Fears of freeze on Medicare rebates

Freezing the Medicare rebate at is current level of $36.30 is likely to leave some patients facing a larger gap payment. Source: News Limited

PATIENTS may have to pay an extra $2.20 to see a doctor from November as fears mount the government will freeze Medicare rebates to fill a $17 billion budget black hole.

The Australian Medical Association yesterday called on the government to keep its "hands off Medicare'' as it reported speculation the government would freeze indexation of Medicare rebates to save $1.54 billion over the next four years.

"With the government looking at ways to reduce the Budget deficit, there is talk that they might freeze indexation of Medicare fees, in the same way that the Howard Government did in 1996,'' AMA president Dr Steve Hambleton said.

"The AMA calls on the government to rule out such a callous raid on vital health funding," he said.

Any short-term budget gain would have long term costs for the health system if people couldn't afford a doctors visit and early diagnosis was delayed, he said. 

A spokesman for Health Minister Tanya Plibersek said yesterday the government did not comment on budget rumours.

Medicare rebates are usually indexed for inflation on November 1, the same day the AMA issues its annual fee rise schedule for doctors.

On average AMA fees have risen by around 3 per cent in the last eight years and the Medicare rebate has increased by around 2 per cent.

Freezing the Medicare rebate at is current level of $36.30 is likely to leave patients of a non-bulk-billing doctor facing a gap payment of $36.09 from November 1 , $2.20 higher than the current gap.

Other areas the government could find health savings in the budget include generic medicines. 

The government has been paying chemists up to 80 per cent more than the market price for many generic medicines and economists have estimated it could save $1.8 billion a year if it rationalised the scheme.

A plan discussed between bureaucrats and medicine industry in the lead up to the budget would see all patients forced to use cheaper generic-brand medicines.

The Generic Medicines Industry Association, which is proposing the plan, also wants the patient charge for prescription medicine to be cut by 50 cents when patients choose the cheaper generic.

For pensioners the $5.90 co-payment for drugs supplied under the medicine subsidy scheme would fall to $5.50 under the proposal.

The $36.10 co-payment for general consumers would fall to $35.60. 

Medicines Australia which represents the pharmaceutical companies that make the brand name drugs has warned any such cuts would breach a memorandum of understanding it had with the government guaranteeing price certainty for medicines.   

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Medicare levy hike permanent: Gillard

PRIME Minister Julia Gillard has revealed the Government's proposed Medicare levy increase would continue to fund the National Disability Insurance Scheme, even if the Budget were to return to surplus in the future.

Premier Campbell Newman is expected to this week sign an agreement with the Federal Government, after Victoria became the latest state to join the NDIS.

A spokesman for Mr Newman would not discuss timeframes, but said the Premier was eager to "push forward".

"He's delighted at the opportunity now to push forward with a full rollout of the NDIS because of the increase in the Medicare levy," he said.

"But he's looking forward to seeing more detail about that from the Prime Minister."

A 0.5 percentage point increase to the Medicare levy will be introduced to partially pay for the scheme, which would grant support to about 410,000 people with disabilities nationwide.

Ms Gillard yesterday said the increase, which Opposition Leader Tony Abbott has conditionally supported, would permanently remain in place to fund the NDIS.

"This needs to be there as a funding source for all of time," she told ABC's Insiders program.

"That's my perspective. It is fair to say to Australians that you will be asked for a little bit more in order to fund something that we all benefit from."

Ms Gillard said she was confident she would be able to lock in those states still yet to sign up.

"I do want to see the National Disability Insurance Scheme be a truly national scheme," she said.

"The momentum is with us now to get this as the national scheme and I'll keep talking to the premiers of Queensland and Western Australia and, of course, the Chief Minister in the Northern Territory, and a lot of discussions are happening between officials as well to try and get agreement around the nation."

About $3.2 billion is expected to be raised by the new Medicare levy in the first year alone.

The changes will be introduced to Parliament when it resumes next week.

The Coalition has said it plans to remove the increase when the Budget returns to "strong surplus and the NDIS can be funded without it", should it win the upcoming election.

