Medicare (Australia)


 * This article describes the Australian universal health insurance scheme Medicare. For information about the Australian Government health agency, see Medicare Australia

Medicare is Australia's publicly-funded, universal health scheme, providing affordable treatment by doctors and in public hospitals for all citizens and permanent residents except for those on Norfolk Island. Visitors from countries which have reciprocal arrangements with Australia have limited access to Medicare.

Medibank
Medicare, originally called Medibank, was introduced by the Labor Whitlam Government on 1 July 1975, at the commencement of the Health Insurance Act 1973. The introduction of Medicare was fraught: the Senate rejected the changes multiple times and they were passed only after a joint sitting after the 1974 double dissolution election.

Despite this hostile response to its introduction, Medibank/Medicare was supported by subsequent governments and has become a key feature of Australia’s public policy landscape. The exact structure of Medicare, in terms of the size of the rebate to doctors and hospitals and the way it has administered, has varied over the years. Although considerable changes were enacted after the Whitlam government lost power, the Fraser Government reviewed Medibank and decided to retain it despite the Liberal Party’s previous opposition. In October 1976 the parliament introduced a ‘Medicare levy’ to help fund the program, a measure the Liberal party had previously refused to support under the Whitlam government.

1 October, 1976 also saw the introduction of Medibank Private, a complementary government-owned private health insurance fund that provides cover for health treatment not covered by the universal scheme (which was then referred to as 'Medibank Public'). Medibank Private competes with all other private health funds on a commercial basis. On 26 April, 2006, the government announced it would be selling Medibank Private. It said there was a conflict of interest in being both the regulator of the whole private health insurance industry and the owner of its largest single competitor.

Current program
The title ‘Medicare’ was introduced in 1984 by the Hawke Government. The Hawke Government reversed many of the Fraser Government’s changes, and this change in title also reflects the introduction of what can be considered the current Medicare system.

Program funding
The original Medibank program proposed a 1.35% levy (with low income exemptions) but these bills were rejected by the Senate, and so Medibank was originally funded from general revenue. In October 1976, the Fraser Government introduced a 2.5% levy.

The program is now nominally funded by an income tax surcharge known as the Medicare levy, which is currently set at 1.5%. An exemption applies to low income earners. In practice the levy raises only a fraction of the money required to pay for the scheme. If the levy was to fully pay for the services provided under the medicare banner then it would need to be set at about 8%.

There is an additional levy of 1%, known as the Medicare Levy Surcharge, for those on high annual incomes who do not have adequate levels of private hospital coverage. This is part of an effort by the current Liberal Party Federal Government to encourage people towards private health insurance.

Constitutional framework
Section 51 (xxiiiA) of the Commonwealth Constitution was inserted following the successful referendum of 1946. It gave the Federal Parliament power, subject to the Constitution, to make laws with respect to: The provision of maternity allowances, widows’ pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorize any form of civil conscription), benefits to students and family allowances.

This power supports the Commonwealth operating the Medicare program, but not the entire Australian health system. The authority to operate public hospitals remains the province of the State and Territory governments. In practice, the state governments, as well as private doctors, act as pseudo-contractors. This is done by a provider number system controlled by the Commonwealth.

Privately run hospitals are also part of the Medicare system. Medicare benefits are payable for medical treatment provided to admitted patients of private hospitals as well as public hospitals. However, a patient in a private hospital (by definition, a private patient) would need private insurance coverage to help him or her meet any of the hospital charges such as accommodation costs, as well as some or all of the remainder of the doctor's charges above the 75% Medicare benefit.

Medicare Benefits Scheme
Medicare funds (or reimburses) expenses related to services provided by medical practitioners. Eye examinations by optometrists are also covered. Dental treatment is excluded except for certain surgical procedures that can only be performed in hospital by specially trained maxillo-facial surgeons.

Medicare benefits are available on a restricted basis for allied health services (such as physiotherapy or speech therapy) under the Enhanced Primary Care program, however most allied health and alternative medicine services are excluded from Medicare.

Each Medicare procedure has an MBS Fee (Medicare Benefits Schedule fee).
 * For in-hospital treatment, ie. medical treatment provided to an admitted patient of a hospital (which usually excludes treatment provided in an outpatient or accident/emergency department of a hospital), Medicare pays 75% of the MBS Fee. If the patient has private patient hospital insurance, that must cover them for the remaining 25% of the MBS Fee (subject to rules such as waiting periods).  If the doctor charges above the MBS Fee, some or all of the remaining charge may be covered by the private health insurance depending on the fund's gap-cover arrangements.


 * For out-of-hospital treatment, ie. treatment provided to a person who is not an admitted patient of a hospital, Medicare pays 100% of the MBS fee for general practitioner consultations and 85% of the MBS fee for specialist consultations. A practitioner may ‘bulk-bill’, which means charging only the relevant percentage of the MBS fee and thus making the service free to the patient.  Doctors are not forced to bulk-bill and have discretion in charging their patients.  The law prevents private health insurance funds from providing any coverage for the remainder of the charge after the Medicare benefit has been paid.

