By Denis Bright

Widening access to affordable healthcare and access to diagnostic services is the key imperative from the Medibank model from the Whitlam era (1972-75). This access to national health was reinstated in the Medicare model of 1984 after two regressive terms of federal LNP government. This era ended with double digit unemployment, high interest rates and inflation during the recession of 1981-82.

The Impact of Tax Changes on the Federal Government’s Revenue Base

Decades later under the Morrison Government, Commonwealth’s revenue base to offer sustainable Medicare benefits and to maintain support for the public hospitals of the states and territories is being challenged by those opportunistic changes to taxation schedules which assisted in the re-election of the LNP in 2019. There are the added financial burdens of support for public health measures during the COVID-19 pandemic. The post-budget press release from the federal health minister places these costs at $25 billion since March 2020.

The revenue base for record levels of federal health expenditure has already been eroded in the delivery of Phase 2 of the LNP’s tax changes (ATO Data). These changes have extended the 37 per cent taxation schedule to taxable incomes of $180,000.

Opinion polling from Newspoll and Resolve Strategic is still inconclusive about the fate of the Morrison Government. Primary votes for the LNP have plateaued around 41 per cent. Some protest votes from ONP and KAP have moved to the LNP. Other voters have drifted to Labor with a firming of its primary vote by approximately 3.5 per cent since the 2019 election.

If the LNP hesitates on plans for an early election from the feedback offered by any future negative trends in opinion polling, the appeal of Phase 3 tax changes will be there as a last resort to stoke up interest in a 2022 election campaign.

The LNP might even decide to give Scott Morrison a few months at the helm before the installation of a new prime minister with a vastly changed ministry. There is the outside chance of having another National Party leader installed if Barnaby Joyce’s come-back is a source of instability for the Coalition.

These still highly speculative scenarios will make the implementation of Phase 3 tax changes a very important component of the LNP’s forthcoming election strategies whenever the election date is announced. The forthcoming tax changed are summarized by data from SuperGuide:

Changes to Marginal Tax Rates

• From 1 July 2018:Raising the lower threshold for the 37% tax bracket from $87,000 to $90,000
• From 1 July 2020: Raising the upper threshold for the 19% tax bracket from $37,000 to $45,000, changing the 32.5% tax bracket from $37,001-$90,000 to $45,001-$120,000 and raising the lower threshold for the 37% tax bracket from $90,001 to $120,001
• From 1 July 2024:Changing the 32.5% tax rate to 30%, raising the upper threshold for the 30% tax bracket from $90,000 to $120,000, removing the 37% tax bracket and raising the 45% lower threshold from $180,000 to $200,000

The Crawford School of Public Policy (ANU) estimates the costs of Phase 3 tax changes at $17 billion in lost revenue. Revenue losses for the delivery of affordable healthcare are also reinforced by easily accessible legalized tax minimization strategies to the 2 per cent Medicare levy on taxable incomes. Even the Low and Middle Income Tax Offset (LMITO) has been extended upwards to taxable incomes of $90,000 to tap into the LNP’s potential support base in disadvantaged outer suburban and regional electorates (SuperGuide data from ATO).

Additional Hardship Imposed at Medical Clinics and Diagnostic Services

Underemployed workers with taxable incomes below $18,200 remain exempt from Medicare levies but are often subjected to gap fees at private clinics and for the receipt of diagnostic services at the discretion of health providers. Out of pocket expenses for non-bulk-billed clinical and diagnostic services usually amount to almost half of the over the counter fees for the services provided.

Out of pocket medical expenses add to the current wealth divide in Australian society and are reinforced by the financial burdens of bonds or daily schedules at nursing homes and backlogs for alternatives to home care packages for disabled or elderly patients.

