Holes in the Safety Net

No one should be surprised that the Medicare Safety Net is being wound back. It was doomed to fail. The safety net was a device invented by the government to aid re-election by neutralising the health policy of the ALP. Nothing more, nothing less.

Reports not long before last year's election stated that spending on the safety net was blowing out. More interestingly, it was shown that the main beneficiaries of the scheme were the wealthy. Claims collated by suburb revealed high income areas received the most benefits. Lots of cosmetic surgery paid for by the government, perhaps? So much for the safety net being a boon for the poor.

At the same time the government was trying to keep the lid on medical specialists' fees. It seems it was a dismal failure.

Doctor's fees are a bit like the housing market. There's constant demand limited only by the buyers' ability to pay. The limiting factor for housing prices are interest rates, for doctors it's the medicare / private health insurance rebates.

An important part of the limiting effect on doctors fees is that you have to pay for the service or collect the bill from the doctor before you can claim the rebate. This forces the consumer to realise the actual cost of the service. Fee increases become immediately apparent.

Medicare is reasonably effective at controlling GPs fees. Suburban GPs are now being squeezed financially because the Medicare rebate hasn't keep up with inflation.

The safety net, and the other hand, having no ceiling and a relatively low threshold, took away the only control available to limit specialists' fees, as they were already so high that the safety net was immediately effective. They could raise their fees and the government coughed up 80% of the increase.

No wonder the AMA was so vocal criticising the government.

The government had no choice but to raise the threshold. My guess is it's still too low and further surgery on the Medicare Safety Net will be needed.