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Medicare is Australia's publicly-funded universal health care system, operated by the government authority Medicare Australia. Medicare is intended to provide affordable treatment by doctors and in public hospitals for all resident citizens and permanent residents except for those on Norfolk Island. Residents with a Medicare card can receive subsidised treatment from medical practitioners who have been issued a Medicare provider number, and fully subsidised treatment in public hospitals. Visitors from countries which have reciprocal arrangements with Australia have limited access to Medicare, as detailed below.

The programme was introduced in 1975 as Medibank, and supplemented by a government-owned private health insurance fund in 1976. It was renamed Medicare in 1984.

Since 1999, the public health scheme has been supplemented by a Private Health Insurance Rebate, where the government funds at least 30% of any private health insurance premium covering people eligible for Medicare. Including these rebates, Medicare is the major component of the total Commonwealth health budget, taking up about 43% of the total. The program is estimated to cost $18.3 billion in 2007-08.^[1] This figure is projected to rise by almost 4% annually in real terms over the next few years.^[1]

History

Medibank

Medibank was the name given to Australia's system of universal health insurance when it was first created by Gough Whitlam's Australian Labor Party government in 1975.

Medibank commenced on 1 July 1975 after the passing of the Medibank legislation by a joint sitting of Parliament on 7 August 1974. According to the Second Reading Speech of the Health Insurance Bill 1973 delivered by the Hon. Bill Hayden on 29 November 1973, the purpose of Medibank was to provide the 'most equitable and efficient means of providing health insurance coverage for all Australians'. The Health Insurance Bill 1973 and the accompanying bills were rejected by the Senate on three occasions (12 December 1973, 2 April 1974 and 18 July 1974) but were subsequently passed at a joint sitting of both Houses (7 August 1974) following a double dissolution election.

Medibank started on schedule, on 1 July 1975. In nine months, the Health Insurance Commission had increased its staff from 22 to 3500, opened 81 offices, installed 31 minicomputers, 633 terminals and 10 medium-sized computers linked by land-lines to the central computer, and registered and issued health insurance cards to 90% of the Australian population.

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 established the Medibank Review Committee in January 1976. The Committee's findings were not made public but the new program was announced in a Ministerial Statement to Parliament on 20 May 1976. 'Medibank Mark II' was launched on 1 October 1976 and included a 2.5 per cent levy on income, with the option of taking out private health insurance instead of paying the levy.

On 1 October 1976 Medibank Private was established by the Fraser Liberal government. Also in 1976 legislation was passed allowing the Health Insurance Commission (HIC) to enter the private health insurance business. Medibank Private competes with all other private health funds on a commercial basis. In 2006 the then Coalition government announced that Medibank Private would be privatised after the 2007 election, claiming a conflict of interest in being both the regulator of the whole private health insurance industry and the owner of its largest single competitor. However the incoming Australian Labor Party government pledged that it would remain in government ownership.

Medicare

On 1 February 1984 Medicare was established by the Hawke Government. The major changes introduced by the Fraser Government were largely rejected by the Hawke Labor Government, which returned to the original Medibank model. Although the financing arrangements were different, and there was a name change from Medibank to Medicare, little else differed from the original. Medicare as we know it came into operation on 1 February 1984, following the passage in September 1983 of the Health Legislation Amendment Act 1983, including amendments to the Health Insurance Act 1973, the National Health Act 1953 and the Health Insurance Commission Act 1973.

Funding and legal framework

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%.^[2] An exemption applies to low income earners.

There is an additional levy of 1.0%, known as the Medicare Levy Surcharge, for individuals on high annual incomes (which increased to $70,000 in the 2008 federal budget) who do not have adequate levels of private hospital coverage.^[3] This was part of an effort by the former Howard Coalition 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 authorise 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.

Components

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. Recently acupuncture provided by a medical practitioner has been included ^[4].

Each Medicare procedure has an MBS Fee (Medicare Benefits Schedule fee).

