NACCHO health news : Making Medicare relevant in the 21st Century: AMA and Catherine King


AMA President Dr Steve Hambleton (pictured right with NACCHO chair Justin Mohamed at a recent Canberra Event) ,

AHHA Medicare Anniversary Roundtable

Making Medicare Relevant in the 21st Century

I would like to acknowledge the traditional owners of the land on which we meet and pay my respects to their elders past and present.

The future of Medicare

I want to speculate about Medicare’s future today – and the key role of doctors, particularly GPs, in that future.

I will make some suggestions about how Medicare can improve its relevance in a changing environment, and how it can best serve the Australian people by continuing to deliver quality, affordable and accessible health services.

As you know, I am not the only person into Medicare speculation recently.

December and January are traditionally the silly season in the Australian media.

The news is full of sport and celebrations … and stories that are recycled, and stories that normally would not see the light of day.

For health, it has been a very silly season.

We have recently seen many opinions about the health system and health financing

People are speculating about the changes to be made to ensure we have a sustainable health care system.

These opinions became stories that inevitably focused on Medicare – because for most Australians Medicare is the Australian health system.

The most notable proposal was the oft-recycled patient co-payment.

The AMA does not support this concept and we have made our view very well known.

There are better ways.

It is interesting that this speculation has come at a time when a new Lancet Commission, when considering global health up to 2035, has recommend that countries should lower the barriers to early use of health services and increase access to disease prevention and minimise the impact of medical expenses.

While I acknowledge the growth in Medicare expenditure, it is important that any changes do not throw the baby out with the bath water.

Any changes must be in the context of the long term goal to improve population health, which will deliver real cost savings.

In terms of spending on medical services, via the Medicare Benefits Schedule, doctors have done their bit over the past decade on containing costs.

As I have said in other fora, medical services costs are not the problem.

Let’s once again set the record straight.

Here are the facts …

Health expenditure

The proportion of health expenditure on medical services was 18.8 per cent in 2001-02 compared to 18.1 per cent in 2011-12.

The average annual growth in total health expenditure on medical services in the decade to 2011-12 was four per cent, compared to growth in PBS expenditure of 6 per cent and 9.3 per cent for products at the pharmacy.

The growth in average health expenditure by individuals on medical services in the decade to 2011-12 was four per cent, compared to 5.3 per cent for PBS medicines and 7.5 per cent for products at the pharmacy.

The average growth in Medicare benefits paid per service in the decade to 2012-13 was 4.7 per cent, less than the real growth in total health spending of 5.4 per cent in the decade to 2011-12.

It is clear that the MBS – combined with the private health insurers’ schedules – is an effective price dampener for medical services.  At least that is what my members keep telling me!

In terms of access to care – despite the low growth in the Medicare Rebate, today, 81 per cent of GP consultations are bulk billed.

And 89 per cent of privately insured in-hospital medical services are charged according to the patient’s private health insurer’s schedule of medical benefits.

This means that patients had no out-of-pocket cost for their doctor’s fee for 93.5 million GP consultations in 2012-13, and over 26 million privately insured in-hospital services.

When Governments get nervous about spending in health, they have three options: reduce the price they pay; spend more wisely; or collect more revenue.

I think that the recent focus on price, in terms of the Medicare Benefits Schedule, is a bit misdirected.

The focus should be on spending that money wisely.  Today, Minister Dutton is quoted as saying that we need to invest in the areas of greatest benefit.

The medical profession stands ready to do its bit in this regard, too.

Australia must change the way it provides health care, where it provides care, and when it is provided for the major driver of health care costs – non-communicable diseases.

Medicare needs to facilitate this.

With the rapid increase in medical knowledge and the rate of change of best practice care, evaluation and change must be part of the medical practitioner DNA.

In terms of our clinical practice, we are going to have to translate what we know into what we do – and we need the tools to do it.

We will need to do this in a structured way so that we stop doing the things we do that don’t provide real outcomes for the patient.

Our clinical practice must be about doing the right things at the right time in the right part of the health system.

