Key Takeaways:
- The Medicare safety net has more than doubled in 15 years, with total benefits rising from $339m in 2010 to $871.4m in 2024.
- The extended Medicare safety net, introduced in 2004, has seen the most significant growth, with spending nearly tripling from $324.9m in 2010 to $850.4m in 2024.
- The system has two key problems: surging costs due to a badly designed subsidy and specialist fees soaring, pushing more patients over the threshold each year.
- The Albanese government is reviewing the Medicare safety nets, and caps on extended safety net benefits for some items have been expanded.
- Addressing the underlying issue of rising specialist fees requires addressing workforce shortages, improving access to public healthcare, and regulating excessive fees.
Introduction to the Medicare Safety Net
The Medicare safety net is a program designed to support people with high out-of-pocket medical costs. There are two safety nets: the original Medicare safety net and the extended Medicare safety net. The original safety net covers the gap between the schedule fee and the Medicare rebate, while the extended safety net covers out-of-pocket fees, which is the difference between the Medicare rebate and what the doctor or health professional actually charges. The thresholds for these safety nets are $576 for the original safety net and $2,615.50 for the extended safety net.
The Growth of the Medicare Safety Net
The Medicare safety net has seen significant growth over the past 15 years, with total benefits rising from $339m in 2010 to $871.4m in 2024. The extended Medicare safety net has seen the most significant growth, with spending nearly tripling from $324.9m in 2010 to $850.4m in 2024. This growth has been described as "explosive" by Peter Breadon, the health program director at the Grattan Institute. The cost of the Medicare safety net has increased by $522m since 2010, with the majority of this increase coming from the extended safety net.
Problems with the Medicare Safety Net
The Medicare safety net has two key problems. Firstly, the costs are surging due to a badly designed subsidy, with money going to fee-charging specialists and the wealthiest patients who can afford to repeatedly see them. Secondly, specialist fees are soaring, pushing more patients over the threshold each year. This has created inequities in the health system, with those who can afford to pay more being able to access more services. A 2009 article in the Australian Economic Review found that the extended Medicare safety net "has possibly created greater inequities in Australia’s healthcare financing arrangements".
Accessing the Medicare Safety Net
To access the Medicare safety net, individuals need to reach the thresholds for either the original or extended safety net. For individuals, the government will automatically pay the higher Medicare benefit when the thresholds are reached. However, for families, they need to register as a family to combine their costs, which may help them reach the thresholds sooner. Families eligible for the lower extended safety net threshold are those that are Commonwealth concession cardholders and/or families who receive Family Tax Benefit (Part A).
Review and Reform of the Medicare Safety Net
The Albanese government is reviewing the Medicare safety nets, and caps on extended safety net benefits for some items have been expanded. A spokesperson for the Department of Health, Disability and Ageing said that a working group has been established to discuss the operation of the safety nets, and a consultation paper has been issued for feedback. Addressing the underlying issue of rising specialist fees requires addressing workforce shortages, improving access to public healthcare, and regulating excessive fees. Former chief medical officer Prof Brendan Murphy has argued that any new Medicare investment should focus on primary care, and that "additional investment in specialists is harder to justify when incomes are high".
Conclusion and Recommendations
In conclusion, the Medicare safety net has seen significant growth over the past 15 years, with the extended safety net seeing the most significant increase. The system has two key problems: surging costs due to a badly designed subsidy and specialist fees soaring, pushing more patients over the threshold each year. To address these issues, the government needs to review and reform the Medicare safety net, focusing on addressing workforce shortages, improving access to public healthcare, and regulating excessive fees. Additionally, any new Medicare investment should focus on primary care, rather than specialist care. By making these changes, the government can ensure that the Medicare safety net is providing effective support to those who need it most, while also addressing the underlying issues driving the growth in costs.