Lack of proper Medicare indexation leaves $8 billion hole   

The Australian Government has saved billions because of poor Medicare indexation with AMA analysis revealing a saving of $8.6 billion from just one Medicare item since 1993.  

 Australian Medical Association President Professor Steve Robson said the AMA analysed the indexation of the most commonly used Medicare item in general practice, the Level B consultation item, in the report Why Medicare indexation matters launched today. 

 “Medicare has never kept pace with the rising costs of running a medical practice, and years of frozen and low indexation means the patient rebate provided no longer bears any relationship to the actual cost of providing high-quality services to patients,” Professor Robson said.  

 “Inadequate indexation has put all medical practices under pressure, especially general practices where so many patients need to be bulk billed because they cannot afford to pay an out-of-pocket cost. What we found clearly illustrates why the state of general practice is so dire; why bulk billing is under pressure; why patients are increasingly facing higher out of pocket costs, and why so many practices are hitting a financial wall.”  

 From July this year, Medicare items were indexed by 1.6 per cent despite practice costs like wages, rent and utilities climbing at a much higher rate. The AMA’s analysis of the level B consultation item (the item used for consultations lasting less than 20 minutes) found that inadequate indexation has “saved” the government around $8.6 billion over the lifetime of the item.   

 “The Medicare rebate is the patient rebate, not the doctor’s rebate, and therefore reflects what the government is willing to pay for Australian’s healthcare,” Professor Robson said.  

 "Our analysis shows that successive governments have been stripping healthcare funding from Australian taxpayers through poor indexation and shifting the cost of care onto everyday Australians. Medical practitioners must either absorb the cost and risk becoming unviable or increase out-of-pocket costs for patients. This is not a sustainable solution. 

 “The Minister for Health and Aged Care, Mark Butler, has talked about the dire state of general practice and acknowledged it needs urgent attention. The AMA’s analysis demonstrates very clearly what one of the core issues is and what needs to happen.  

 “The AMA’s Plan to Modernise Medicare campaign calls on the government to implement a revised indexation tool to ensure rebates better reflect the rising costs of providing high-quality medical care and running a medical practice.”   

 The AMA estimates that improved indexation across the whole MBS could cost the government $4.98 billion over four years — just over half of what has been stripped from one MBS item.   

 Read the AMA’s report Why Medicare Indexation Matters