A more competitive Medicare

Since the 1960s, the Commonwealth has pursued a series of wasted policies to limit out-of-pocket charges and to set with certainty what doctors charge and what patients pay in all circumstances. Since the early 1990s, it’s variously tried to anchor these policies around the so-called Medicare Schedule Fee.

This has resulted in public policy ricocheting between diametrically opposed objectives. On the one hand, the Commonwealth has sought to encourage bulk billing via incentive payments (costing more than $0.5 billion a year) that reward GPs for limiting their charges to 100% of the Schedule Fee to Concessional patients; and on the other, it’s repeatedly attempted to mandate a statutory GP co-payment – using the Schedule Fee as a marker.

The problem is that Government has no constitutional power to fix doctors’ fees. The Schedule Fee is no more than a ‘fee for benefit’ purposes. GPs are willing to bulk bill for over 80% of their consultations at a 100% of the Schedule Fee and to collect the bonus in the case of Concessional patients, but where local conditions permit, they’re quite happy to charge what the market will bear.

Government should abolish the Schedule Fee together with the bonus for bulk billing, and save itself the cost and contradiction of paying GPs for doing so.

Co-payments would become the business of doctors rather than governments. This would concentrate the minds of health consumers on what doctors charge instead of what government pays; it would also engineer a systemic shift towards greater competiveness in setting all medical fees, as in the deregulated markets for medical services of New Zealand and Singapore and create thereby a focus for ultimate removal of private medical price signals remaining in the market — both for GP and specialist services — essentially, the AMA Fee List.

GPs who were concerned about co-payments creating a barrier to primary preventive health services could obviously continue to set fees equivalent to the Medicare benefit.

 

David Gadiel is a Senior Fellow at the Centre for Independent Studies. His latest research, Towards a More Competitive Medicare: The case for deregulating medical fees and co-payments in Australia, was published on 23 March 2015.