Once people get to hospital, their care becomes very expensive.

Keeping people out of hospital is cheaper and it frees up resources, but it might need an increased investment from Medicare, not a decrease.

That investment must be sufficient to improve the coordination of primary care services.

Population Health in the Community – Medicare Locals

The AMA understands the need for community-based health care organisations to improve the coordination of health care outside of the hospital environment.

Such organisations can help to break down the silos in the non-hospital space, build better links between the hospital sector and community based care, support improved population health, and address gaps in the delivery of primary care services.

The former Government set up 61 Medicare Locals to undertake this role.

Despite now having been in operation for a number of years, few Australians understand what Medicare Locals do.

Many GPs feel disenfranchised by them – and so do almost all community-based medical specialists.

We have welcomed the incoming Government’s review and have made a strong submission, based on frontline medical practitioner input.

We believe the former Government pursued the wrong governance model.

They substituted or downplayed the role of GP leaders in Medicare Locals and in their decision-making structures.

They made the same mistakes that the New Zealand Government made in 2001 when it decided to implement ‘skills based boards’ that excluded GPs.

These boards were initially made up of people who, while experienced in governance, did not understand the complexity of health care delivery.

Clinical leadership was absent in many areas in New Zealand and the models failed to deliver.

The leadership role of GPs has now been restored.

The PHOs in New Zealand are now playing a more meaningful role in support of improved health outcomes for local communities.

In New Zealand, the PHOs are now:

  • supporting GPs to focus on population health;
  • supporting improved quality in general practice by facilitating information sharing among GPs;
  • supporting pro-active management of chronic disease;
  • supporting e-health initiatives;
  • funding specific initiatives to keep people out of hospital; and
  • helping support more sustainable general practice by building improved IT and delivering business support.

These are initiatives that are being built from the ground up and led by GPs, not imposed from the top down.

We are calling on the Abbott Government to overhaul the Medicare Locals model to make them responsive to local health needs and to be fully engaged with GPs, who are the engine room of non-hospital based care.

But enough about Medicare Locals, which have got nothing to do with Medicare.

That is why we have suggested a name change.

Complex and chronic disease

The challenges for primary care are growing with our ageing population.

Complex and chronic disease represents a huge burden to the health system.

It accounts for about 70 per cent of the allocated health expenditure on disease and is estimated to increase significantly in the immediate future.

This is both a threat and an opportunity for the Medicare of tomorrow.

Current Medicare-funded chronic disease management arrangements are limited, can be difficult for patients to access, and involve considerable red tape and bureaucracy.

We need less red tape and more streamlined arrangements allowing GPs to refer patients to appropriate Medicare-funded allied health services.

We need a more structured, pro-active approach to managing patients with complex and chronic disease.

The Department of Veterans Affairs is doing some great work in this area with its Coordinated Veterans Care (CVC) Program.

DVA is supporting GPs to provide comprehensive planned and coordinated care to eligible veterans with the support of a practice nurse or community nurse contracted by the Department.

The CVC program is a proactive interactive approach to the management of high acuity chronic and complex diseases.

It supports GPs to spend more time on these patients on a longitudinal basis.  This is something that Medicare currently works against.

The CVC program recognises the non-face-to-face work required, including regular follow-up to see how patients are going without relying on the patient returning to the surgery.

We need to look at how we can roll out this type of pro-active approach more broadly.

It would allow us to invest in a healthier future with better disease management, and prevention of avoidable costly hospital admissions.

The overall message is that if we as a nation do not wish to spend more on health – and that is the clear message coming from the new Government – than we must spend smarter.

We must invest in the things that work.

We must share the knowledge that our various organisations gather from the coalface of health service delivery.

Above all, we must be spending more time building on the things we agree on – and there are a lot of things that we agree on.

Doctors are ready to be a major part of the solution.

GPs are the foundation of primary care – and they save the health system money.

The GP role in population wellness and, ultimately, cost control must be enhanced by Medicare – not eroded or substituted.

