
strengthened into the future.[12]
The Guarantee Bill establishes the Medicare
Guarantee Fund comprising of two special accounts.
About special accounts
Under section 81 of the Constitution
all moneys raised or received by the Commonwealth form part of the Consolidated
Revenue Fund (CRF). Furthermore, section 83 of the Constitution provides
that no money may be drawn from the Treasury of the Commonwealth without a
legal appropriation authority.[13]
The CRF in section 81 of the Constitution is synonymous with the
Treasury in section 83.[14]
Under section 80 of the Public Governance,
Performance and Accountability Act 2013 if an Act establishes a special
account and identifies the purposes of the special account, then the CRF is
appropriated for expenditure for those purposes, up to the balance for the time
being of the special account.
A special account which has been established under an
enactment, such as is proposed by the Guarantee Bill, can only be varied,
revoked or abolished with the amendment or repeal of the provision which
establishes the Special Account in the enabling legislation.[15]
While special accounts can record amounts solely from
Commonwealth appropriations, they can also record amounts from other sources as
allowed by the terms of the legislation establishing the special account. These
funds can include indirect taxes or other imposts (for example, an industry
levy), contributions by other governments, or discretionary contributions by
members of the community. Amounts standing to the credit of special accounts
may only be debited strictly in accordance with the Account’s purpose.[16]
Current
funding arrangements
Medicare is primarily financed through taxation, which
includes the imposition of a Medicare levy on taxable income.[17]
Expenditure on the PBS is uncapped, and can therefore increase as new drugs are
added and demand grows.[18]
At present Medicare benefits and PBS benefits are paid in
accordance with certain provisions of the Health Insurance Act and
the National Health Act respectively. Under these statutes payment
obligations in relation to those schemes are appropriated from the CRF in
accordance with sections 81 and 83 of the Constitution as set out above.
Rationale
for the Bills
Speaking at the introduction of the Guarantee Bill, the Treasurer,
Scott Morrison, stated:
The fund demonstrates the Government's commitment to Medicare
by ring-fencing revenue for the sole purpose of MBS and PBS spending.
Ring-fencing the revenue in the Medicare Guarantee Fund will
increase the public visibility of the costs of the MBS and PBS, the quantum of
revenue generated by the Medicare levy and the additional revenue necessary to
meet these costs.
The Fund does not change the demand driven nature of MBS and
PBS funding. To make sure that there is always sufficient credit in the fund to
meet MBS and PBS costs, the credit to the fund will be adjusted at every budget
update. This will ensure that it is in line with forecast future growth in MBS
and PBS expenditure over the forward estimates.[19]
The Guarantee Bill does not guarantee the continuing existence
of Medicare of itself. However, it will make funding of both the MBS and PBS
more visible because all the Medicare benefit payments and PBS payments will be
made through the Health Special Account.
Committee
consideration
Selection
of Bills Committee
At the time of writing this Bills Digest neither of the
Bills had been referred to Committee for inquiry and report.
Senate
Standing Committee for the Scrutiny of Bills
At the time of writing this Bills Digest, the Senate
Standing Committee for the Scrutiny of Bills had not made any comment in
relation to the Bills.
Policy
position of non-government parties/independents
The Australian Greens have labelled the Medicare guarantee
fund as ‘a glorified bank account’.[20]
Shadow Minister for Health and Medicare, Catherine King, has
quoted a leading health expert saying the fund does absolutely nothing to
guarantee the future of Medicare:
The best guarantee for the future of Medicare would have been
if the Turnbull Government dropped their entire Medicare freeze immediately –
which they failed to do.[21]
Position of
major interest groups
The establishment of the Medicare Guarantee Fund was only one
of the measures announced in the 2017–18 budget to impact the Health portfolio.
Other measures include a thaw of the Medicare freeze on rebates, the retention
of bulk-billing incentives and reinvestment of pharmaceutical subsidy savings. As
a result, ‘patients have a better chance of being bulk-billed and still have
access to new drugs’.[22]
It is these measures which have garnered most of the commentary from stakeholders.
However, according to the Australian Healthcare and Hospitals Association
(AHHA):
The Minister has proposed the Medicare Guarantee Fund as a
measure to provide certainty for health funding, but it appears to be an
exercise in compartmentalising health funding which could lead to longer term
jeopardy should the coffers not be full enough.[23]
Financial
implications
According to the Explanatory Memorandum for the Bills they
will have nil financial impact.[24]
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed
the Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bills are compatible.[25]
Parliamentary
Joint Committee on Human Rights
At the time of writing this Bills Digest, the
Parliamentary Joint Committee on Human Rights had not made any comment in
relation to the Bills.
Key issues
and provisions
Guarantee
Bill
The Medicare
Guarantee Fund
Clause 5 of the Guarantee Bill provides that the
Medicare Guarantee Fund consists of two separate special accounts:
- Medicare
Guarantee Fund (Treasury) Special Account (Treasury Special Account) and
- Medicare
Guarantee Fund (Health) Special Account (Health Special Account).
