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If I were Bill Shorten – on healthcare

This is the first in a series on policy by respected blogger Ad astra; policy that might improve this nation’s situation, policy that Bill Shorten and Labor ought to consider. This first article looks at healthcare policy.

While it’s easy for Bill Shorten to sit back and watch Tony Abbott and his government self-destruct, he could accelerate that process by presenting the electorate with alternative policies, visionary policies, policies that had more appeal than the Coalition’s, more inherent merit, more chance of solving our nation’s problems.

As yet, Labor has not provided a convenient forum for those who have a view on policy to contribute to its policy formulation. This is my way of having my say.

I begin with healthcare, an area with which I am familiar.

Australia has an excellent healthcare system, not perfect, but one of the best in the world, and one of the most cost effective. Here we spend about 9.5% of GDP on healthcare; the US spends 17.7%, yet has much inferior heath outcomes.

Its backbone is its primary care services, provided by well-trained general practitioners, or family doctors, as we prefer to call them. To provide specialist services we have some of the most expert consultants in the world. They work in hospitals and in private practice. They are equipped with the highly sophisticated technology. We have a splendid hospital system, a network of nursing home facilities, and a sterling coterie of allied health professionals: nurses, therapists of many kinds, and paramedic personnel.

The pressing question is what will we need in healthcare in the years ahead, and how we might pay for it.

Everyone knows that our population is ageing. Life expectancy at birth is now over eighty-four for women, and over eighty for men. We have a lot of living to do.

Ageing brings in its wake physical and mental illness, dementia and disability. Obesity has become a national epidemic, even among the young. It predisposes to type 2 diabetes, heart disease, stroke, and even some cancers. Dementia is on the increase, filling our aged care facilities and using more and more healthcare resources. Mental illness and disability are becoming increasingly prevalent.

Medical science and therapeutics are advancing rapidly. They offer more and more sophisticated therapy every year, but at a cost. Telemedicine is coming into its own, offering as it does many benefits, but again at a cost.

Ask people in the street if they believe we deserve the sophisticated healthcare system we have, and see how many say ‘no’. We all want the very best for ourselves, and for our own when they are ill, disabled and demented. Ask how we might pay for it, and wait patiently for the answers.

Clearly the cost of healthcare will rise and rise and rise because excellent healthcare is what the people want and feel they deserve. There is no value in thinking about rationing healthcare – the people simply will not buy it.

Given that our nation, through its governing bodies, has an obligation to provide healthcare to all who need it, how might they pay for it, as indeed they must?

The Abbott government acknowledges the problem, but unsurprisingly has taken its own idiosyncratic approach to financing it. As with so many other areas of government, austerity is its focus. Spending less is seen as the answer; raising more revenue seems to be off the agenda.

Without consulting stakeholders: the AMA, doctors, healthcare workers, patients, or anyone who might have had a worthwhile opinion, then Health Minister Peter Dutton, rated overwhelmingly by over a thousand doctors surveyed by Australian Doctor magazine as ‘the worst health minister in living memory’, thrust his $7 co-payment for GP consultations on an unprepared audience. It was to give them a ‘price signal’, one designed to discourage patients making ‘unnecessary’ visits to their GP.

The reaction was predictable. The AMA, doctors, the public, and most notably the Senate, rejected the idea as poorly thought-through, impractical, and perhaps most importantly, poorly directed. GPs, the core of the healthcare system, became the main target; they were the ones put under the pump. After the patients, the group that would lose the most would be general practitioners, who provide most of the preventive care and chronic disease management and thereby contribute most to keeping people in optimal health and out of the very expensive hospital system. Laudably, the AMA was strident in its resistance to measures that targeted GPs, and insistent that general practice must be supported. It insisted that rather than directing the proceeds of the co-payment to a medical research fund, it should be directed into general practice.

When the Senate rejected this proposal, Abbott ditched the $7 co-payment scheme and unveiled another policy that would see a co-payment of up to $5 levied against patients over the age of 16 who did not have a concession card. Doctors would have the ‘discretion’ to raise prices by up to $5 to cover the reduced rebate. Thereby, costs would be guaranteed to rise. Next, Dutton proposed that there be a lower rebate paid to GPs for consultations under 10 minutes, resulting in less income for short consultations; the $37.05 rebate currently claimed for 6 – 19 minute consultations would be changed so that for consultations under 10 minutes doctors would receive only $16.95 for concessional patients and $11.95 for other patients, an unacceptable and arbitrary reduction of GP income for short consultations, which comprise a substantial proportion of their income.

These proposals cascaded one on top of the other, leaving those affected angry, and the public bewildered. It was a disastrous comedy of errors.

