How did Medicare get so ? Australia is known for its universal healthcare system. Speak to an American and free doctors and gun free streets will come up in conversation. But for anyone who actually lives in this country, the realities of accessing free, affordable or even good healthcare these last few years have not matched the PR campaign we have overseas. Months long waits, paying out of pocket, jumping through hoops to see specialists, overworked hospital and emergency workers. It’s hard to think this is actually how it was meant to work. It’s gotten so bad that before the last federal election, that labor committed $750 million to establishing a strengthening Medicare task force to end the primary care crisis. Somehow the whole thing has ended up feeling, well, broken. So what happened?
Medicare was introduced by Labor PM Gough Whitlam in the 70s. Back then, it was called Medibank, but it was controversial even within the healthcare industry. Through years of negotiating, the legislation had been blocked in the Senate so many times that it triggered a double election, which Whitlam narrowly won. Medibank finally passed in August 1974. But all this backlash meant that to even get it off the ground, its original form was pretty meager and didn’t include things like dental, for example. Whitlam compromised a lot until he was voted out in 1975 when Liberal Malcolm Fraser came to power. His government, which viewed healthcare as more of the responsibility of the individual rather than in the national interest, made multiple changes that further destabilize this healthcare system that was already wobbly. And by the early 80s, Medibank was abolished. Healthcare became really expensive. Three out of five families didn’t have private health insurance because they couldn’t afford it. So people just didn’t see the doctor because it cost too much.
In 1983, Labor was reelected and PM Bob Hawk prioritize reinstating public health. Medicare was launched in 1984. And all of a sudden, anyone with a Medicare card, which was immediately almost everyone, could see a doctor free of charge. People no longer had to sacrifice their health and the economy benefited, too. Medicare lowered the cost of healthcare so much that inflation fell from 6.5% to 3.9% in its first 12 months. The rates of personal bankruptcy also plummeted after Medicare was introduced. How did they pay for it? Very simply with a 1% levy on all taxable income. Everything was going great. So what went wrong? Enter John Howard, the guy who introduced Hex and made our house price skyrocket also thought Medicare was too expensive a policy. Howard had been anti Medicare for years and as the opposition leader had called it, one of the great failures of the hawk government. He promised that if elected, bulk billing under Medicare would go, except for those classified as disadvantaged. In 2003, as PM handveiled a new, fairer Medicare rather than bulk billing everyone, doctors were offered higher incentives to bulk Bill concession card holders only, but for everyone else, the rebate was kept low. So doctors would claim their rebate and then charge, if they needed to, a small upfront fee to the patient to cover any unmet business costs like rising wages, rent, equipment, insurance. Well, that does sound good.
Yes. It’s just one of the ways we’re strengthening.
Medicare. It sounded like it makes sense. It was marketed as a 900 million dollar healthcare investment to help Australia’s most vulnerable. But in reality, it was the death knell of universal healthcare. The parliamentary inquiry report into the package describes it as a decisive step away from the principle of universality that has underpinned Medicare since its conception.
The Coalition’s then health minister Tony Abbott then also introduce the controversial extended Medicare safety net, which adds up all of your out of pocket expenses every time you see a doctor up to a certain threshold. Only once you meet that threshold, I, by paying for lots of appointments, Medicare will then cover more of your costs over that threshold for the rest of the calendar year. But this ended up benefiting mostly people in high income areas and gave doctors free rein to raise their prices under the guys that. Hey, it was helping people reach that threshold faster when laborers Kevin Rudd took office in 2007, he promised to scrap the safety net but then backflipped because he said some Australians, wealthy ones, had come to rely on that system. So he left it. Then came the biggest gunshot, the rebate freeze, actually introduced by labor as a temporary savings measure in 2000,2013, following the global financial crisis. The freeze stops the Medicare rebate, the benefit from rising in line with the wage and consumer price indexes the way it does every financial year.
When the coalition was back in the driver’s seat under Abbott in 2014, amending Medicare was on the agenda and the rebate was locked in the freezer initially for four years, then extended and extended to 2020. And the cost of living and doing business continued to grow.
Side note, in these years, the coalition government also began heavily subsidizing private health insurance, of all things. And in 2017, those subsidies totaled $6 billion a year. They grew faster than the Medicare rebate despite less than half the country having private health or hospital cover. And those that do being Australia’s most well off, the privatization of Medicare was already happening before our eyes. But the coalition had swayed public opinion enough to convince people that universal healthcare was not only unnecessary, but bad for the economy. When Anthony Albanese took over and the freeze lifted so the rebate could actually catch up to the value of today’s money. Medicare, while was a battered and bloody mess. What doctors got from the government per appointment was now so low compared to the cost of living, there was no way they could afford to bulk Bill patients. They had to charge more.
In 2023, the Australian Medical Association and president, Professor Steve Robson estimated the rebate freeze stripped $4 billion from the industry and said its impact was now clear. A primary care system struggling to survive falling bulk billing rates and patients waiting longer to access a GP. So what’s the government doing now?
The 2023,24 federal budget included what Treasury Jim charmers talked up as a historic 5.7 billion dollar investment in Medicare, the biggest since its inception in 1984,$3.5 billion, went to addressing declining bulk billing rates by increasing the financial incentives GPS get per bulk built appointment, but incentives are separate to the actual rebate and are only for appointments with patients who are children under 16, pensioners or concession cardholders. Nothing really changes for the rest of us, Medicare works by paying a benefit in the form of a rebate, IE a refund for a healthcare service listed on the Medicare benefits schedule. Like X rays, surgeries, general practitioner appointments, when a claim is made either by the patient or the doctor, the government reimburses the schedule fee, usually a portion of the total fee. If a service is bulk bills, that means the practitioner receives the Medicare benefit as a full payment and the patient pays nothing. If a service isn’t bulk build, a, the practitioner determines their own higher prices, it will incur an out of pocket cost for the patient. That cost is referred to as the gap, which has been getting wider and wider. And once upon a time, it didn’t even exist.
Professor Steven Duckett, chair of the board of directors of the Eastern Melbourne Primary Health Network, told vice that by now, many practices have moved on from bog billing, and we’re likely to stick with that change. So what would it take to get GPS to bog Bill? Well, the government has committed three quarters of a billion dollars to figure it out. Some minor measures have been brought in by state governments, like allowing pharmacists to give some common medications without prescriptions from a doctor, like UTI antibiotics. But the 2025 federal budget latest chance to make a real difference had crumbs for health compared to say our 700 billion dollar defense budget over the next 10 years. So while Australia’s healthcare system is still comparatively one of the best in the world, it’s already falling down a slippery slope. Who knows where it’ll end up or if we’ll ever really have universal healthcare again.