According to the Explanatory Memorandum for the Bills:
The establishment of two special accounts as part of the
Medicare Guarantee Fund rather than a single special account is required to
ensure that the new Medicare Guarantee arrangements do not affect existing
expenditure reporting requirements for MBS and PBS payments undertaken by the
Health portfolio.[26]
Treasury Special
Account
Clause 6 establishes the Treasury Special Account
and designates it as a special account for the purposes of the Public
Governance, Performance and Accountability Act. The Treasury Special
Account is to be administered by the Secretary of the Treasury Department.[27]
The purpose of the Treasury Special Account is to
ensure that amounts are available for transfer to the Health Special Account to
meet Medicare benefit and PBS payment obligations.[28]
Clause 7 sets out in general terms the power of the
Treasurer to determine, by notifiable instrument, that a specified amount is to
be credited to the Treasury Special Account at a specified time.[29]
The determination must always be expressed to be for a particular budget
year.[30]
Clause 8 sets out how an amount is to be credited
into the Treasury Special Account for the budget year commencing on 1 July
2017. This provision recognises that the Treasury Special Account may not be
established by 1 July 2017. The Treasurer is required, as soon as practicable
after the establishment of the Treasury Special Account, to make a
determination expressed as being for the budget year commencing on 1 July 2017.
The amounts specified in the determination must be sufficient to cover the
funding of Medicare benefit payments[31]
and PBS payments[32]
for the period which begins when a specified amount is credited to the Treasury
Special Account and ends at the end of the relevant budget year. Those monies
will be ‘the proceeds from the Medicare levy, less the portion set aside for
the National Disability Insurance Scheme’.[33]
Clause 9 sets out how the Treasurer is to make a
determination for later budget years. The determination is to be made as soon
as practicable after the release of the Commonwealth budget in the relevant
budget year.
Where the balance of the Treasury Special Account and the
Health Special Account is likely to fall short of the amount needed to meet Medicare
benefit payments and PBS payments, clause 10 of the Guarantee Bill
requires the Treasurer to make a further determination (in accordance with the
terms of clause 7) that:
- is
expressed to be for a budget year
- provides
that a specified amount is to be credited to the Treasury Special Account at a
specified time and
- the
amount must be equivalent to the amount of the expected shortfall.
Such a shortfall may come to light, for instance, at the
time that the Government prepares its mid-year budget update.
Health Special
Account
Clause 12 of the Guarantee Bill establishes the Health
Special Account and designates it as a special account for the purposes of the Public
Governance, Performance and Accountability Act. The Health Special Account
is to be administered by the Secretary of the Health Department.[34]
Clause 13 specifies that the purposes of the
Health Special Account are to make Medicare benefit payments and make PBS
payments after the initial credit time for the Health Special
Account.[35]
Where the balance of the Treasury Special Account is
greater than zero, the Treasurer must, in writing, direct that the balance
amount is debited from the Treasury Special Account and credited to the Health
Special Account.[36]
Similarly where the liabilities of the Health Special Account are
over-estimated the Health Minister may direct, by notifiable instrument, that
an amount should be debited from the Health Special Account and returned to the
general CRF.[37]
Clause 18 of the Guarantee Bill provides that, if
the balance of the Health Special Account is insufficient to meet a MBS or PBS
payment, then the CRF is appropriated for the purposes of making the payment.
Consequential
Amendments Bill
Item 1 of the Consequential Amendments Bill repeals
section 125 of the Health Insurance Act which provides that all amounts
payable by the Commonwealth by way of Medicare benefits are appropriated from
the CRF. This is no longer needed as those payments will be made from the Health
Special Account.
Items 2 and 3 of the Consequential Amendments Bill
amend subsection 130(1) of the Health Insurance Act and subsection
135A(1) of the National Health Act respectively to permit information
covered by those provisions to be shared for the purposes of the performance of
duties or the exercise of powers or functions under the provisions of the
Guarantee Bill.
Concluding comments
The Guarantee Bill establishes the Medicare
Guarantee Fund comprising two special accounts. It does not, of itself,
guarantee the continuing existence of Medicare. According to one commentator,
‘it merely provides an additional line in the budget papers,
supplementing information that was already there for MBS and PBS expenditure,
albeit separately’.[38]
[1]. Department
of Human Services (DHS), ‘Medicare services: about
Medicare’, DHS website, 18 May 2017.
[2]. A
Biggs, Medicare:
a quick guide, Research paper series, 2016–17, Parliamentary Library,
Canberra, 12 July 2016, p. 1.
[3]. Department
of Health (DoH), Medicare
benefits schedule book: operating from 01 May 2017, DoH, Canberra, 1
May 2017.
[4]. DoH,
‘About the PBS’, DoH
website, 1 January 2017.
[5]. M
Goddard, ‘How
the Pharmaceutical Benefits Scheme began’, Medical Journal of Australia,
201(1), 7 July 2014.
[6]. DoH,
‘National medicines
policy’, DoH website, 16 November 2014.