Assessing the benefits and costs of legalized tax minimization strategies for comfortably off families and business networks is a less complicated investigative tasks. Data from ACOSS NSW provides an update on the wealth divide in Australia as the frightful possibility of a third term of federal LNP Government is still possible in a strategically timed early election:

It is an insult to medical service providers to offer Medicare rebates at current scheduled rates which short-change providers for both consultation fees and minor procedures performed by GPs and specialists. In the case of X-rays and ultra-sonic scans, the out of pocket expenses can be quite substantial. Tolerance of bulk-billing for disadvantaged patients varies within the medical provider community.

One eminent specialist in Brisbane even sends his patients off to MyGov Medicare offices for refunds on biopsies because of a personal ideological opposition to Medicare. Most specialists, however, have a working relationship with Medicare that requests credit card patients for those out of pocket expenses. Without such co-payments, current Medicare rebates are insufficient to maintain viable medical practices and diagnostic services.

The issue of out of pocket expenses for diagnostic services was covered in one of my previous articles for The AIMN (Rising Health Costs in the COVID-19 Era, 7 March 2020). The schedule of fees quoted in this article may have changed slightly but this article is still relevant. Mention was made of Sonic Healthcare Limited in this article. Queensland X-Ray is part of this Australian corporate network which has a vast global outreach particularly in the USA.

What has not changed since March 2020, is the company’s commitment to market ideology as summarized in its latest annual report for 2020.

The company’s chairman was up-beat about the performance of his company in difficult times at his annual address to shareholders on 12 November 2020:

“Another point to note about commitment of Sonic’s people was the willingness of Sonic’s Board, managers, doctors and other staff to take voluntary pay cuts, reduce hours, take leave or assist the company in other ways when the outlook was at its darkest is sure testament to the strength of our culture. Fortunately, we have since been able to repay and modestly reward our staff for their sacrifice and loyalty. Sonic reported a net profit of $528 million for the 2020 financial year. Revenue increased 10% to $6.8 billion. The strength of our balance sheet going into the pandemic and the recovery we saw in our base businesses enabled us to continue our progressive dividend policy, with a modest 1.2% increase, to 85 cents, in total dividends per share for the full year.”

Other providers such as CitiScan Radiology in Brisbane are more receptive to bulk-billing for patients with pension and healthcare cards on the written recommendations of GPs and specialists. CitiScan operates within Peloton Radiology Pty Ltd. I sought details from Peloton Radiology Pty Ltd. about its corporate profile. Should this information be forthcoming, I will pass the relevant web address onto readers in a comment in the replies section to this article.

When it comes to MRI scans however, pensioners and social security recipients must negotiate for fee reductions on compassionate grounds. MRI scans for private outpatients do not attract Medicare subsidy under the Medicare Benefits Schedule (MBS). The current over the counter rates for MRI scans to both knees costs $518. This includes the cost of injections for contrasting dyes. The company literally cannot generate bulk-billing schedules when they are not available through Medicare and no criticisms of its charges are intended.

The case of MRI scans is part of a wider review of MBS subsidies which were set to change on 1 July 2021. The scope of the changes to MBS subsidies has been reviewed by Melissa Davey from The Guardian (8 June 2021) and generated only passing coverage in the mainstream media:

“In one of the most significant changes to Medicare in its history, more than 900 health services and procedures eligible for government rebates are set to change on 1 July.

The changes to the Medicare Benefits Schedule (MBS) items make a number of procedures significantly cheaper for consumers, but doctors and consumer health advocates say the government should hold off on implementing them.

Medical advances mean that over time, some procedures become quicker to carry out, far less complex, and the cost of medical devices and tools can come down too.”

MBS subsidies must of course be subjected to ongoing rationalizations based on best medical practice and financial accountability. Readers might take up the challenges of assessing the changes as explained on MBS Online.

In a more socially divided society with its patchy levels of national health coverage, the imperative is surely to stay healthy for as long as possible while being on guard against tax changes which further entrench less accessible healthcare services and negative impacts on funding for NDIS and care of the elderly through the preferred access to home care packages.