Medicare is the publicly funded universal health care insurance scheme in Australia (including its external territories) operated by Services Australia (formerly the Department of Human Services). Medicare is the main source of payment of health care in Australia, either partially or fully covering the cost of most primary health care services for eligible citizens, residents and some visitors. Residents are entitled to a rebate for treatment by medical practitioners, eligible midwives, nurse practitioners and allied health professionals who have been issued a Medicare provider number, and they can also obtain free treatment in state public hospitals. Many non-medical or allied health services are not covered by Medicare, such as dental, optical, physiotherapy, and chiropractic treatment.
The scheme was created in 1975 by the Whitlam Government under the brand Medibank, and was limited by the Fraser Government in 1976 to paying customers only. The Hawke Government reinstated universal health care in 1984 under the brand of Medicare. Medibank continued to exist as a government-owned private health insurance provider until it was privatised by the Abbott Government in 2014.
Reciprocal Health Care Agreements (RHCA) are in place with the United Kingdom, Sweden, the Netherlands, Belgium, Finland, Norway, Slovenia, Malta, Italy, Republic of Ireland and New Zealand, which entitles visitors from these countries limited access to public health care in Australia (often only for emergencies and critical care), and entitles eligible Australians to reciprocal rights while in one of these countries.
- 1 Constitutional framework
- 2 History
- 3 Funding of scheme
- 4 Medicare rebates or benefits
- 5 Operation of the scheme
- 6 Practitioner review programs
- 7 See also
- 8 References
- 9 External links
Australia's Medicare scheme operates under power granted to the federal Parliament by Section 51 (xxiiiA) of the Commonwealth Constitution, which was inserted by a referendum of 1946, and gave the federal Parliament power, subject to the Constitution, to make laws with respect to: The provision of maternity allowances, widows' pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorise any form of civil conscription), benefits to students and family allowances.
This empowers the Commonwealth to provide benefits under the Medicare scheme, but not to provide health care services directly. The operation of hospitals, for example, remains within the jurisdiction of the states and territories, and the Commonwealth must operate through their authority.
Privately run hospitals are also part of the Medicare scheme. Medicare benefits are payable for medical treatment provided to admitted patients of private hospitals as well as public hospitals. However, a patient in a private hospital (by definition, a private patient) would need private insurance coverage to help him or her meet any of the hospital charges such as accommodation costs, as well as some or all of the remainder of the doctor's charges above the 75% Medicare benefit.
There was an increase in the number of Australians covered by health insurance plans following the end of the Second World War. However, a large proportion of the Australian population continued to lack coverage for health risks in the early 1970s. In 1972, 17% of Australians outside of Queensland (which had a free public health care system) were uninsured, most of whom were on low incomes.
The Whitlam Labor government, elected in 1972, sought to put an end to the two-tier system by extending healthcare coverage to the entire population. Before the Labor Party came to office, Bill Hayden, one of the Labor Party's front bench members of parliament, took the main responsibility for developing the preliminary plans to establish a universal health scheme.
According to the second reading speech of the Health Insurance Bill 1973, delivered by Hayden (who had become Minister for Social Security) on 29 November 1973, the purpose of the new scheme, called Medibank, was to provide the 'most equitable and efficient means of providing health insurance coverage for all Australians'. There was opposition to the system from the Liberal-Country Party Coalition-controlled Senate. The Health Insurance Bill 1973 and the accompanying bills were rejected by the Senate on three occasions (12 December 1973, 2 April 1974 and 18 July 1974). The Medibank legislation was one of the bills which resulted in a double dissolution of Parliament on 11 April 1974, and was passed at a subsequent joint sitting of Parliament on 7 August 1974. The original plan for Medibank was for it to be financed by a 1.35% levy (with low income exemptions) but the bills were rejected by the Senate, and so Medibank was originally funded from general revenue.