[7]. A
Grove, The
pharmaceutical benefits scheme: a quick guide, Research paper series,
2015–16, Parliamentary Library, Canberra, 7 April 2016, p. 1.
[8]. B
Shorten (Leader of the Opposition) and C King (Shadow Minister for Health), Election
2016: Labor’s Medicare guarantee, joint media release, 24 May
2016.
[9]. H
Alexander, ‘Why
Mediscare worked in the west’, The Sun-Herald, 24 July 2016, p. 6; R
Gittins, ‘”Mediscare”
a real worry’, The Age, 6 July 2016, p. 16; B Potter, ‘Concern
over success of “Mediscare”’, The Australian Financial Review, 4
July 2016, p. 9.
[10]. P
Martin, ‘“Mediscare”
worked because fear among voters was real’, The Age, 4 July 2016, p.
8; S Bartholomeusz, ‘The
high price of Labor’s “Mediscare” campaign’, The Australian, 5 July
2016, p. 22.
[11]. S
Morrison (Treasurer), ‘Second
reading speech: Appropriation Bill (No. 1) 2017–18’, House of
Representatives, Debates, (proof), 9 May 2017, p. 65.
[12]. S
Morrison (Treasurer), ‘Second
reading speech: Medicare Guarantee Bill 2017’, House of Representatives, Debates,
(proof), 1 June 2017, p. 7.
[13]. Northern
Suburbs General Cemetery Reserve Trust v Commonwealth (1993) 176 CLR 555, [1993] HCA 12.
[14]. Department
of Finance (DoF), ‘Guide
to appropriations: RMG 100: appropriations: constitutional background’, DoF
website, 25 January 2017.
[15]. DoF,
An
introduction to Special Accounts, Finance circular, 2009/01, DoF,
Canberra, 4 March 2009, para. 16.
[16]. For
a history of the development of Special Accounts, see C Lawson, ‘“Special
Accounts” under the Constitution: amounts appropriated for designated
purposes’, UNSW Law Journal, 29(2), 2006, pp. 114–146.
[17]. Australian
Taxation Office (ATO), ‘Medicare levy’,
ATO website, 31 August 2016.
[18]. Grove,
The
pharmaceutical benefits scheme: a quick guide, op. cit., p. 1.
[19]. Morrison
(Treasurer), ‘Second
reading speech: Medicare Guarantee Bill 2017’, op. cit.
[20]. R
Di Natale (Australian Greens), Australian
Greens 2017 budget, media release, 9 May 2017.
[21]. C
King (Shadow Minister for Health and Medicare), Government's
Medicare "guarantee" not worth the paper it's written on, media
release, 23 May 2017.
[22]. S
Parnell, ‘The
verdict’, The Australian, 10 May 2017, p. 14.
[23]. Australian
Healthcare and Hospitals Association (AHHA), Doctors, industry
groups entrusted with the keys for a healthy Australia, media release,
9 May 2017.
[24]. Explanatory
Memorandum, Medicare Guarantee Bill 2017 [and] Medicare Guarantee
(Consequential Amendments) Bill 2017, p. 3.
[25]. The
Statement of Compatibility with Human Rights can be found at pages 17–18 of the
Explanatory
Memorandum to the Bills.
[26]. Explanatory
Memorandum, Medicare Guarantee Bill 2017 [and] Medicare Guarantee
(Consequential Amendments) Bill 2017, p. 9.
[27]. Medicare
Guarantee Bill, subclause 6(3).
[28]. Medicare
Guarantee Bill, clause 11.
[29]. Section
11 of the Legislation
Act 2003 defines a notifiable instrument. Notifiable instruments are
not subject to Parliamentary scrutiny or sunsetting and do not require an
explanatory statement.
[30]. Clause
4 of the Guarantee Bill defines a budget year as the
financial year to which an annual Commonwealth budget relates.
[31]. Clause
4 of the Guarantee Bill defines a Medicare benefit payment as
a payment by the Commonwealth under Part II of the Health Insurance Act 1973;
or payment by the Commonwealth under an arrangement in force under section 129A
of the Health Insurance Act 1973.
[32]. Clause
4 of the Guarantee Bill defines a PBS payment as a payment by
the Commonwealth for the purposes of Part VII of the National Health Act
1953 but does not include expenditure covered by subsection 137(2) of that
Act.
[33]. Morrison
(Treasurer), ‘Second
reading speech: Medicare Guarantee Bill 2017’, op. cit.
[34]. Medicare
Guarantee Bill, subclause 12(3).
[35]. Clause
4 of the Guarantee Bill defines the initial credit time for
the Health Special Account is the first time when an amount is required to be
credited to the Health Special Account by a direction under subsection 14(1).
[36]. Medicare
Guarantee Bill, clause 14.
[37]. Medicare
Guarantee Bill, clause 15.
[38]. S
Duckett, ‘Don’t
be fooled, the Medicare Guarantee Fund provides no real guarantee’, The
Conversation, 12 May 2017.
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