Speech - Dr Kerryn Phelps, AMA President, to the National Press Club, Canberra - The Future of Medicare

In three weeks and three days I leave the AMA Federal Presidency after three years. Three cheers, some might say.

I will pass on the baton with an enhanced sense of pride in my profession, and satisfied with the achievements of the organisation I have led for the past three years.

They say timing is everything. This speech in this place at this time is indeed fortuitous.

Last week we saw what the Government touted as "the biggest shake-up of Medicare in twenty years".

Reform costing less than $250 million a year in a budget of $60 billion - $30 billion of which is Federal - is more like a rattle than a shake.

But the AMA had to give an honest response to the Medicare package - and not just a kneejerk response.

We spent days consulting our members and our patients and the other GP groups about how the reforms were likely to affect them and their patients.

The unanimous decision was that the package would not fix the access and affordability problems engulfing general practice in Australia today.

The Opposition can take no comfort from this either.

They are yet to put forward a solid policy. We are told to expect something two days after the Budget.

We look forward to having both sides with contributions to the policy debate.

But perhaps most welcome is the increased level of involvement of a very big player in the health and Medicare debate...the community.

One of the things I sought to do as AMA President was to inform the Australian people about their health system...how it worked, where it was successful, where it fell short of reasonable expectations.

The Australian public is now, through the media and directly through their doctors, a far more informed participant in the Medicare debate than they were three years ago.

There is now a more sophisticated understanding of how bulk billing works, who ultimately pays, and why bulk billing rates are declining.

No longer can governments of any persuasion get away with the old "greedy doctor" argument.

It just won't wash any more because facts have overtaken rhetoric.

I have said before that Medicare belongs to the Australian people, not the medical profession or the politicians.

Our elected representatives are the custodians of a valuable Australian icon.

Quality of health care should always be above politics. It is unrealistic to hope that health funding will ever be.

The biggest ticket on the domestic agenda for all Australians - the thing that most affects their daily lives and the wellbeing of their families and loved ones - is health.

Just look at the news over the past couple of weeks. Medicare, SARS and Pan Pharmaceuticals. All health-related. All at the core of the Australian way of life.

Not even the former Iraqi Information Minister, Mohammad al-Sahaf, could have engineered a front page among that lot.

So, where to from here?

The future of Medicare and the funding of our health system stands at the crossroads.

I firmly believe that the battle to win the hearts and minds of Australian voters on health policy for the next election is wide open.

The Government's Medicare package was not the panacea many were hoping for.

However it has been the catalyst to raise health to the number one domestic political issue for the foreseeable future.

We really wanted to like this package. It held so much promise.

There were definite positives...but the bureaucrats got too clever for their own good.

For every positive there was a nasty barb attached:

• There was long awaited recognition of the GP workforce crisis. However, the 234 extra medical student places are 'bonded' for six years and GP registrar training has lost its appeal.

• There was recognition that a safety net is critical in keeping medical services affordable particularly for young families, the socially disadvantaged and the chronically ill.

But it will not benefit the working poor who do not have health care cards. People will fall through the cracks.

It will not benefit concessional patients in areas that already have low bulk billing rates because GPs would effectively have to take an income cut to opt-in.

• There are initiatives to encourage practice nurses to assist GPs. But these will be confined to bureaucratically determined geographic areas.

• There are proposals to introduce a streamlined billing system to release transaction costs to the Government and make claiming from Medicare easier for patients. This effectively meant no visits to the Medicare office.

Great idea...but practices have to agree to bulk bill every one of their concession card holders, even those they are currently privately billing in order to be permitted to provide the service to their patients.

• The Government is offering $750 to $1000 to assist each practice to go on-line. However, the experience of our members has shown that the costs to the practice are far higher - over $17,000 in start-up costs for a seven-doctor practice. This does not include purchase of computers.

There are currently around 50 practices nationally with the on-line facility, but there is no guarantee that any of those 50 will opt-in.

• Unfortunately the package does not address the underfunding of the Medicare Benefits Schedule or the inadequate indexing of patient rebates.

• A major problem with the package is the opt-in scheme - this is a type of 'preferred provider' system that will split general practice and will deter doctors from considering a career in general practice.

• One of the big myths accompanying the sales pitch of this package is that some doctors will be around $22,000 better off. You'd need to ask the Leyland Brothers where to find them.