Medibank started on schedule on 1 July 1975. In nine months, the Health Insurance Commission (HIC) had increased its staff from 22 to 3500, opened 81 offices, installed 31 minicomputers, 633 terminals and 10 medium-sized computers linked by land-lines to the central computer, and issued registered health insurance cards to 90% of the Australian population.
Medibank Mark IIEdit
After a change of government at the December 1975 election, the Fraser Coalition government established the Medibank Review Committee in January 1976. The Committee findings were not made public but the new program was announced in a Ministerial Statement to Parliament on 20 May 1976. 'Medibank Mark II' was launched on 1 October 1976 and included a 2.5% levy on taxable incomes, with the option of taking out private health insurance instead of paying the levy. Other changes included reducing rebates to doctors and hospitals.
On 1 October 1976, the Fraser government also passed the Medibank Private bill, that allowed the HIC to enter the private health insurance business. This legislation led to the original Medibank closing in 1981.
On 1 February 1984, the original Medibank model was reinstated by the Hawke Labor government, but renamed Medicare to distinguish it from Medibank Private which continued to exist. The major changes introduced by the Fraser government were largely reversed, although the financing arrangements were changed. Medicare, which came into effect on 1 February 1984, followed the passage in September 1983 of the Health Legislation Amendment Act 1983, including amendments to the Health Insurance Act 1973, the National Health Act 1953 and the Health Insurance Commission Act 1973.
Easyclaim was launched in 2006, under which a patient would pay the medical practitioner the consultation fee and the receptionist would send a message to Medicare to release the amount of rebate due to the patient's designated bank account. The rebate amount would take into account the patient's concession status and thresholds. In effect, the patient only pays the gap. In recent years, it has been replaced with HICAPS (Health Insurance Claim At Point of Sale). For providers not using HICAPS, patients can make claims on-the-spot (where Medicare will pay the patient at a later date), online, through the Medicare mobile apps, or at joint Medicare-Centrelink Service Centres.
Funding of schemeEdit
Medicare is presently nominally funded by an income tax surcharge, known as the Medicare levy, which is currently 2% of a resident taxpayer's taxable income. However, revenue raised by the levy falls far short of funding the entirety of Medicare expenditure, and any shortfall is paid out of general government expenditure.
The 2013 budget increased the Medicare levy from 1.5% to 2% from 1 July 2014, ostensibly to fund the National Disability Insurance Scheme. The 2017 budget proposes to increase the Medicare levy from 2% to 2.5%, from 1 July 2018, but the proposed increase was scrapped on 25 April 2018.
When the levy is payable, it is calculated on the whole of an individual's taxable income, and not just the amount above the low-income threshold.
Low income exemptionsEdit
Low income earners are exempt from the Medicare levy, with different exemption thresholds applying to singles, families, seniors and pensioners, with a phasing-in range. Since 2015–16, the exemptions have applied to taxable incomes below $21,335, or $33,738 for seniors and pensioners. The phasing-in range is for taxable incomes between $21,335 and $26,668, or $33,738 and $42,172 for seniors and pensioners.
Medicare rebates or benefitsEdit
Standard Medicare rebateEdit
Medicare sets a schedule of fees, called the Medicare Benefits Schedule (MBS). The standard Medicare rebate or benefit is 100% of a general practitioner and 85% of a specialist schedule fee. Where medical practitioners bill Medicare directly (called "bulk billing"), they agree with Medicare to accept 85% of the schedule fee in full payment for their services. Many medical practitioners bulk bill pensioner patients, and some bulk bill other groups or all of their patients.
For services provided in a private hospital, Medicare will rebate 75% of the Schedule fee.
The MBS is not indexed, but is reviewed from time to time. The government has imposed a Medicare benefits freeze over the last few years. This has resulted in some practitioners opting out of bulk billing, with affected patients having to pay out-of-pocket costs.