• For in-hospital treatment, i.e. 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.^[5] 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, i.e. 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 choose bulk billing, and charge 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.

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.

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 (Australia) 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, and there has been a trend 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.

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, the threshold (for the year 2007) is $519.50. For other individuals or registered families, the threshold (for the year 2007) is $1039.00. These figures are revised annually.

Medicare and private health insurance

Debates regarding Medicare focus on the two-tier system and the role of private health insurance. Controversial issues include:

• Whether people with means should take up private health insurance
• Whether 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 with private health insurance are still required to pay a 1.5% levy on their taxes regardless of their income and usage of the system.

People who take up private health insurance are currently rewarded in a number of ways. They receive a Private Health Insurance Rebate that subsidises 30% of their insurance premiums, increasing to 35% or 40% for people over 65. Critics say that the rebate is an unfair subsidy to those who can afford health insurance, claiming the money would be better spent on public hospitals where it would benefit everyone. Supporters say people must be encouraged into the private health care system, claiming the public system is not universally sustainable for the future. Similarly, even after the introduction of the rebate, most private health insurance organisations have raised their premiums most years [1], somewhat negating the benefit of the rebate.

Approximately 43% 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^{[citation needed]}:

• 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).
• Improved accommodation facilities such as private rooms (although medical facilities are usually more extensive in the public system).

Some people choose to have private coverage for ancillary treatment, or "extras", (e.g. chiropractic, dental, optical, ambulance, etc - for which Medicare has limited or no cover) but use the Medicare system for hospital treatment.

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).

Other health care programs

Pharmaceutical Benefits Scheme

The Pharmaceutical Benefits Scheme (PBS) subsidises certain prescribed pharmaceuticals. The PBS pre-dates Medicare, being established in 1948. 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.

State/territory programs

State and Territory Governments also sometimes administer peripheral health programmes, such as free dentistry for school students and community sexual health programmes.

Practitioner review programs

This is a basic overview of the practitioner review process in point form:

• Medicare Australia provide a federal framework to deliver a health system to the people of Australia.
• Delivering health care to millions relies on proper utilisation of limited resources.
• As such, to make sure the services provided under the Medicare umbrella (including medicines administered by the PBS), reviews and audits are conducted.
• To quote the Medicare website, "identification and reviews of practitioners' practice profiles protect patients and the community from the risks and costs of inappropriate practice"^[6].
• Inappropriate practice is defined two-fold:
  • "services that would be unacceptable to the general body of members"
  • includes the rendering of "80 or more professional attendances on each of 20 more days in a 12 month period", i.e. rorting the system through false services rendered
• When practitioner is reviewed, their data is compared with that of their peers.
• If this data is markedly different then this practitioner may be referred to the Practitioner Review Program.
• If concerns still remain at the end of the Practitioner Review Program, then a referral to the Professional Services Review (PSR) can be made.
• The PSR:
  • Practitioners are always contacted by the PSR when a review concerning them is conducted.
  • Practitioners covered by the PSR include all who provide services within the PBS and/or Medicare framework (this includes doctors, dentists, allied health professionals).
  • The Medical Director of the PSR acts as a last-ditch arbitrator.
  • The Medical Director will compare the reported case to random data.
  • The outcome may be no further action, a reprimand (administered by the Determining Authority), counseling, etc^[7].

See also

• Medicare card (Australia), on the card itself
• Medicare (Canada)
• Medicare (United States)
• National Health Service

References

• Medicare - Background Brief
• Medibank: from conception to delivery and beyond

External links

• Official website
• MEDICARE ephemera digitised and held by the National Library of Australia
• Department of Health and Ageing Bulk Billing Rates
• APH Background Briefing on Medicare
• Medicare Benefits Schedule Online contains a searchable index of all fees

Reciprocal Agreements

• http://www.health.gov.au/internet/main/publishing.nsf/Content/health-privatehealth-consumers-ovc.htm