You would have to be a GP in a practice in the most remote parts of Australia who is currently bulk billing all of their patients to draw this kind of benefit from the package. Nor does it take into consideration the high costs these outposted GPs face to go on-line...if they had access to broadband.

There is no such incentive for the vast majority of GPs.

The other point I should make is that no incentive was needed to entice doctors to go on-line. Doctors want this and have been working towards it for some time.

Perhaps the most glaring omission from this package is any assistance for patients to see their specialists. The out-of-pocket expenses for patients to see a cardiologist, a psychiatrist, a dermatologist, a cancer specialist, a rheumatologist or any out-of-hospital specialist are not addressed at all...let alone, if God forbid, you need elective surgery.

To put it bluntly, it is a package with a lot of sticks and few carrots.

As the polls in the papers show today, the Australian people agree with the AMA.

Just one in ten see benefits.

Most think they will be worse off. Others are confused. Some are hostile. Not a healthy response.

It is clear the Australian people want something better for Medicare. So does the AMA.

What I want to do today is look at what is out in the public arena on health policy and put forward some AMA proposals that we think could secure a workable and popular future for Medicare.

Whatever you think of Medicare, I think we all agree that its principles are loved by the Australian community...or at least what the Australian community thinks Medicare's principles are.

Even this has been shrouded in some confusion lately. So too is the meaning and intent of bulk billing.

The Prime Minister said in Parliament in March that it was the purpose of bulk billing to protect the less well off. He said, quote:

"...It was never the intention of the Labor Party (when it created Medicare in the 1980s)...nor is it the view of the Coalition Government now that it should be the aim of policy to universally guarantee bulk billing to everybody, including people on very generous incomes. What we can do is commit ourselves to the maintenance of high availability for the less fortunate and for concession card holders..."

The PM put it more succinctly the following day when he said his Government was committed to retaining the universal Medicare system, but said bulk billing was never intended to be universal.

It is clear that Labor intends to head down the Deeble path with an increased Medicare patient rebate.

Against the backdrop of the RVS, it will be interesting to see, in Mr Crean's words, 'what can be afforded' by the ALP...and how.

The big test for both sides is what they consider affordable in terms of providing equitable access for all Australians to quality health care.

The AMA believes the RVS is affordable.

In today's terms, Medicare Benefits Schedule fees are close to $2 billion underfunded, and rebates are $1.7 billion per annum underfunded. Half of that is in general practice.

To properly fund the MBS, Government needs to look closely at its expenditure priorities in health and at its overall expenditure priorities.

Some areas that could perhaps be looked at include:

• The $200 million per annum that is spent on Practice Incentive Payments, which are the cause of much GP red tape and which are not popular with GPs. There would be massive savings in GP compliance costs on top of this, and this money could be reallocated to patient rebates.

• A total of $700 million per annum is spent on the private health insurance rebate for non-acute care services - ancillary cover. Some or all of this could be reallocated to Medicare patient rebates if it was considered a higher priority.

• $80 million was allocated to unsuccessful programs to redistribute the medical workforce. This could be allocated to patient rebates.

Labor has been hinting at taking some money from the private health rebate.

I should put on the record right now that the AMA supports retaining the principle of the private health rebate because it helps to ensure a balance between the public and the private sectors.

The cost pressures on the public hospital sector should the rebate be removed would outstrip any potential savings.

Full electronic processing of all rebates would produce another large saving. There are potential savings of over $100 million (perhaps more like $120 million) which could be redirected into patient rebates.

It is time for policy bravery on health.

Medicare is not just about out-of-hospital expenses. It's the framework for funding all public sector health care

Take the Australian Health Care Agreements...please. These may be better known to you as the Australian Health Care Disagreements...or dummy spits!

Since the introduction of the private health insurance rebate, we have seen private hospital separations grow by more than 40% over the last five years while public hospital separations have grown by less than 8% over the same period.

The Commonwealth's offer to the States on public hospital funding through the Australian Health Care Agreements has to be seen in this context.

We have seen no detail but as far as we can tell that offer of a maximum of $42 billion in total funding amounts to a 5.4% growth per annum over the life of the Agreement.

The Commonwealth's offer is that it will increase the AHCA moneys by up to 5.4% p.a. on average if the States match this rate of indexation.

On the face of it, the Commonwealth offer is not being exceedingly generous.

The forward estimates published in the 2002-03 Budget Papers would indicate, for example, funding of $42.6 billion over the five-year period.

So the Commonwealth offer is actually less than was indicated in the Forward Estimates - in the order of $1 billion.

