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Reorganisation: New Government, New Relationship, New Priorities, New Structure

The Senate Committee’s eventual report on the Lawrence legislation recommended more or less the status quo. This was a surprise and a disappointment for those, like the AMA, who had hoped for a more positive endorsement of their analysis of its effects. The new Government, moreover, seemed in no great hurry to withdraw it. The AMA therefore continued to pursue its concerns, pointing out to the Government that the legislation had clearly failed to meet its aims anyway because increases in insurance premiums had already outstripped any benefit from a rebate, which had not yet been introduced.

The new Government agreed finally to refer the private health insurance question to the Productivity Commission for inquiry and report. It was a recognition of sorts of what had become a large problem but not quite the full one that the AMA thought that the problem demanded. The terms of reference that the Government gave to the inquiry were so narrow that it was hard to see how the Commission could come to any effective result. It was prevented, for example, from examining Medicare, including bulkbilling, and its terms precluded abandonment of community rating. The AMA was dismayed by this limitation, given that almost 75 per cent of expenditure on hospitals and 80 per cent on medical services came from government. Nevertheless, it put a submission to the inquiry arguing that private health insurance could not be stabilised without an examination of the overall financing arrangements, that the managed care agenda be abandoned and that the proposed rebate be targeted to support private healthcare more effectively. The AMA also offered the profession’s cooperation on informed financial consent, simplified billing and better use of resources. The Commission did not report until February 1997, when it handed down a report that traversed the general problems of the private health insurance sector but, presumably because of the limitations on its terms of references, that reached no conclusion and recommended no action on the question, other than proposing unfunded lifetime community rating.

The Lawrence contracts issue aside, the immediate post-election environment in general continued to encourage the AMA to look forward to a more agreeable relationship with the new Government. Dr Wooldridge met Dr Weedon and Dr Coote informally within a few weeks of his becoming the new Minister and the AMA welcomed him in its 1996 Annual Report as “accessible and consultative”, as befitted a member of the association. Dr Wooldridge was on the record as saying that he wanted “to get government off the back of GPs”, that he wanted to work with the profession to improve healthcare, and that change would be impossible without cooperation. He established a group of private health insurance organisations known as the Round Table to help identify areas of agreement on change. Within six months, the Round Table issued a report that pointed to two such areas: simplified billing and informed financial consent. On several fronts, cooperation between the AMA and the Government and its agencies was close and relatively smooth. The joint AMA-Government Relative Value Study was proceeding well; the Medical Benefits Consultative Committee (with AMA, craft groups and government representatives) was concentrating on making sure that the schedule reflected developments in medical practice. The General Practice Accreditation Steering Committee was helping build a system of accreditation that was acceptable to members, including a suitable set of practice standards. But, not too long into the term of the new Government, the expectations of the AMA and the profession of a generally smoother relationship with it were beginning to be shaky.

The new Government’s first Budget ordered unexpectedly large cuts in expenditure on health – along with those in other sectors, it is true – but alarming to the AMA because of their effects on the health system and on doctors. The medical Medicare budget was cut by more than $1.5 billion between 1996 and 2000, the reductions including restrictions on access by new graduates to Medicare benefits, non-indexation of MBS fees for rebate purposes and cuts to rebates for psychiatry and assistance at operations. The PBS was cut by more than $0.75 billion and Commonwealth grants to the states for hospitals were reduced by nearly $0.35 billion. The Government did eventually heed an AMA campaign against these cuts to the extent that it reversed its decisions affecting psychiatry and assistance at operations, but not those implementing the rest of the health budget. This posed real problems for the profession and the sector at large, and it provoked concerns in the AMA about the strength of the Government’s commitment to cooperation and consultation.

An even more difficult bump in the road was caused by the Government’s decision in 1996 to restrict Medicare provider numbers to doctors who had completed postgraduate training. This was an idea aired (though never adequately explained) and never implemented by the previous Government. The AMA had for some time argued there was a problem of over-supply of GPs in major cities that was not being managed, and it had supported the idea of postgraduate training before independent practice. But the new Government decided to use Medicare provider numbers in a way that the AMA interpreted as meant to exert control over the medical workforce more generally. Whatever its intent, the decision was grossly unfair to interns and medical students who had begun and finished studies in good faith, in the AMA’s view. It warned that the Government’s action would be bitterly resisted by junior doctors. The warning was prescient. Unprecedented action by Resident Medical Officers in New South Wales (described by Dr Wooldridge as “industrial thugs in white coats”) and lobbying by the AMA and its Council of Doctors-in-Training led to a re-think by the Government. After protracted negotiations with the AMA, it agreed to reverse its decision. It was also agreed that the AMA would be represented on a Medical Training Review Panel set up by the Government to improve and regulate medical training.

The managed care issue was grumbling along in the meantime, surviving so long as the Lawrence legislation survived. Early in 1996, most private hospitals had signed up for Lawrence contracts, no doubt because they were initially secure under them, as the Federal President, Dr Keith Woollard, had noted at the time. But they were also steadily pressuring doctors to fall into line via MPPAs – steadily, but not all that successfully, because the great majority of the doctors concerned refused to be tempted.

Late in 1997, the Government introduced the Health Legislation Amendment Bill (No. 4), which included a provision that actually extended Lawrence contracts into consultations and other medical services provided by community organisations by approving private health insurance for charges above 85 per cent of the MBS, but only if the doctors providing the service signed a Lawrence contract. The AMA strenuously opposed the idea, mailing the membership and lobbying the Government about it. Eventually (and, on the face of it, reluctantly) the Government withdrew the offending provisions in the legislation: the first time that the AMA had succeeded in winning withdrawal of legislation that had been tabled in the Parliament.

