The Medicare co-payment: the future of public health in Australia?

By Dario Mujkic | 07 Jul 14

The Federal Government’s proposal for a patient co-payment for some health products and services – GP visits, diagnostic tests, prescription drugs – might make sense from a purely economic perspective. But healthcare is not a mechanical device. What’s more, history suggests we have reason to doubt the Coalition’s commitment to universal public healthcare. The co-payment is the likely first step towards a very different Medicare.

The co-payment proposal is, apparently, about ensuring the financial sustainability of Medicare. Supporters of the idea, who, apart from Government Ministers, aren’t many, say our health system is expensive, and increasingly unsustainable. The co-payment is to act as a so-called price signal. Price signals make sense in markets because the price of a product sends a signal to consumers, which in turn affects demand. Logically if something that was once free now has a price, you will be less likely it buy it. At $7, the co-payment is unashamedly an attempt to decrease demand for health products and services from Australians.

That might be acceptable if you consider our health system to be just a range of products. But health services, and more particularly public health services, are more than just something that is produced and exchanged; they are, or should be, an integral part of the Australian social contract. Proposed changes to the Medicare system should be considered not in the context of prices and markets, but in the context of accessibility and quality. The co-payment will impact negatively on the accessibility and quality of healthcare. Particularly it would make the system less accessible for the poorest, many of whom are already avoiding doctors’ visits.

But that’s the point. The political purpose of the co-payment is not really to make Medicare more sustainable. It is about fundamentally changing our universal health system – when there is an up-front cost, the system is no longer “free”. Once the difficult political battle over the introduction of a co-payment is won, increasing the payment over time will be easier. As the system becomes more expensive, the poor can’t or won’t access it, and the wealthy will question the utility of paying for a public system when a private system is available. This would result in further social exclusion for people in low socio-economic positions and ultimately increase wealth disparity in Australia.

The Coalition Government preceded its budget proposals for radical changes to Medicare by stating it is “the best friend Medicare has ever had”. That’s because the government can’t be seen to be demolishing the popular system. Changes must be seen to be subtle and minimal to be in any way politically acceptable. Officially, conservative politicians must support Medicare and claim to be fighting for its future sustainability

This apparent bipartisan support for Medicare is a relatively new phenomenon in Australian politics. Universal and free access to (most) healthcare has been the reality in Australia for only the last forty years, and was a controversial progressive reform at the time of its introduction. It was strongly opposed by the medical profession and the then conservative opposition and was one of the bills that triggered the 1974 “double dissolution election” which eventually lead to the dismissal of the Whitlam Government in 1975.

The scheme, once introduced, was then promptly diminished (including by the use of co-payments) and eventually repealed by the Fraser government, until its “second coming” in 1983, when the Hawke Government established Medicare as part of its first Accord with the Australian Council of Trade Unions (ACTU). Medicare was again opposed by the conservatives, who continuously went to federal elections with “destruction of Medicare” mantra as part of their platform, even as late as 1993.

The Howard government had an ambivalent relationship with Medicare. Funding was often cut, and private health insurance was championed, but the rates of bulk-billing increased in the second-half of Howard’s time in office (after first falling significantly from 1996 to 2003). These years, however, were also linked to an important change in rhetoric from the Government, with Medicare branded a “safety net”. By definition, a safety net is not universal.

By not seeking to repeal Medicare, the Howard Government was more of a conservative aberration than clear evidence of a fundamental change in conservative thinking about universal healthcare in Australian society. It is safe to say the Abbott Government is, on current form and on most fronts, more ideologically uncompromising than the Howard Government was. This year’s Federal Budget and associated reforms are an obvious attempt to redefine the underpinning values of what is left of the Australian Settlement by attacking the universality and accessibility of healthcare and the ability of the social welfare system to provide necessary assistance to those in need of it. It is clear that fundamental change to Medicare is back on the conservative agenda, starting with the introduction of a co-payment.

Legitimate proposals to ensure a sustainable and efficient Medicare system would not be viewed with cynicism if we could be relaxed about the future of universal healthcare in Australia. But history shows the Liberal and National parties are no friends of Medicare; in fact, they have often been its determined enemies.