Medicare Safety Net costs grow
Reporter: Michael Brissenden
MAXINE McKEW: With just a month to go before the federal Budget, it's becoming clear that one of the key concerns for the Government's bottom line is the growing cost of the Medicare Safety Net. Labor says the scheme is little more than a political fix. The government says it's a great improvement to Medicare. Whatever it is, it's expensive and there's evidence that's it's a safety net that's benefiting the well off, not the poor. Already the cost estimates have doubled to over $1 billion and there's every indication that the blow out will only get worse. The tussle has Tony Abbott and Peter Costello at odds in the Cabinet room. The Treasurer wants to rein in the costs and the Health Minister is arguing for the maintenance of what was a key feature of last year's election campaign. Political editor Michael Brissenden reports.
MICHAEL BRISSENDEN: Health and Medicare has, like kissing babies tax cuts and interest rates, has become an election campaign perennial. Last year's poll was no exception. Medicare is always one of the areas the Labor opposition consistently polls well on. It's a touchstone issue with the voting public. Labor knows it and so does the Coalition. And so in March last year, six months before the October poll, the Government introduced the health care safety net, trumpeted as the biggest structural improvement to Medicare since it began 20 years ago. It was also without doubt a strategic political weapon.
TONY ABBOTT, HEALTH MINISTER: When it comes to health, you can't trust Labor, and the message from this side of the House to the other side of the House is, do whatever you want, but one thing don't do, don't mess with Medicare. The Howard Government is the best friend that Medicare has ever had. That Howard Government Ministers are the truest of true believers in a Medicare system.
MICHAEL BRISSENDEN: The safety net in effect refunds 80 per cent of all out-of-pocket expenses for low-income families after they've spent $300 and over $700 for everyone else. It became an immutable, dare we say it, core election promise.
JOHN HOWARD, PM: We have a better Medicare system now than our opponents are offering because we have this you beaut safety net. If you're a card holder or a family tax benefit recipient and your out of hospital out-of-pocket expenses go over $300 you get 80 per cent of the excess back.
REPORTER: Will this Government commit to keeping the Medicare plus safety net as it is now in place after the election?
TONY ABBOTT: Yes.
REPORTER: That's a cast iron commitment?
TONY ABBOTT: Cast iron commitment.
REPORTER: 80 per cent of out-of-pocket expenses rebatable over $300 and $700?
TONY ABBOTT: That's an absolutely rock-solid ironclad commitment.
MICHAEL BRISSENDEN: The trouble is the costs are blowing out. Already, the initial estimate of $440 million over four years has grown to a projected $1 billion. And there are plenty of health economists and industry experts who will say that's just the start. Charles Livingston from La Trobe University's health sciences faculty is one of those who argues the safety net is itself intrinsically inflationary.
CHARLES LIVINGSTONE, LA TROBE UNIVERSITY: This is not to say that doctors are more greedy than anyone else. The example I'm fond of citing is what would happen to the price of panel beating if your out-of-pocket costs were met 80 per cent by the Government? It would skyrocket. Unfortunately this is the perverse incentive that this program is putting into the health care system.
MICHAEL BRISSENDEN: And the safety net, he says, simply isn't benefiting those people who really need it. According to the data available so far, the electors of Bradfield on the north shore of Sydney have benefited most and those in the predominantly Aboriginal electorate of Lingiari in the Northern Territory have benefited least. The money is going to specialists not GPs in bulk-billing clinics. Rod Wilson is the CEO
of the Inner East Community Health Clinic.
ROD WILSON, CEO, INNER EAST HEALTH CLINIC: The indications seem to be that people have wealthier suburbs are getting more benefit from the safety net than people from poorer suburbs. That's probably about people's access to specialists as much as anything else. So people from poorer suburbs, it would seem, tend to have less access to those specialists.
MICHAEL BRISSENDEN: There's one group of specialists that's doing extremely well indeed.
CHARLES LIVINGSTONE: In the period from December 2003 through to December 2004, the last period for which we have Medicare data, the fees on an average base, the average cost of fees charged by GPs increased about 2.5 per cent. For obstetricians, the average fees charged increased by 61.4 per cent.
MICHAEL BRISSENDEN: Obstetricians, it's said have been rearranging their payments to take them out of the private hospital environment and putting more of them instead into consulting costs, costs covered by the safety net. This is favouring not just obstetricians but wealthier patients who use private specialists.
FRANCIS SULLIVAN, CATHOLIC HEALTH CARE: A couple, both on six figure salaries, having their first child go to a private obstetrician and can have their anti-natal fees paid up front. They immediately will access the Medicare Safety Net, whereas a family on average earnings in the 40,000s, already with three children, they would need to go to a GP roughly 20 times a year before they access the safety net.
MICHAEL BRISSENDEN: Francis Sullivan is one of those who worked with the independents in the Senate last year to persuade the Government to bring down the safety net cutting point from the initial $500 to the current $300 level. But Rob Wilson argues there are other ways to lower costs.
ROD WILSON: I think the basic system is flawed, and I think that the Government should think about regulating the prices of both GPs and specialists so that they can earn an adequate living and get adequately reimbursed but we don't have an open-ended capacity to charge whatever the medical fraternity wishes to charge, and knows that the Government's going to meet those costs.
MICHAEL BRISSENDEN: Tony Abbott, though, says his Government doesn't believe in price control. They don't regulate the price of bread for instance and they're hardly likely to start regulating specialist fees. But for all that, the talk now is that Peter Costello has the razor out for Tony Abbott's ironclad commitment on the threshold at least.
REPORTER: Is the safety net sustainable at the moment?
PETER COSTELLO, TREASURER: Well, I'm not going into specifics, as I said, because I know - not you, Dennis, but there are journalists that try to speculate.
MICHAEL BRISSENDEN: The speculation is that the fight going on in Cabinet ahead of this year's Budget is to bring the threshold back to the $500 level. Francis Sullivan and others in the industry say the fight itself is misguided.
FRANCIS SULLIVAN: We would be much better off if the Government had invested an extra $10 into the medical benefits schedule across-the-board. More people would have been bulk-billed and any out-of-pocket fees would have been less.
MICHAEL BRISSENDEN: So there are two threads to this. One is whether the safety net is actually helping the people it's designed to help, the Government says we should be applauding the fact that more people are getting government assistance for their health care. The cost blow-out is proof in itself of that. The other thread is the internal fiscal fisticuffs now under way in the Cabinet room. Peter Costello clearly wants to stop the safety net haemorrhaging, but any retreat from what was seen as a core election promise will be politically difficult and the Treasurer will need more than a good bedside manner to sell that one to the voters and to his own party room.
MAXINE McKEW: And we did approach Health Minister Tony Abbott for comment tonight, but his office declined our offer. Political editor Michael Brissenden.