The difference between the cost of health care and the rebate is called an out-of-pocket cost or co-payment. The out-of-pocket costs for Australians are continuing to increase, as a result of increases in healthcare costs above Medicare schedule increases, and also because a Medicare benefits freeze has been imposed over the last few years. Medical practitioners choosing to cease or cut back on bulk-billing also increases out-of-pocket costs to patients.
If a practitioner does not bulk bill a particular patient, that patient will receive a bill for the medical expenses and is obligated to pay the bill. The practitioner is paid the full amount of the bill. The patient is reimbursed by Medicare 85% of the schedule fee and is out-of-pocket for the balance of the bill. Medicare accumulates the gap amounts, which is the difference between the schedule fee and the 85% reimbursed by Medicare, paid by the patient, to determine when the safety net threshold is reached. After the threshold is reached, the patient is reimbursed for the balance of the schedule fee (i.e., 15%). In the three months to July 2016, 85.9% of GP visits were bulk billed, which fell to 85.4% in the three months to September 2016.
Many medical practitioners charge more than the schedule fee, and the amount in excess of the schedule fee must be borne by the patient and is not counted towards the safety net threshold.
Medicare safety netsEdit
To provide additional relief to those who incur higher than usual medical costs, Medicare safety nets have been set up. These provide singles and families with an additional rebate when an annual threshold (determined on a calendar year basis) is reached for out-of-hospital Medicare services. There are two safety nets:
- the original Medicare safety net, and
- the extended Medicare safety net.
The thresholds for both safety nets are indexed on 1 January each year to the Consumer Price Index.
Original Medicare safety netEdit
Under the original Medicare safety net, once an annual threshold in gap costs has been reached, the Medicare rebate for out-of-hospital services is increased to 100% of the schedule fee (up from 85%). Gap costs refer to the difference between the standard Medicare rebate (85% of the schedule fee) and the actual fee paid, but limited to 100% of the schedule fee. The threshold applies for all Medicare cardholders and is $470.00 for calendar year 2019.
|1 January 2006||$345.50|
|1 January 2007||$358.90|
|1 January 2008||$365.70|
|1 January 2009||$383.90|
|1 January 2010||$388.80|
|1 January 2011||$399.60|
|1 January 2012||$413.50|
|1 January 2013||$421.70|
|1 January 2014||$430.90|
|1 January 2015||$440.80|
|1 January 2016||$447.40|
|1 January 2017||$453.20|
|1 January 2018|
|1 January 2019||$470.00|
Extended Medicare safety netEdit
The extended Medicare safety net (EMSN) was first introduced in March 2004. Once an annual threshold in out-of-pocket costs for out-of-hospital Medicare services is reached, the Medicare rebate will increase to 80% of any future out-of-pocket costs (now subject to the EMSN fee cap) for out-of-hospital Medicare services for the remainder of the calendar year. Out-of-pocket costs are the difference between the fee actually paid to the practitioner (subject to the fee cap) and the standard Medicare rebate.
When introduced, the general threshold for singles and families was $700 and $300 for singles and families that hold a Commonwealth concession card, and families that received Family Tax Benefit Part (A) (FTB(A)) and families that qualify for notional FTB(A). On 1 January 2006 the thresholds were increased to $1,000 and $500 respectively. From then the EMSN was indexed by the Consumer Price Index on 1 January each year.
Since 1 January 2010, some medical fees have been subject to an EMSN fee cap, so that the out-of-pocket costs used in determining whether the threshold has been reached are limited to that cap. The EMSN fee cap also applies for any rebate that is paid once the EMSN threshold is reached. The items subject to a cap has expanded since 2010, the latest being in November 2012.
