Crisis looms as Medicare rebates fall
Patients are paying more and more out of pocket for specialist services. It’s time for reform.
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The latest disturbing information from the medical sector – that patients are paying more out-of-pocket medical costs to specialists as Medicare rebates drop to historic lows – reinforces National Seniors’ campaign to cut medical costs and reform the private health insurance system.
According to media reports, Medicare is now covering just over half of specialist fees, which means we are increasingly dipping into our own pockets.
Alternatively, we are delaying care treatments because it is too expensive.
According to data from the Australian Institute of Health and Welfare (AIHW), Medicare funding for specialist provider fees dropped to an all-time low of 52% between January and March this year, down from 72% in 2004 – and the trend is downwards.
Doctors blame the Federal Government for failing to fund the Medicare rebate to keep pace with inflation.
“Over time, the Medicare rebates fall further and further behind, so that we see now they’re almost meaningless when it comes to accessing care,” Gino Pecoraro, the president of National Association of Specialist Obstetricians and Gynaecologists (NASOG), told the ABC.
“It is so far out of touch with what it actually costs to access the services that it doesn’t provide any degree of comfort to the patients who have to purchase these services.”
But others blame an ongoing shortage in specialists, which has led to a lack of competition in some areas.
“These fees probably aren’t a big surprise because you’ve got some constraints on the supply of specialists and no-one regulates their fees,” the Grattan Institute’s health program director, Peter Breadon, said.
“It’s really hard for patients to know the fees ahead or to evaluate the quality of care and, particularly in rural areas, there’s just hardly any specialists in many cases.”
Out-of-pocket specialist costs have long been an issue for older Australians – as highlighted by NSA research, which revealed growing seniors’ anger about the unaffordability of private health care in Australia.
This must be addressed to preserve private health insurance as an option for older people.
That’s why National Seniors is calling for an independent inquiry into the private health system. Read the NSA report and join our Health Costs campaign to support cheaper health care.
The Grattan Institute says out-of-pocket fees have increased by an average of more than 50% in real terms in the decade since 2012.
AIHW figures show $2.3 billion in out-of-pocket costs were paid by private patients in 2022-23 for specialist consultations, with obstetrics and gynaecology, anaesthetics, psychiatry, dermatology, and ophthalmology charging the most.
Decreasing Medicare rebates to specialists and rising gap medical costs is a dangerous trend, because people are delaying care due to cost-of-living concerns.
More than 10% of Australians aged over 15 delayed seeing a medical specialist when they needed to in 2022-23 because of the cost, Australian Bureau of Statistics data showed. This is compared to 8% the year before.
Those who cannot afford private fees must wait on public waitlists, with the ABC last year revealing some Australians are forced to wait longer than six years to see crucial specialists like neurosurgeons.
People are also being forced to turn to crowdfunding or dip into their superannuation for help with exorbitant medical costs, the ABC says.
Delaying and waiting for medical treatment is counterproductive, with poor personal and economic flow-on effects as patients get sicker, stay longer and occupy beds in hospital, and may even drop out of the workforce.
Australian Medical Association president Steve Robson called for the rebates to be increased to make healthcare more accessible.
“Increases in the Medicare rebate have gone up, sometimes, not at all … or perhaps 1% or 2% a year, whereas the costs of providing care by doctors has gone up, sometimes, as much as 7-10% in a year,” he told the media.
“There’s a huge gap between what Medicare will give back to a patient and what it costs to provide the care.”
However, the Grattan Institute has reportedly argued a rebate increase in isolation is not likely to help.
“In the past when rebates have gone up, patient fees haven’t actually gone down,” Mr Breadon said. “There are some deeper structural problems that have to be addressed here.”
National Seniors agrees. Only a thorough review of the private health insurance by the Productivity Commission can get to the heart of the problem, which includes the need for greater transparency of specialists’ fees.
There is no regulation of how much specialists can charge patients.
Mr Beardon said solutions to the problem included boosting the supply of specialists, expanding public care for people who could not afford private fees, and increasing transparency around how much specialists charged.
The Federal Government is prohibited from regulating specialist fees under the constitution, but Mr Breadon says it can punish the “minority of specialists who charge really extreme, high fees” by stripping them of rebates altogether.
“The government has to look at how to crack down on them because, in many cases, these fees are double or triple the rebate level,” he said.
“Bringing that rebate up a bit won’t address those outliers who are charging really extreme fees.”
National Seniors believes our health system’s business model is on the way to failing, and the government needs to act.
However, media reporting of the response from Health Minister, Mark Butler, is not encouraging and falls short of committing to intervention.
In a motherhood statement, he said all Australians deserved access to affordable health care.
“The private health sector, including insurers and specialists, need to do more to protect patients from exorbitant bills,” he said.
“This year's increase to Medicare rebates is the second largest increase in the past 30 years. The largest increase was last year.”
He added that the government was committed to working with consumers, doctors, and private health providers to improve transparency of out-of-pocket costs for specialist services.