The Royal Australian College of General Practitioners, who train and certify GPs, made its position quite clear in a considered statement: “Many patients are in a position to make a contribution to the cost of their healthcare, and the RACGP believes general practitioners should be able to determine a fair and equitable fee for their services.

“The RACGP therefore supports the right of GPs to set fees that ensure the viability of their practices whilst acknowledging the Government’s right to set the patient rebate for medical services.

“The Government should not determine fees, or mandate out-of-pocket costs, for patient services.”

So where are we at?

Many practices set their fees at a level above the Medicare rebate, and patients attending those practices pay the gap between the fee and the Medicare rebate or what they might receive from their health insurer. Why the government sought to interfere with this system, which has been in place for years, could be attributed to the government’s ideological position of user-pays, ‘price signals’, and of course saving money. The fact that, as with the 2014 budget, those least able to pay the co-payment were the most heavily penalised seemed quite acceptable to this government.

There is nothing inherently wrong with a co-payment, provided it targets those who can afford to pay and are willing to do so. The existing system was working; why change it?

There is a cogent argument that millionaires ought not to be able to avoid paying for medical services simply by attending a practice that bulk-bills every patient. Such a practice seems unfair. Yet such millionaires might claim that since Medicare is at least partly funded from the Medicare levy, and since the levy is a progressive tax that penalises most heavily the higher earners, they are entitled to free healthcare as they have paid for it via their Medicare levy payments. That seems like a good topic for a debate on ethics!

So where is the solution?

In my view, what is needed is increased revenue to fund healthcare, not punitive cuts to GP payments (specialists were not affected at all), not ‘price signals’ to patients to inhibit visits to their GPs. Sussan Ley the new Health Minister has now ‘solved’ the awkward notion of ‘price signals’; they are now ‘value signals’, which she hopes will immediately shift public opinion in their favour!

At present the 1.5% Medicare levy on income covers 55% of healthcare costs. It could cover more; even all costs were it to be increased. The public seems less averse to paying a higher levy or more tax when what it is delivering is apparent. If the public wants the sort of healthcare system we have and will need in the years ahead, are advised what it will cost, are asked to contribute via a higher Medicare levy, and are shown where their money is being spent and on what, in my view the majority would be amenable to such a change.

Of course income tax could be increased to cover the cost of healthcare, but taxpayers resent seeing their taxes disappear out of sight into a black hole; on the other hand, so-called ‘hypothecated’ taxes, where their purpose is clear, such as the Medicare levy, are much more acceptable to them.

They would realise that because the Medicare levy is a progressive tax based on income, it takes more from higher income earners than the lower, and the very lowest earners are exempt. It is a fair tax, as is our progressive income tax system.

Were the levy to be increased gradually, say by one quarter of one per cent per year or two until it reached a level that could properly fund healthcare, which by the way is estimated to climb from $19 billion per year today to $34 billion a year in the next decade to 2024, it might not be felt too acutely by the taxpayer. Most of us can adapt to gradual changes; it is the sudden, unexpected, excessive and unfair changes that people resent and reject.

Do glance through Robyn Oyeniyi’s comprehensive article in the AIMN: Medicare is the wrong target particularly the revealing graphs, one of which shows that GP consultations account for only 10% of healthcare expenditure, yet this sector is what our government targeted! She suggests the Medicare levy be doubled from 1.5% to 3%: “… the easiest solution would be to increase the Medicare levy to 3%…

So if I were Bill Shorten, I would completely abandon the Coalition ploy of penalising patients and their doctors to save money. I would put aside all the apprehension about tax increases that so scare politicians, firmly grasp this prickly nettle, lay out the case for properly funding healthcare to meet our needs, needs that will magnify as we age, explain carefully what benefits will be offered to all who live in this country, then with the help of actuaries spell out what it will cost now and in the years ahead, and finally make clear how gradual increases to the Medicare levy would cover that cost. That would take courage, but the people just might buy it.

But I’m not Bill Shorten; I’m not up for election in 2016; I haven’t got a vindictive opponent waiting to stoke up his ‘Great Big New Tax’ manta to tear Labor down.

Have you got the courage Bill?

Ad astra is a retired medical academic who, after a 14 year period in rural family practice, became intensely involved for the next 35 years in undergraduate, vocational and postgraduate medical education for family medicine.

This article was first published on TPS Extra.


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  1. Blanik

    If I were Bill Shorten I’d be scared just in case I had to perform.

  2. Rafe Falkiner

    %5 would be even better to include dental

  3. John Kelly

    A sliding scale increase in the medicare levy with no increase for those on less than $50,000. 2% for those up to $100,000. 2.5% up to 200,000 and 3% for those over $200,000 would cover most of the shortfall. Cancelling the medicare rebate would surely cover the balance.

  4. Kaye Lee

    The medicare levy is now 2% to help pay for the NDIS. Incrementally raising it to 3% is a good idea.