The AMA strongly believes that 2014 and beyond must be the years of the GP who can deliver the right care at the right time to the right person.

Medicare must rise to the challenge.






Thank you Alison Verhoeven for that introduction, and thank you for the invitation to make this address today.

May I also acknowledge AMA President Steve Hambleton, Con Costa the President of the Doctors Reform Society, Stephen Duckett from the Grattan Institute, John Glover and all of the other esteemed speakers and guests here with us today.

When Bob Hawke introduced Medicare 30 years ago he warned that without it, two million Australians ‘faced potential financial ruin in the event of major illness’. Today more than 39% of Australia’s population is under 30 – that’s more than eight and a half million Australians who are growing up without knowing what healthcare in Australia looks like without Medicare.

And of the two million Australians who faced potential financial ruin in 1984, it’s worth considering just how many hundreds of thousands of people have had their lives changed thanks to Medicare. It’s quite an achievement, particularly given how hard Labor has had to fight not just to introduce, or reintroduce, the architecture of a universal healthcare system, but to protect it.

That we are celebrating Medicare’s 30th birthday is particularly commendable when a comparison is made of international health systems.  No one health system is perfect, but on this 30th anniversary it is right to be celebrating and reflecting on what is important about our health system.

It’s also important that we focus on what needs to be done to preserve the fundamental principles on which it is based:

  • Universal access
  • Overcoming health inequality
  • Access to new medicines and treatments
  • And prevention.


For the millions of Australians who have grown up with Medicare it must be difficult to appreciate how different Australia’s healthcare system was in 1984 compared with the system of universal care we are afforded today.

Of course the Medicare we know is different from the scheme that was originally introduced. Gough Whitlam introduced Medibank in August 1974 only to have Malcolm Fraser and his government overturn it in 1976. The legislation for Medibank had been blocked in the Senate, and was one of the key issues Labor campaigned on during the 1974 election – indeed it was one of the measures on which the Governor-General granted a double dissolution.

At the time, Whitlam argued that the conservatives had:

‘Preserved the inequity, inefficiency and injustice of an antiquated health scheme. They have prevented one million of our fellow-citizens from having any protection against hospital and medical charges.’

Whitlam’s victory in ’74 would prove to be one of the most important steps in achieving a system of universal healthcare but it would not be a decisive one. It took two Labor governments more than two decades to embed what is now Medicare.

When Neal Blewett, the reforming health minister in the Hawke government, introduced the legislation that would re-establish a system of universal care he told the parliament:

“In a society as wealthy as ours there should not be people putting off treatment because they cannot afford the bills. Basic health care should be the right of every Australian.”

It’s a statement that says everything about what Labor stood for 30 years ago and it says everything about what Labor stands for today.

Bulk billing and co-payments

It’s appropriate therefore to focus on some of the achievements of the past two terms in government. When Labor left office bulk billing rates were at more than 80%. This is an achievement I’m very proud of but also something that also causes me deep concern. The increase in bulk billing rates to this historical high did not happen by accident.

The incentives my colleague Tanya Plibersek introduced, and before her Nicola Roxon, for GPs to bulk bill, particularly to bulk bill concessional patients, have made it easier for all Australians to get to see a doctor, but in particular they have benefited those members of the community who most need the assistance Medicare affords. Over the past month we’ve seen the government repeatedly refuse to rule out the introduction of a Medicare co-payment. This would end bulk billing and put considerable pressure on some of the most vulnerable Australians, many of whom already have very low access to GPs.

Labor’s legacy

To strengthen primary care Labor established a network of 61 Medicare Locals servicing every region. Medicare Locals are intended to save money on secondary care and prevent hospital admissions. They are also one of the important ways Labor strengthened Medicare when in government by refocussing on the importance of primary care.

The benefits of the work Medicare Locals are undertaking are already being seen in communities across Australia. Medicare Locals are identifying specific needs for local services and planning for services to address these gaps, such as through the engagement of additional nurses and other allied health professionals at GP clinics, as well as the provision of after-hours GP services.