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Rates could drop under Medicare levy

The Gillard government has confirmed workers will face a tax increase through the Medicare levy to fund the National Disability Insurance Scheme

The RBA could cut interest rates if the Medicare levy rises. Source: AP

The RBA could cut interest rates if the Medicare levy rises. Source: AP

ECONOMISTS and tax specialists have warned the RBA may have to cut rates to offset the impact of a Medicare levy hike and that governments may adopt levies to fund future promises.

University of NSW taxation professor Neil Warren said Australia had a history of levies and the latest proposed hike could set a precedent.

''We have a long history of this from a milk levy, a sugar levy, levies on guns, a flood levy,'' he said.

''What is different is this goes on forever, we get a little concerned about this because the history tells us from an economics point of view they have such good political consumption, people go 'oh well, it is going to a good cause', governments tend to over use them.''

He said the Medicare levy already only funded a fraction of the nation's medical costs.

AMP chief economist Shane Oliver said the levy proposal was a lesson that proposals such as the NDIS needed to be funded somehow and it was a ''community judgment'' that DisabilityCare was needed.

''If you want something you have got to pay for it. It is a community judgment if we want the NDIS, we have got to pay for it,'' he said.

He said the levy rise was an effective income tax hike at a time when the economy was sluggish.

For a person earning $100,000 with a $250,000 he said the hit was the equivalent of a 0.25 per cent rate hike and the impact on household spending could prompt the RBA to drop rates.

Mr Oliver said hopes household spending would rise to stem the affects of the slowing mining boom could be ''jeopardised to some degree''.

University of Technology tax lecturer Adrian Raftery said raising the Medicare levy from 1.5 to 2 per cent to cover the National Disability Insurance Scheme could set a precedent.

''What is going to happen in five years time or ten years time when you have five new policies are you going to continue to put half a per cent on the Medicare levy?'' he said.

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Medicare costing $250 more under Labor

There is speculation the Labor Government will increase the Medicare levy by 2 per cent in the May budget. Source: News Limited

THE average Medicare levy has grown by nearly $250 to $1120 under Labor - and much faster than during the Coalition's reign.

Amid speculation the levy will be increased to 2 per cent, the Australian Taxation Office published new statistics yesterday showing 8.66 million people were charged a combined $8.47 billion for Medicare - an average of $978 - in 2010-11.

Treasury has estimated the Medicare levy will reap $9.7 billion this financial year, pushing the average contribution to $1120.

This assumes the number paying the levy remains steady - it has risen and fallen slightly in previous years.

In 2007-08 - the financial year Kevin Rudd won government - the average was $872.

That means the average Medicare levy has increased by $248 since Labor came to power five and a half years ago.

Under the 11 years of the previous Coalition government, the average rose by $360 - just 45 per cent more for double the length of time.

Treasury forecasts the Medicare levy will raise $10.4 billion next financial year - $700 million more than 2012-13.

It upgraded its estimate by $150 million in November 2012.

Data from the Government's Australian Institute of Health and Welfare (AIHW) shows out-of-pocket expenses have increased considerably under Labor.In 2007-08, payments by individuals accounted for 16.8 per cent of all health expenditure.

In 2010-11 - the latest available figures - the figure was 18.3 per cent, higher than at any time under John Howard, according to AIHW figures.

Under Labor, health costs have risen 31 per cent, according to the Australian Bureau of Statistics, while medical and hospital services have become 41 per cent more expensive.

In the preceding 11 and a half years of Coalition rule, health costs rose 50 per cent.

Medical and hospital services became 57 per cent more expensive.

And while private health premiums have been rising at twice the pace of inflation recently, the office of Health Minister Tanya Plibersek said: ''This year's average increase of 5.6 per cent remained well below rises when Tony Abbott was minister for health, which peaked at 7.96 per cent and averaged 6.44 per cent.''

However, it was Labor that removed the private health insurance rebate for more than two million Australians last year.

Ms Plibersek's spokesman said bulk-billing rates for GP services were at an equal record high, with 82 per cent of consultations free in the final three months of 2012.

''This is in stark contrast to when Tony Abbott was health minister when bulk billing rates hit rock bottom at just 67 per cent,'' Ms Plibersek's spokesman said.

The government is considering raising the medicare levy to pay for the NDIS.

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