Even later in 1997 (on the last sitting day of the year, in fact), the Government got its 30 per cent rebate through the Parliament. This was expected to interrupt the apparently irresistible shrinkage in health insurance coverage, though the relief would be temporary, in the AMA’s view. Lawrence contracts had not succeeded in encouraging coverage. A new way was needed. The AMA continued to press alternative ideas on the Government and offer its support for ways to reverse the movement of people out of health insurance, such as lifetime community rating, informed financial consent, simplified billing and increased Medicare rebates in areas where they were seriously deficient. It proposed legislation that would allow gap medical insurance without Lawrence contracts and, to deal with any concerns about fee inflation, a gap cover scheme in which the funds would put proposals about premium levels to the Minister for approval. By the end of 1997, the pattern of decline in coverage had resumed. In December, coverage was down to 31.6 per cent; ie, 4.8 per cent lower than that reported in January.

It was not only private health insurance that was giving the AMA cause for concern about the way things were going. The Annual Report for 1997 recorded complaints by members about low morale and deteriorating working conditions. Dr Woollard spoke of the Government’s “appalling treatment of GPs”. As early as May in 1997, Federal Council decided to mount a Campaign in Support of GPs, to continue until 1998 (when a federal election was already anticipated), to stimulate debate in the community, the profession and the Government about the issues facing GPs and the need for change. The General Practice at Breaking Point campaign was launched five months later, after the Minister was told about it and the AMA’s expectation of formal negotiations that would produce measures to reposition general practice and confirm its leading role in the health system.

The campaign had two major, linked objectives. One was awareness-raising: to inform the community as a whole – including governments and policymakers – and the profession about the issues confronting the contemporary GP. The second was to achieve better conditions for GPs and to encourage less reliance among them on bulkbilling – but also to increase the AMA’s profile as the foremost GP political organisation in the country and increase its GP membership. These objectives were pursued in five ways: negotiating to achieve remuneration and professional goals; using a network of doctors to lobby members and candidates in every federal electorate; distributing profile-raising material such as stickers; organising professional events such as the campaign launch and professional conferences; and pursuing the campaign through media and public relations.

Among the achievements that the AMA claimed for the campaign was the full indexation of GP rebates in November 1998 (with another increase four months later) and federal funding for information technology in general practice. More importantly for the AMA’s political agenda – and with the axiom ‘all politics is local’ at the core of it – it designed, produced and distributed basic tools with which GPs could campaign for better conditions among their MPs and Senators: information about bulkbilling and co-payments, general practice financing, the impact on GPs of taxation, including the FBT and the GST that were then being promoted, and the various impacts on (and consequences for) general practice of information and other new technologies.

It was about this time – 1997 and 1998 – that the AMA’s role was evolving (in the words of Dr Bill Coote, the then Secretary General) from representing one monolithic professional view on issues related to fees and insurance to one in which it would be also a facilitator and a resource for other groups in the field. Apart from any other reason, it reflected and was a consequence of what Dr Coote called “the growing sophistication and detail with which the Government was managing Medicare, using the vast amount of data generated by the Medicare system”. This needed informed response that could only come about with the help of relevant experts. So the AMA began looking closely at ways to coordinate the expertise of craft and speciality groups. But the issue of fees for medical services and medical benefits still remained a major priority at this time, when the AMA was involved with the Government in a relative value study (RVS) of the MBS, up to then seen as a theoretical exercise, as Dr Coote stated in the Annual Report for 1997, but which “will eventually impact on every doctor whose services attract Medicare benefits”. The RVS idea had been born and put to work in the Keating days; the incoming Government had endorsed it in its platform for the 1996 election. Its future looked secure. But it would provide the ground for yet another clash between the AMA and the Government.

The RVS would take the best part of seven years to complete. A joint Commonwealth-AMA Medicare Schedule Review Board (MSRB) was created to determine MBS fees for all services excluding pathology and diagnostic imaging on which Medicare rebates would be paid. The genesis of the whole operation was actually in the AMA National Conference in May 1991, which carried a motion that “the Federal AMA undertake a work value and relative value study to reassess the appropriateness of the AMA List of Medical Services and Fees”. The AMA agreed to comply with the motion only after much internal discussion. Indeed, Federal Council, in its first meeting after National Conference in September, resolved that an RVS “would not achieve the appropriate objectives, particularly in the light of overseas experience”. Instead, it decided that the Federal Secretariat should “consider the value of consultative items in the AMA List of Medical Services and Fees in the light of remuneration of other professions, having regard to perceptions in some sections of the profession that consultative items are under-remunerated”.

The AMA’s objective for the RVS was that it would help reflect more accurately the medical and non-medical resources needed to support the provision of private medical services, including the rising cost of indemnity insurance. Its own modelling suggested that MBS fees might need to be increased by at least $1.5 billion a year in then dollar values, if Medicare rebates were to match the anticipated results of the RVS. This “apparently high price tag”, the 2000 Annual Report said, “is no surprise to those familiar with the way MBS fees and rebates have been screwed down over the years”. It was also no surprise, therefore, that the Government took its time agreeing to cooperate with the RVS. Indeed, in her 2001 President’s Report to members, after the results of the RVS had been handed finally to the Minister, Dr Kerryn Phelps took aim at the Government not just for being reluctant to cooperate with the RVS, but also for actually trying to sabotage it. “The Health Minister and his department took every opportunity to try to undermine and pour scorn on the RVS and suggest that the AMA’s involvement was purely a massive pay demand by already well-paid doctors,” she said.

The RVS and medical indemnity were still unfinished business for the AMA as late as 2000, when Dr Phelps succeeded Dr Brand as Federal President. Before then, however, the association had had to endure seriously damaging internal division.