Will the money on offer be adequate? The answer is: "It all depends ".

It depends most importantly on whether the Commonwealth:

1. makes offsetting cuts in other payments to the States and Territories such as the financial assistance grants or other special purpose grants;
2. provides enough money for GPs to take pressure off hospital outpatient departments, for aged care to deal with exit block and for the PBS; and
3. remains strongly committed to supporting private health insurance so as to keep the pressure off the public hospitals.

Growth of 5.4% is not generous in the face of an ageing population. It is less than the growth the States and Territories are estimated to have received in the current agreement (7% on average over the five years).

So we need to see what else is in the Budget next week.

The Commonwealth has alleged that in the past the States have used the stronger Commonwealth funding increases to slacken off their own funding efforts (trucking money out the back door). More transparency would show us where the truth lies.

The Commonwealth/State share of funding is one issue. The total expenditure on public hospitals is another and possibly the more important one.

The key to this is whether the States agree to match the Commonwealth indexation.

So, the medical profession welcomes the Prime Minister's proposal that the States and Territories should match the indexation the Commonwealth is offering...but a big question mark remains over the generosity of the offer.

But where will the money come from? That's partly about Budget priorities.

Then there are many who suggest the Government should consider increasing the Medicare levy. Any move to do so would have to be accompanied by an education campaign to inform Australians that the levy only pays a part of the cost of their health care. Who knows? There may be some change from the $21 million set aside to promote the Medicare package.

If Labor sticks solely to the Deeble definitions of universality and affordability in its announcements on 15 May, we may be forced into extra time in the Medicare battle.

Perhaps the real workable solution will lie somewhere in the middle of the Howard package and the anticipated Crean package. That will be something for voters to stew on.

Simon Crean made another interesting observation in a speech to the Adelaide Press Club on the First of May. He said:

"...I believe that all Australians should have the right to visit the doctor or attend a well-funded public hospital without charge. I won't say for free, because it's not free. Australians have already paid for this right through their Medicare levy and their taxes..."

We agree, Mr Crean. Medicare was never meant to be about "free" health care for all.

It was supposed to make it affordable for patients to visit a doctor and because the level of the Medicare rebate was pretty close to the mark, many doctors accepted the patient's rebate as their full fee, billing the government in bulk rather than the patient individually...so-called "bulk-billing".

However, successive Governments have eroded the value of the Medicare Benefits Schedule so as to render it virtually meaningless as a "universal insurer".

For the short term, at least, Medicare will survive in some form...even if in name only. The substance will be a political policy auction.

GPs, in the meantime, continue to subsidise Medicare to the tune of over $1 billion a year.

It has suited the political parties for people not to fully understand the economics of general practice, because that way every time a doctors' group raised its head and said, "hang on, what about the Medicare rebate", they could be whacked back into submission by having their sense of community responsibility questioned.

But as time went by, and the Medicare rebate failed to keep up with the cost of running a practice, Medicare, as an insurer, fell further and further behind.

It reached a point in fairly recent years where doctors had to look at their practice expenses versus practice incomes and say, 'what's the point in me continuing?'

Governments were quite happy to continue with the lie that GPs and other specialists were adequately remunerated if they bulk billed and that anyone who charged over the Schedule Fee was a greedy doctor.

And I think a lot of doctors kind of bought into that kind of rhetoric as well.

And it wasn't until, really, the last few years - when the AMA has conducted a concerted education campaign that people have understood much more clearly what Medicare actually means and what bulk billing actually means - that the penny has dropped.

The patient rebate for bulk billing is grossly inadequate.

Another burden on GPs is red tape. The Productivity Commission estimates that incremental administrative and compliance costs resulting from Commonwealth policies and programs amount to about $228 million or 5% of GPs' estimated total income from public and private sources.

This is equivalent to about $13,100 per GP per year (for GPs who work at least one day per week).

Doctors were subsidising Medicare...and still are. The Government has gone AWOL.

Which is another reason the RVS is worth looking at again.

The MBS would at least have some integrity if it had medical fees at the right level and then the Government set the patient rebate at what it considered affordable - even if that was 40, 50 or 60 per cent of the MBS fee.

As you know, Governments of both persuasions spent millions of taxpayer dollars and spent six years working with the AMA to develop the RVS to calculate the 'real value' of doctor services.

Then, in 2001, the former Health Minister, Dr Michael Wooldridge, drove a stake through the heart of the RVS and danced merrily on its grave.

