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Reforms and more funding needed to save Medicare – Stephen Duckett

The release of the Strengthening Medicare Taskforce report last week has re-ignited discussions about reform of Australia’s primary healthcare system.

The report and options for reform were discussed today at the National Press Club in Canberra where health economist Dr Stephen Duckett appeared on a panel with Dr Kerrie Aust GP AMA President ACT and Dr Nicole Higgins RACGP President.

Due to time constraints, Duckett cut his intended speech short but below is the full text where he argues for a significant injection of funding into rebate increases, along with structural reforms to support a focus on integrated multidisciplinary teams and blended payments. Also see this article on Medicare reform which covers the Press Club event in more detail.


Stephen Duckett writes:

Medicare was designed in the 1960s. It was a different world back then. The only health professionals with university degrees were doctors and dentists. Primary care was provided by solo practitioners, or small group practices with partners who owned the practice. GPs managed a range of conditions, mostly acute, and often performed minor procedures.

Primary care is different today on each of these dimensions. There are now a range of highly skilled professionals ready to step up in care provision, but the funding framework inhibits that. More practices are owned by corporates, who want the same rate of return on their primary care investment that they get from a road or a shopping centre. The epidemiology of the population has changed with more patients with multiple chronic conditions.

Medicare, the funding system we’ve had since 1984, addressed the inequitable mess of the 1960s. It underwrote the existing fee-for-service system with an efficient national approach. Initially rebates under Medicare were set by an independent tribunal.

Medicare under pressure

Fast forward to 2023. The independent rebate tribunal has gone, replaced by rebates set on political whim and a six-year rebate freeze. However, even so, over the long haul since 1984, rebates have still gone up with inflation, but not with average weekly earnings. 

GPs are contractors to the corporates, generally paid through fee-sharing arrangements. Depending on your perspective, GPs are well-remunerated, or not. Tax data for 2019-20 show that, as a group, GPs are amongst Australia’s top earners, but earn a few hundred thousand dollars a year less than other specialists who are the top earners.

The rebate freeze, and recent escalating inflation, have contributed to the decline in the rate of bulk billing from about 90 percent in the September quarter 2021 to 84 percent in the September quarter 2022, with probable further declines since then.

Health Minister Butler has described Medicare as being in its worst shape in 40 years.

More funding and structural reform needed

More money needs to be invested in primary care – significantly more than the $250 million per annum that the government put on the table at the last election. The critical questions are, how is the extra money to be invested and what will the Australian public get for that investment?

Pouring money into a system which needs structural reform is not the way to go. Simply increasing rebates may not end up with increased bulk-billing rates and does not progress the structural reform necessary for contemporary primary care. That is why I think the quick and expensive fix of increasing rebates is both naive – it ignores the fact that the public voted for a low spending government less than twelve months ago – and may not deliver the right outcome.

Filling the niche

The decline in bulk billing has inevitably meant that the public and governments have adopted or are considering alternatives to traditional primary medical care, such as autonomous pharmacist prescribing. In my view that is unfortunate as I prefer an integrated primary care system. Telehealth disrupters have also been an innovative response, again, unfortunate in my view. The horse has bolted on both changes. 

But they both fill a niche being vacated by general medical practice and they will grow. An increased role for autonomous nurse practitioners is also being considered. How these changes play out really depends on how traditional general practice repositions itself, and this is where the report of the Strengthening Medicare Taskforce comes in.

Even though the report was only 12 pages, I can’t summarise all the report’s recommendations, but in essence the Taskforce was about emphasising integrated multidisciplinary teams and blended payments.

My Twitter feed is full of comments from GPs railing against both directions. Of course, Twitter is not a random sample of the GP world, nor its leadership, so it is unclear whether the profession will embrace change or not. So far, my Twitter feed has almost no comments from consumers or other health professionals, so it’s hard to determine broader public opinion – other than to get bulk-billing rates back up

If not throw more money into a creaking system right now, what?

Strategies for government

First, the Government should commit to fair indexation of general practice rebates through an independent rebate tribunal, including any necessary rebasing. Lazy budget savings by freezing rebates should go. This will give the profession some surety for the future and would be a sign of good faith.

Second, the May budget has to be specific about how the $250 million is to be spent. There are some obvious no regret changes, such as a Level E prolonged consultation item, but even here, we might want to restrict that to some practices. But a tweak like this is obviously not enough, the profession must see that more money will flow.

So third, the $250m should be supplemented by a net cost-neutral restructuring of some of the existing plethora of payments, which have not aged well – the various incentive payments are an example, which could occur in a way that improves quality and access. Additional funding could also be found with a better aligned and more equitably distributed set of safety net arrangements.

Thought should also be given to how often people must go back to see their GP for a repeat prescription, and how long GPs can write prescriptions for. Money saved here should be reinvested back into primary care.

Fourth, we have long known that procedural items are over-rewarded relative to cognitive/attendance items and a rebalance should occur here as well.

Reducing rebate spending for in-hospital medical specialists and shifting it to primary care will help redress the current misalignment of incentives to medical career choice. Some better workforce planning might also help bring more medical graduates to choose general practice as a career. 

Redesigning bulkbilled incentives

But all this still begs the question of how the additional incentive investment in primary care should occur. 

Patients face a lottery. They often have no idea what out-of-pockets they will face when starting at a new practice. More and more practices are dropping bulk billing.

In my view, the bulk billing incentive should be redesigned and increased, so the practice is rewarded for certainty – if all patients (or maybe all patients in certain groups) are bulk billed there is a significant additional payment. The rise of corporates may make this easier, through direct negotiation with those chains.

More of the same is not what is needed in 2023.

We must use all the workforce skills we’ve got. We must reward good practice and continuity of care. We must encourage preventively oriented practice, including outreach calls by practice staff. We must keep access to high-quality care affordable to all. The Strengthening Medicare Taskforce points to how this might occur.

All of this will not be achieved overnight, nor in one budget, but importantly, the reform process must start from a good foundation, and not be distracted by the loudest voices pushing for a poorly designed quick fix that will not age well.

But the Government must also recognise that primary care is in pain. There must be an immediate down payment in the May budget and very clear signals, not just waffle words, that more will come in the very near future.


See here for Croakey’s other stories on the Strengthening Medicare Taskforce