The major issues with this part of Medicare are:
 * to medical professionals – the rate at which the scheduled fees are set and how accurately they reflect running costs/support profit margins
 * to patients – the availability of a ‘bulk-billing’ doctor (free doctor), particularly in rural and regional areas.

The ‘bulk-billing rate’ is the percentage of doctors providing a free service. The Department of Health and Ageing monitors bulk billing rates (see external sources). The number of bulk-billing doctors has decreased. Some doctors may not bulk-bill at all; may bulk-bill only existing patients; or may bulk-bill only patients who can not afford to pay medical fees out-of-pocket. Whilst the majority of general practitioner services are bulk billed, the rate is lower in more affluent areas and in rural, regional and remote areas of Australia where there is a greater shortage of doctors and health care services.

Medicare Safety Net
Due to low rates of bulk-billing the Howard Government, after the 2004 election, introduced the “Medicare Plus Safety Net”. This system reimburses 80% of out-patient expenses for health card holders or Family Tax Benefit recipients (provided expenditure is above a certain amount). However, the Howard government later revised the ‘safety net’: a reimbursement will be available only after $500 of expenditure (not $300).

Pharmaceutical Benefits Scheme
The Pharmaceutical Benefits Scheme (PBS) subsidises certain prescribed pharmaceuticals. The PBS pre-dates Medicare by some 25 years. It is generally considered a separate health policy to 'Medicare'. However, the PBS is now administered by Medicare Australia (formerly the Health Insurance Commission) under the Health Insurance Act 1973, with input from a range of other bodies such as the Pharmaceutical Benefits Pricing Authority.

Access to PBS medications requires presentation of a Medicare card. This link to the Medicare card was only introduced in May 2002.

Commonwealth-State agreements
Although hospitals are considered a ‘state’ issue, the role of Commonwealth funding means that under-funded hospitals remain a Commonwealth issue.

Treatment in a public hospital as a public patient is fully subsidised by Medicare. Regardless of means, every Australian is entitled to attend a public hospital and receive medical treatment free of charge. However, there may be a considerable waiting list for elective surgery. Treatment and hospital accommodation is free to the patient. This is funded through the Commonwealth-State Health Care Agreements.

For private patients in public or private hospitals, Medicare will cover 75 per cent of the Medicare Schedule fee for medical procedures. Private patients still need private hospital coverage to help with accommodation costs and other hospital charges.

Public Policy Debate
Debates regarding Medicare again focus on whether the system should be universal. Controversial issues include:
 * Whether people with means should take up private health insurance
 * What rebates/incentives should be given in terms of private health insurance
 * People with health insurance still accessing the tax-payer funded public system rather than relying on their insurance.

People who take up private health insurance are currently rewarded in a number of ways. They receive a Private Health Insurance Rebate that subsidises at least 30% of their insurance premiums. Critics say that the rebate would be better spent on public hospitals. Supporters say people must be encouraged into private health care system as the public system is not universally sustainable for the future.

Approximately 30% of Australians also retain private health insurance, even though they are already entitled to free treatment in public hospitals. The major reasons for taking up health insurance despite the free public system are:
 * Shorter waiting lists in private hospitals (especially for procedures such as joint reconstructions or heart bypass surgery, for which there are often long waiting times in public hospitals).
 * Choice of hospital/physician in the private system;
 * Improved accommodation facilities such as private rooms (although medical facilities are usually more extensive in the public system);
 * The coverage of a broader range of services (e.g. chiropractic, dental, optical, etc).

The proportion of Australians with private health insurance was declining, but has increased again with the introduction of Lifetime Health Cover (where people who take out private hospital insurance later in life pay higher premiums than those who have held coverage since they were younger) and tax incentives to take out private cover (such as the Medicare Levy Surcharge).

Bulk billing
Medicare emerged as an important issue in the 2004 federal election. Medicare is an important issue because of declining bulk-billing rates, particularly in rural areas. This decline can be linked to the low level of the scheduled fees and doctor’s desire to maintain their profitability. However, increasing scheduled fees would increase the cost of the program.

Debates over Medicare now frequently raise a conflict over the purpose of the scheme itself. Although both the original Medibank program and the Hawke Medicare program used the language of universal, equitable, medical treatment; arguably a state-funded health care system is unsustainable and individuals should contribute based on means. The introduction of the ‘safety-net’, rather than increasing scheduled fees (and so reducing the gap for everyone) can be seen as a reflection of this belief.

The popularity of Medicare makes it difficult for the conservative side of Australian politics to reduce its coverage. The Labor party has frequently claimed that reforms to Medicare that move away from a universal model will create a two-tier system of health care. However, arguably, given the unavailability of bulk-billing doctors it is unsustainable to deny access for the sake of quality. Given an ageing population, even the extent of Labor’s commitment to complete universality may not be absolute.

Other health care programs
There are several related services for other government-managed aspects of the health system, such as the Pharmaceutical Benefits Scheme, which provides prescription drugs at heavily subsidised rates. State and Territory Governments also sometimes administer peripheral health programmes, such as free dentistry for school students and community sexual health programmes.