He missed the perfect opportunity to avoid the crisis that has hit general practice today...and it is a crisis.

There are doctor shortages in communities all around the country - urban, rural and remote.

Many GPs cannot afford to practice the kind of medicine they trained for...and bulk bill all or most of their patients. They are retiring, moving to areas where they can make a living, going overseas to work or working part time. The GP participation rate is falling to dangerously low levels.

Patients are finding it harder to find a local family doctor. The poorest and sickest in the community are seeing accessible and affordable health care slip further out of their grasp.

What Dr Wooldridge - and others in Government and the bureaucracy - failed to see, or refused to see - was that the RVS was the lynchpin.

For the first time there was a benchmark for general practice services and all other medical services.

And what it showed was the amount that Medicare had fallen behind in being a reasonable insurer.

Now, initially, Medicare paid 85 per cent of what was considered at the time to be a reasonable fee.

Now, it's only paying, in terms of general practice, about 50 per cent of what is considered to be a reasonable fee.

For some specialties like obstetrics, the MBS long ceased to have any relevance.

And so, what we're faced with now is a redefinition of Medicare.

Should it go forward as the substantial insurer for health care costs or should it continue to be a partial insurer or be reinvented as a safety net for the disadvantaged?

Under the Government's Medicare package, a $6.30 so-called incentive payment for concessional patients in remote communities - and most definitely a $1.00 'incentive' for inner city patients - is considered to be an insult to practitioners providing quality primary care.

It is a joke - and a bad one at that - if the Government genuinely believes it will maintain Medicare as a substantial insurer.

Do the simple mathematics. The RVS benchmark puts the value of the increase needed in the patient rebate for a standard GP consultation to be $17.45.

The Government package says that if you move your practice to the back of Bourke and commit yourself to jumping through hoops between patients, your reward is $6.30 per patient if you bulk bill every one of your concession card holders - all seven-and-a-half million of them - even the ones earning up to $80,000 a year.

If you choose to stay in, say, Darlinghurst or Carlton or North Adelaide or Subiaco, you'll get an extra $1.00.

And for concession card holders who choose to see a doctor who does not opt-in? The Health Minister would have them changing doctors, which flies in the face of good general practice care. One of its fundamentals is continuity of care.

If that's a Medicare solution, I'll eat my hat.

So it's hardly surprising that GPs have had enough.

Remember, too, that GPs are not paid by Medicare - Medicare subsidises patients' health care costs.

There's no point people in the general public getting cranky with GPs for charging a reasonable fee, because they have costs to meet.

And they have to earn a reasonable living, otherwise there's no point them being there. They're not there to go broke. They might as well do something else with their time and their talents, and many are making that very decision.

There are fewer GPs and many of those who are left are working fewer hours.

Between 1995 and 1999, GP average hours fell from 45.3 to 42.4 hours per week - a fall of 6.4 per cent. Based on 20,966 GPs in 1999, this represents a loss of 1,342 GPs over four years or 336 GPs a year. We only train 450 a year.

When you add the strength of feeling over medical indemnity, this trend may well accelerate. Australian communities cannot afford to lose these services.

If every GP worked two hours less per week, you reduce your GP workforce by more than 1000 doctors. Thirty per cent of GPs are 55 years and over. We need strategies to keep these people in the workforce, not push them out.

And it's not cheap to run a medical practice.

The RVS found that the practice costs for a single GP practice as at December 1999 were $125,000.

Adjusting that figure for movements in the cost of running a General Practice and for real increases in medical indemnity, means the current practice costs for a single GP practice are around $137,700.

The RVS figure was a compromise figure and left out many costs which the AMA believed were essential to a good quality General Practice. And of course medical indemnity costs alone have skyrocketed since then.

The Government's Package adds, on average, one dollar per consultation - out of which comes the cost of new technology for direct billing and other red tape.

Not much joy there.

The ideological battleground now is not so much that someone has to pay more; it is all about who pays - the Government through the taxpayer, or the patient.

On this point, let me say that I have received many letters and e-mails from members of the public asking why they should pay more for their health care when they already pay the Medicare levy, taxes and their private insurance.

Some say that they don't spend what they contribute to the system. In other words, they tell me they don't get sick. I tell them that they are paying for the security of knowing that there is a health system ready and waiting should they have an accident or get sick.

From personal experience I know as well as anyone that that can strike anyone out of the blue.