    I always hesitate to bring up my next suggestion in a discussion of money but here goes.

    We spend a great deal of money in the last month or two of people’s lives, sometimes doing tests or procedures that may be unnecessary or invasive with little benefit. I would like to reopen the discussion about voluntary euthanasia or assisted suicide as some prefer to call it. I know I would like to have that option. I understand there are many ethical and legal considerations but I think it is time to have the discussion. I wish I wasn’t doing it in the context of a discussion of fiscal matters because, for me, it is about dignity and choice.

  5. Matters Not

    Kaye Lee said:

    would like to reopen the discussion about voluntary euthanasia or assisted suicide

    So would I. Been to lots of places around the world but there’s two that really stand out in terms of ‘sadness’. I’ll leave aside the Red Light District of Amsterdam, where the ‘working girls’, always seem to be in a state of dejection, and instead concentrate on the ‘holy place’ of Lourdes.

    Lourdes is a relatively small town but it hosts some 5 million tourists and pilgrims every season. It has nearly 300 ‘hotels’, most of which are fire traps. Enough.

    The sad part is the sight of those who have certainly reached their ‘used by date’ in my opinion. They are accommodated in ‘hospitals’ and the like and every night they ‘parade’ around hoping for ‘divine intervention’ (in the form of a miracle) that will somehow prolong their eight or nine decades of life. The understanding that many, (having reached 90 plus years) have had their ‘miracle’ seems to have gone through to the keeper.

    My mother died last year aged 96 and even she, a devoutly religious woman, argued that one can live ‘too long’.

    I can only agree. For me, a ‘little white pill’ ought to be an option that I can choose, free from State restraint.

  6. Kaye Lee

    I would also like to stress the importance of preventative health, as any parent can attest to after a visit by Healthy Harold to your child’s school. Talk about harassment from 8 year olds to clean up your act!

    Overall Budget cuts to health and hospital funding total $50b over the next decade. One of the areas targeted is funding of preventative health programs.

    The Australian National Preventive Health Agency is abolished, saving $6.4 million, and the National Preventative Health agreements on public health with the States have also been removed.

    The effects of co-payments on preventive behaviour are greatest among those who can least afford the additional costs. The potential for prevention is greatest among poorer patients, who are often at a health disadvantage.

    Anti-smoking programs for non-Indigenous Australians have achieved great success in the last 70 years, with rates dropping to one in five for men and less for women.

    By contrast, around half all Aboriginal adults smoke, yet the government cut $130 million cut from a program that was having success in tackling Indigenous smoking.

    According to the Medical Journal of Australia…

    “The Australian Government’s commitment to index its contribution to public hospital costs to population growth and the consumer price index will be insufficient to meet the predicted increase in demand for health care. In this environment, activity to prevent anything other than communicable disease may need to be cut.”

    They really didn’t think this one through at all. This government needs to listen to people other than Maurice Newman and Tony Shepherd.

  7. John Fraser


    Euthanasia needs to be discussed ………… by not while the religious zealots are in charge.

    Nothing wrong with 8 year olds telling you to clean up your act …… as long as they do it with lots of pearly whites shining at you.

    Please do not talk about anything, absolutely anything to do with our Indigenous population ……. smashing my keyboard and screaming at Abbott is not healthy.

    It's getting that far down the track that if Shorten suddenly wakes up I doubt that anyone will notice.

  8. stephentardrew

    The Dutch model is really well thought out.

    Ain’t having no one change my nappy. I will be outa here. Months, or years, of agony just to satisfy the the incalculable cruelty of religious dogmatists. Good God man we all have to die and whether today or tomorrow does not matter a shit.
    Get over your sanctimonious magical bullshit and give people their right and freedom to decide their life and or death.
    But ,but we can make it pain free.
    What crap you sure as hell can’t cure psychological suffering depression and despair with a bloody pill.
    They have always got some cranked idiot excuse for denying people the right to death with dignity.
    Compassionate cruelty. What a laugh or rather what a great big pain.
    Talk about living in the dark ages.
    What is it 2015 coming on year 0.

  9. stephentardrew

    John Fraser:

    Didn’t you know the furry Labor sloth goes into hibernation until the day of judgment as the mistake prone, overactive, gibbering, brainless coots drop the prize in his lap.

    Trouble is Bill there are a whole lot of other scenarios that could blow up your little low profile strategy.

    It’s a worry.

  10. stephentardrew

    John Kelly: No argument about that.

  11. Team Oyeniyi

    Thank you for citing my work, Ad, I am honoured.

    I would point out I found female health costs to be greater than the ageing population. We fear the costs of ageing will increase but the reality right now is female health is the high cost area. How is this likely to change?

    Also a 3% levy would not cover all health costs, only the Medicare rebate which is $19 bill out of a total of $62 bill.