|Year||Extended Concessional and
FTB Part A Threshold Value
|1 January 2006||$500.00||$1000.00|
|1 January 2007||$519.50||$1039.00|
|1 January 2008||$529.30||$1058.70|
|1 January 2009||$555.70||$1111.60|
|1 January 2010||$562.90||$1126.00|
|1 January 2011||$578.60||$1157.50|
|1 January 2012||$598.80||$1198.00|
|1 January 2013||$610.70||$1,221.90|
|1 January 2014||$624.10||$1,248.70|
|1 January 2015||$638.40||$2,000.00|
|1 January 2016||$647.90||$2,030.00|
|1 January 2017||$656.30||$2,056.30|
|1 January 2018|
|1 January 2019||$680.70||$2133.00|
Operation of the schemeEdit
Services Australia (previously the Department of Human Services) is the statutory agency responsible for operating the Medicare scheme. Medicare Australia was the responsible agency until it was dissolved in 2011 into its parent agency, DHS. Currently, Services Australia operates the scheme in consultation with the national Department of Health and other health-related agencies such as the Australian Organ Donor Register and state health services (for example, Queensland Health).
Medicare provider numbersEdit
Medicare issues to eligible health professionals a unique Medicare provider number to enable them to participate in the Medicare scheme. The provider number is required to appear on the practitioners’ bills, prescriptions or service requests (referrals) that are eligible for a Medicare benefit. A practitioner may have more than one number, if, for example, they practise from more than one location.
Medicare issues each person entitled to receive benefits under the scheme with a Medicare card which has a number that must be used when making a claim. The card must be produced or the Medicare number provided if the Medicare rebate is paid directly to the doctor under the bulk billing system; and in its absence the doctor cannot bulk bill for the consultation. The doctor is permitted to keep a record of the patient's card number and use it at subsequent visits.
It is also necessary to provide a card number (although not necessarily show the card) to gain access to the public hospital system to be treated as a public patient. For non-elective treatment (e.g. emergency), public hospitals will admit patients without a number or card and resolve Medicare eligibility issues after treatment.
The Medicare card will also be required when accessing medical, hospital or pharmaceutical services in a country with which Australia has a reciprocal health care agreement.
Practitioner review programsEdit
This is a basic overview of the practitioner review process in point form:
- Medicare Australia provide a federal framework to deliver a health system to the people of Australia.
- Delivering health care to millions relies on proper utilisation of limited resources.
- As such, to make sure the services provided under the Medicare umbrella (including medicines administered by the PBS), reviews and audits are conducted.
- To quote the Medicare website, "identification and reviews of practitioners' practice profiles protect patients and the community from the risks and costs of inappropriate practice".
- Inappropriate practice is defined twofold:
- "services that would be unacceptable to the general body of members".
- includes the rendering of "80 or more professional attendances on each of 20 more days in a 12-month period", i.e. rorting the system through false services rendered.
- When practitioner is reviewed, their data is compared with that of their peers.
- If this data is markedly different then this practitioner may be referred to the Practitioner Review Program.
- If concerns still remain at the end of the Practitioner Review Program, then a referral to the Professional Services Review (PSR) can be made.
- The PSR:
- Practitioners are always contacted by the PSR when a review concerning them is conducted.
- Practitioners covered by the PSR include all who provide services within the PBS and/or Medicare framework (this includes doctors, dentists, allied health professionals).
- The Medical Director of the PSR acts as a last-ditch arbitrator.
- The Medical Director will compare the reported case to random data.
- The outcome may be no further action, a reprimand (administered by the Determining Authority), counseling, etc.
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- Understanding the Australian Health Care System by Eileen Willis, Louise Reynolds, and Keleher Helen.
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- "Medicare levy". www.ato.gov.au. Archived from the original on 29 June 2013. Retrieved 28 February 2015.
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- " Archived 4 March 2010 at the Wayback Machine
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- Medicare (Australia) Official website
- MEDICARE ephemera digitised and held by the National Library of Australia
- Department of Health and Ageing Bulk Billing Rates
- APH Background Briefing on Medicare
- Medicare Benefits Schedule Online contains a searchable index of all fees Reciprocal Agreements
- Department of Health and Ageing – Overseas Visitors' Health Cover
- What is Medicare in Australia?