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Australia: Budget Includes Introduction of $7 Co-pay for Doctor Visits

(May 22, 2014) On May 13, 2014, the Australian Treasurer, Joe Hockey, published the federal government’s annual budget for the period July 1, 2014, to June 30, 2015. (BUDGET 2014-1 (last visited May 14, 2014); for information on the Australian appropriations process, see The Commonwealth’s Appropriation Framework – An Introduction, Department of Finance website, (last visited May 14, 2014).) The accompanying appropriations bills were also introduced in the Parliament. (Appropriation Bills, BUDGET 2014-15 (last visited May 14, 2014).)

One of the most controversial aspects of the Budget is the change to the charges for doctor visits under the Medicare system, which is the publicly-funded universal health insurance program in Australia. (Medicare Services, Department of Human Services website (last updated May 7, 2014).)

Under the changes, beginning on July 1, 2015, people who were previously bulk-billed for visits to a general practitioner (GP) and for out-of-hospital pathology and imaging services, meaning that Medicare paid the provider directly rather than the patient receiving reimbursements for charges, will need to make a co-payment of AU$7 per visit (about US$6.57). (Outcome 3: Access to Medical and Dental Services, in AUSTRALIAN GOVERNMENT, PORTFOLIO BUDGET STATEMENTS 2014-15, BUDGET RELATED PAPER NO. 1.10: HEALTH PORTFOLIO 79 (2014); Flynn Murphy & Julie Lambert, Budget 2014: How Are You Affected, MEDICAL OBSERVER (May 14, 2014).) The government clarified that “[p]roviders will still be able to set their own fees and will have discretion whether to charge the $7 patient contribution.” (Patient Contributions for Health Care, BUDGET 2014-15 (last visited May 14, 2014).)

Currently, under the bulk-billing system, the Medicare benefit is accepted as full payment for the service, so patients cannot be required to pay any charges. (Medicare Services, supra.) Many doctors bulk-bill patients such as pensioners or holders of the Health Care Card, which provides concessions on health-care costs for persons receiving welfare assistance. (Medical Bulk Billing, Department of Human Services website (last updated Sept. 12, 2013); Health Care Card, Department of Human Services website (last updated Jan. 8, 2014).) Around 80% of GP visits are currently bulk-billed. (Dan Harrison, Rate of Bulk Billing Hits Record High, THE SYDNEY MORNING HERALD (May 14, 2013).)

Accompanying changes in the Budget include an AU$5 reduction in the Medicare rebate for GP and other relevant services and an incentive payment to encourage doctors to charge concession card holders and children under the age of 16 the $7 co-payment only for their first ten visits each year. (Outcome 3: Access to Medical and Dental Services, supra, at 79 & 83.) The Budget also provides for AU$5 of the co-payment to be funneled to the Medical Research Future Fund, with providers therefore keeping AU$2. ($20 Billion Medical Research Fund, BUDGET 2014-15 (last visited May 14, 2014).) The Medical Research Future Fund is a new initiative introduced in the Budget, set to commence in January 2015. The government stated that the Fund will grow to AU$20 billion (about US$18.6 billion) and be the “largest of its kind in the world.” (Medical Research Future Fund, BUDGET 2014-15 (last visited May 14, 2014).)

The Australian Prime Minister, Tony Abbott, had previously indicated that a AU$6 co-payment would be introduced in the Budget. A recent poll showed that such a requirement would deter four in ten people from seeing a GP. (Jonathan Swan, Bulk-billing Co-Payment Would Deter Millions from Visiting Doctor, THE SYDNEY MORNING HERALD (May 9, 2014).)

Concerns about the impact of a co-payment on the likelihood of poorer Australians visiting a doctor have also been raised by health economists and medical professionals. (Id.) Opponents of the new plan include the Royal Australian College of General Practitioners, the Australasian College for Emergency Medicine, and the Consumer Health Forum of Australia. (Id.) The Australian Medical Association considers that the co-payment and other proposals “are targeted at the wrong end of the health system, would produce disincentives for people to see their doctor, and would create loads of new red tape for medical practices.” (Australian Medical Association, Co-Payment for General Practice Visits, GP NETWORK NEWS (Apr. 24, 2014); Press Release, Australian Medical Association, Health Budget Full of Pain for Patients (May 13, 2014).)

The government’s Budget documentation states that, with the proposed changes, it is “moving to put health expenditure on a more sustainable footing, to ensure that Australia can continue to afford a strong Medicare system.” (Outcome 3: Access to Medical and Dental Services, supra, at 79.)

With the 2014 Budget, the Australian government aims to significantly reduce the deficit from about AU$50 billion to about AU$30 billion (about US$46.4 billion to $27.8 billion) over the next fiscal year. (Rod McGuirk, Australia Aims to Nearly Half Budget Deficit, ABC NEWS (May 13, 2014).) In addition to the health care changes, the Budget includes reductions in planned foreign aid spending, downsizing or abolishing of a number of government entities (possibly affecting more than 16,000 employees), lowering of some unemployment and family welfare payments, and reductions in industry assistance programs. It also includes some tax increases, including a 2% levy to be paid for three years by Australians making over AU$180,000 (about US$167,000) per year and increases in the gasoline tax based on inflation. (Id.)