But most importantly Labor made funding available to ensure these services could be delivered effectively.  Medicare Locals provide the architecture for a stronger reengagement of the Commonwealth in local primary care and planning. Medicare Locals for example are working to increase breastfeeding rates in areas where breastfeeding rates are low; in areas where smoking rates are high there are programs tailored specifically to those communities to reduce smoking rates, as there are programs to reduce rates of type two diabetes in communities that have a significant prevalence of this disease.

Despite the rhetoric of the new government, the vast majority of people employed by Medicare Locals are directly responsible for providing care and improving health services in local regions.

Viability of Medicare

As the demands on the MBS and PBS continue, it’s important to ensure governments get the best value for money on health expenditure and that all Australians continue to get access to the best quality medical care. The sustainability of Medicare is about much more than purely academic arguments.  It’s important that new policies be pragmatic and can actually be implemented by governments. A good example of this is the price disclosure reforms we pursued when in government.

But it’s important to acknowledge too the challenges that had to be met to implement this policy.  I am concerned however that some of the rhetoric of the past few months is more about softening the Australian public and media up for an assault on the universality of Medicare and a further move towards a two tiered health system. Today for example we have seen the Health Minister use a Productivity Commission report as an excuse to talk about cutting ‘waste’ in health.

On its record to date it’s difficult to trust this government, and I fear the Minister is only using this rhetoric as an opportunity to justify cuts to satisfy the Prime Minister’s agenda. Over the next couple of years I am particularly interested in working with you to develop new ways we can ensure greater equity in our health system and make sure the Medicare of the 21st century is something its original architects and the Labor party that introduced it, can be proud of today.

Private Health Insurance

It’s important to acknowledge that the private health insurance industry does play an important role in healthcare in Australia. Labor’s position remains that governments have a responsibility to ensure that the private health insurance industry remains sustainable and that private health insurance is affordable and provides good value. The means testing of the private health insurance rebate that Labor introduced in government meant a number of the health programs and infrastructure projects I’ve already mentioned could be delivered.

Despite the criticism at the time we did not see tens of thousands of Australians giving up their cover as was claimed would occur. On the contrary, the number of people with both general and hospital cover is at the highest rate ever and continues to grow. For the first time ever, 55% of Australians have general cover, with 47% having hospital treatment cover.

The challenge for the government now is to ensure the cost of private health insurance is kept as low as possible and that the system does not undermine Medicare. At the end of last year Minister Dutton announced the largest increase to private health insurance premiums in a decade. In government, we had always taken several months to agree on premium increases, often going back to individual insurers several times to ensure consumers received the smallest increase possible. This was a particularly cynical announcement by this government and one that would be a mistake to repeat.

I want to mention briefly the government’s intention to sell Medibank Private.  Labor has reservations about what the sale of Medibank will do for competition in the sector and what this will mean for consumers. Having a government-owned insurer has had a balancing factor in the sector which would be lost should Medibank be sold.  More concerning again is the new government’s rhetoric about the move of the private health insurance industry into general practice.

I am interested from a policy perspective in good models of care. I am interested in how there can be a stronger role for prevention and more integrated case management, better consumer health literacy, more consumer engagement. There are very good examples across the country, including some of the work private health insurers are doing with their captured population of patients.

But I remain fundamentally concerned as a Labor Shadow Health Minister about health inequality and my very real fear is that there is a genuine danger of a shift toward a two tiered health system.


Today, some 30 years since the introduction of our universal health system – Medicare – debates about its structure, its funding, its principles and its implementation continue. But it is clear that Australians value it and that it is embedded as a fundamental aspect of our society.

I want to wish you well in your deliberations today.

I wish to congratulate the AHHA on pulling together speakers who have been responsible for the establishment, implementation and defence of Medicare.

Labor stands for a system of universal care.

As Neal Blewett told parliament 30 years ago, basic healthcare should be the right of every Australian.

30 years later, it is.

Medicare is a system worth defending and we will do exactly that.

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