    Like you, I have no issue with a co-payment for working and independently wealthy Australians. I would scrap the levy altogether. I think it misleads health discussions because focus is on the rebate shortfall rather than the overall health picture.

    I do think as a nation we need to look at all options, including the Dutch and other systems. We need to think outside the square. Universal health doesn’t have to be Medicare as we know it.

  12. Team Oyeniyi

    Ditto everything Kaye Lee said above!

  13. astra5

    Team Oyeniyi
    Thank you Robyn for your comment. I admire the quality of your research on this subject and the lucidity of your writing. Your ideas are refreshing.

    You are right when you endorse Kaye Lee’s emphasis on the importance of preventive care.

    It was in the late sixties and early seventies that preventive care was integrated formally into the curriculum for general practice training. Although GPs always did provide such care, formalizing it gave it the emphasis it needed. Because at that time the specialties were developing rapidly and assuming glamour proportions such that most medical students sought to become specialists, preventive care did not gain much credence. With persistence though, its crucial significance became apparent in general practice circles, and then gradually in specialist circles. You can imagine how encouraging it has been to hear the president of the AMA, Professor Brian Owler, himself an adult and pediatric neurosurgeon, underscoring the central importance of general practice and general practitioners, and the crucial value of preventive care that keeps people in optimal health and out of expensive secondary and tertiary care in hospitals. To give just one example, we are all aware of the current epidemic of obesity and its sequelae, its cost to health and the healthcare system, and how much could be saved if it could be prevented in the first place through healthy diet and exercise.

    Prevention is relevant right across the spectrum of illness and injury that afflicts our citizens, from prevention of melanoma, to prevention of mental illness and substance abuse, to prevention of accidents. In the field of women’s health, where you show that costs are already high and rising, preventive care has assumed great importance with Pap smears and HPV vaccination, to name just two measures. With the current emphasis on domestic violence, preventive measures must evolve to shield potential victims. The reduction in human misery and the cost savings would be immense.

    Preventive care is here to stay, yet our government seems indifferent, and has cut funding to preventive care programs. Its antediluvian attitude knows no bounds.

    I look forward to your further writings.

  14. eli nes

    I understand the treasurer imself gets paid through his company and lives on his allowances. If that is true he pays no income tax and no levy?? There are millions of australians who do not pay the levy. Perhaps they should. especially the super people????

  15. Robyn Oyeniyi

    Astra5 – we are very much clearly on the same page in many ways! Prevention better than cure is an adage as true today as the first time it was said!

  16. Robyn Oyeniyi

    Eli nes – if that is true, therein lies a major problem.

  17. 61chrissterry

    Healthcare costs, not just a problem in Australia

  18. Jexpat

    A couple of problems with this article:

    1. “There is no value in thinking about rationing healthcare.”

    We already ration healthcare and ALWAYS will, because we won’t pay exorbitant prices (and lack the capacity) for every treatment (in terms of best practices) for every disease or condition or apply every end of life half measure. How to ration treatment equitably, given the built in inequity of Australia’s two tiered system is a critical issue.

    2. “There is nothing inherently wrong with a co-payment, provided it targets those who can afford to pay and are willing to do so.”

    That’s simply incorrect. Studies show unequivocally that even minor co-payments (or policy excesses, known in the US as “deductibles”) create disincentives to primary and preventive care and management of chronic conditions. This is shown to be the case even with individuals with can well afford them, which is why insurers use them- in their parlance to “prevent overutilisation.” That in turn leads to poorer health outcomes AND higher costs, as well as cost shifting to emergency departments.

    Aside from those points, I largely agree with the prescription here, except that I would propose gaining additional savings through phasing in the efficiencies of a Canadian style single payer network- one that excludes private insurance from offering cover on any element of the basic benefits package. Note: this does not preclude supplemental coverages.

  19. Florence nee Fedup

    Yes, Medicare is sustainable. That is not what this mob is about, Their aim, and only aim is to dismantled Medicare, as they did it’s predecessor, Medibank.

  20. Florence nee Fedup

    Jexpat, I agree that a co-payment in not needed.

    Co-payment is based on the false premises that the patient does not already contribute to their health care. This is not true. Gap payment, much more than $ is paid by the majority when visiting GP or specialist. A small co-payment would cost more to collect than it produces. Adds to the red tape of running a surgery. In fact it makes no sense.

  21. Jexpat

    There’s functionally no distinction between “gap payments” already in place and copayments proposed. Both act as disincentives to primary and preventive care and the effective management of chronic conditions- and as you note, both cost us all, directly and indirectly more than they take in.

    They’re examples of ideology trumping evidence based policy making, leaving us all worse off.

    The Americans are the world’s foremost experts on this, though of late we’ve been coming in a close second.

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