Daily Bulletin


The Conversation

  • Written by Stephen Duckett, Director, Health Program, Grattan Institute
image

Treasurer Scott Morrison pulled a health-related rabbit out of his hat on budget night, announcing the government will “guarantee” the future of Medicare.

It will do this by allocating any extra revenue from the recently increased (from 2% to 2.5%) Medicare levy, after paying for the National Insurance Disability Scheme (NDIS), into a Medicare Guarantee Fund.

The government will then cover the shortfall to cover the costs of Medicare – defined in these budget announcements as a combination of expenditure from the Medicare Benefits Schedule (MBS) and Pharmaceutical Benefits Scheme (PBS). In Morrison’s words:

Proceeds from the Medicare levy will be paid into the fund. An additional contribution from income tax revenue will also be paid into the Medicare Guarantee Fund to make up the difference.

Based on the sketchy information so far available, this fund appears to be no more than an accounting trick. The size of the fund will be determined each year based on projected MBS and PBS expenditure. The balancing item, which is the extra proportion of non-NDIS revenue, will also be adjusted each year in line with those expenditure projections.

The guarantee part is that only the MBS and PBS expenditures can be paid from the fund, “by law”. This might sound good, but don’t be fooled. The Medicare Guarantee Fund is nothing more than a rebadging exercise: it changes the badge on a policy in the hope people might think it is a new policy.

It merely provides an additional line in the budget papers, supplementing information that was already there for MBS and PBS expenditure, albeit separately. And by defining Medicare as MBS and PBS expenditure, the government has seamlessly airbrushed public hospitals out of the picture.

What is Medicare?

Until budget night this week, most people would have thought of Medicare as the medical services and public hospital scheme, and probably still do.

When Medicare was introduced in 1984, it changed funding arrangements for medical services and public hospitals, removing or reducing financial barriers to access to these services. It did not touch PBS arrangements.

It may now be appropriate to add the PBS as a third component of Medicare, as it is about access to health care. But the PBS should be an addition to how Medicare is defined. It shouldn’t be used to airbrush public hospital access out of any Commonwealth definition of Medicare.

To put it more simply, the Medicare Guarantee Fund does not include the Commonwealth’s contribution to public hospital funding. But it does include the PBS, adopting a unique and idiosyncratic definition of Medicare.

The Medicare Guarantee Fund is being created using a partial statement of Medicare spending: if the public were to assume the Medicare Guarantee Fund is purely about a public commitment to Medicare, they would be misled.

So despite Morrison’s claims the fund will provide “transparency about what it really costs to run Medicare”, Medicare funding will actually be less transparent.

What does the fund guarantee?

The government probably hopes the Medicare Guarantee Fund will be its armour against a revised Mediscare campaign, like the one Labor ran before the 2016 election. The word “guarantee” linked with “Medicare” sounds good, costs nothing and does not bind the government in any way. But it may be enough to ward off the Mediscare vampires.

Mediscare resonated in 2016 because of the 2014 budget decisions. These were seen as a breach of trust as they were policies that had been explicitly ruled out in the previous election campaign.

The controversial 2014 budget proposals aimed to reduce Commonwealth expenditure by shifting costs onto consumers and onto states. One way of doing this was through co-payments that required patients to make an out-of-pocket payment when they see a doctor.

Another cost-shifting policy was the Medicare rebate freeze, which froze MBS rebates for visits to doctors at 2013 levels, despite inflation since then which has been tracking at around 2% a year. Since rebates are also paid to consumers, this was another example of a consumer cost shift, although the burden of this strategy probably fell on providers, particularly general practitioners.

Some of the 2014 changes (like the co-payment) required legislation to implement, while others (like the rebate freeze) could be implemented by administrative action without requiring parliamentary approval.

Importantly, none of the changes that required legislation were successful. The only changes in the 2014 budget that were eventually implemented were the ones that didn’t require legislation, such as the rebate freeze and draconian public hospital budget cuts. These tore up a previous agreement under which the Commonwealth matched cost increases in public hospitals.

Even these two measures have now been partially wound back - the hospital cuts before the 2016 election, and the rebate freeze in the 2017 budget.

What should a Medicare guarantee look like?

A Medicare guarantee worth its salt would be one that protects the public from the administrative assaults of the 2014 budget. This would involve enshrining in legislation the Commonwealth-state health care agreements – as well as the “partnership” payments, which are other Commonwealth grants to the states for health care – and introducing automatic indexation of Medicare rebates.

The Medicare Guarantee Fund as proposed in the 2017 budget does not do this. It provides no guarantee of policy stability, no guarantee of additional funding, and no guarantee that a future budget will not tear into the Medicare fabric in the way that characterised the 2014 debacle.

Authors: Stephen Duckett, Director, Health Program, Grattan Institute

Read more http://theconversation.com/dont-be-fooled-the-medicare-guarantee-fund-provides-no-real-guarantee-77555

Writers Wanted

Asian countries do aged care differently. Here's what we can learn from them

arrow_forward

The Conversation
INTERWEBS DIGITAL AGENCY

Politics

Prime Minister Interview with Kieran Gilbert, Sky News

KIERAN GILBERT: Kieran Gilbert here with you and the Prime Minister joins me. Prime Minister, thanks so much for your time.  PRIME MINISTER: G'day Kieran.  GILBERT: An assumption a vaccine is ...

Daily Bulletin - avatar Daily Bulletin

Did BLM Really Change the US Police Work?

The Black Lives Matter (BLM) movement has proven that the power of the state rests in the hands of the people it governs. Following the death of 46-year-old black American George Floyd in a case of ...

a Guest Writer - avatar a Guest Writer

Scott Morrison: the right man at the right time

Australia is not at war with another nation or ideology in August 2020 but the nation is in conflict. There are serious threats from China and there are many challenges flowing from the pandemic tha...

Greg Rogers - avatar Greg Rogers

Business News

Top 5 US Logistics Companies

Nothing is more annoying than having to deal with unreliable shipping companies for your fragile and important packages. Other than providing the best customer service, a logistics company also ne...

News Co - avatar News Co

Luke Lazarus Helps Turns Startups into Global Stalwarts

There are many positive aspects to globalization. It is no secret that those who have been impacted by globalization tend to enjoy a higher standard of living in general. One factor that has led to ...

Emma Davidson - avatar Emma Davidson

Digital-based strategies that grow and expand your business

Small and medium-sized businesses are increasingly relying on new technology solutions to strengthen their product development, marketing, and customer engagement activities. Technology adoption...

News Co - avatar News Co



News Co Media Group

Content & Technology Connecting Global Audiences

More Information - Less Opinion