I tell them that even that their contribution does not cover the full cost of providing the quality of health care we have in Australia. It does not properly fund the Medicare that Australians demand and deserve.

So the Government must contribute more via the taxpayer or patients must pay more directly. This is a decision for Government, not doctors.

If we want Medicare to be the substantial insurer for medical services, the MBS has to have integrity, and any prospective Government has to commit to finding the money to do that.

Any policy prescription must be based around the fact that general practice is the frontline of primary care in this country, and accessible secondary specialist care is essential to back this up.

If you starve general practice, then you're going to be putting a greater illness burden on the health agencies up the line, especially hospitals.

If they don't go to the general practitioner they wait until they're sick and they then are more likely to have to go to hospital.

It's the same with the Pharmaceutical Benefits Scheme.

You're less likely to have chronic illness well managed in the community, because people who have chronic illness are quite often financially disadvantaged - but they may not be disadvantaged to the point of having a health care card.

Even then, many practices do not accept the health care card because there are so many of them.

If general practice and the PBS are neglected by Government, our health system is in tatters. It is a false economy.

Under current plans, there will be people who will fall between the cracks. These are the people who are not poor enough to qualify for a health care card, but who don't make enough money so they have to actually think about whether they go the doctor or not on the basis of cost.

The so-called incentives come with so many strings attached - GPs just throw their hands up in the air and say 'NOT AGAIN', another MOU by another name.

One weapon that some critics - politicians and bureaucrats and beancounters alike - have used against doctors is so-called 'six minute medicine'.

There's been a lot made over the years of six-minute medicine and fast throughput medicine.

Well, it's all bunkum - a myth.

Recent Australian Institute of Health and Welfare (AIHW) research shows that the average amount of time a GP spends with a patient in Australia is 14.6 minutes.

This matches AMA data.

It really exposes the six-minute medicine rhetoric as just propaganda - unsubstantiated by evidence.

The GP workforce is shrinking and will continue to shrink.

There is a serious shortage of GPs in Australia, especially in outer urban and rural areas.

The government has finally acknowledged this shortage and has announced a number of measures to address it, including 150 more GP training places.

But young doctors and medical students are appalled at Government plans to 'bond' these medical school places.

Having the Government tell young doctors where they must practice for six years will only turn more bright young people away from a career in medicine.

The bonding issue flared up last week when Health Minister, Senator Kay Patterson, was quoted in The Daily Telegraph saying: "If the students who accept government assistance won't go to work where they are needed, they'll have to repay the cost of their medical education".

Medical students are angry at this proposal and the way it was expressed by the Minister.

The bonds are unfair, inequitable, constitute a fundamental change to the higher education system and only make service in areas of need even less attractive to young doctors...because it is coercive.

The Government says entry into medical schools will be 'on merit'. So those candidates rated highest will be offered a normal place or one of the 100 rural bonded places with a $20,000 per year scholarship attached.

Those left after those places have been taken will be offered one of the new bonded places, which require them to serve six years in designated outer urban or rural locations after graduation.

This suggests two or even three tiers of student categories, with the lowest ranked having to accept a bonded place and work in the country.

Bonding students will conscript medical graduates into second grade careers subject to bureaucratic control.

Many will be only 17 or 18 years old, filled with excitement and enthusiasm and unable to make informed judgements about contractual obligations that kick in 8-12 years ahead.

But the penalties for breaching a bond can be savage.

Not only could they have to repay the cost of their medical education (unknown, but possibly $90,000), but depending on the terms of their contract, they can be subject to a lengthy ban from the Medicare system under section 19ABA of the Health Insurance Act which would prevent them engaging in private practice.

What other student has to sign that kind of bond to get an education in this country?

After graduation, General Practice is just one of many specialist training options. It is the only one controlled by Government, which determines the number of training places and conditions of entry.

The new regionalised GP training program with 22 separate training providers has made young doctors uncertain about the quality, consistency and continuity of GP training. This year the training program was unable to fill all 450 places.

The Government has imposed a number of conditions to address GP workforce shortages, such as a rural pathway and a general pathway.

Even trainees in the general pathway have a compulsory 6 month rural term and now a compulsory 6 month outer metropolitan term.

Workforce issues, not quality or equity, are tending to drive the GP training program - and geographic provider numbers are still being mentioned by some misguided Government members as a possibility.

These measures reduce training and work flexibility, which used to be a major attraction of GP training - remember that GP trainees have at least two years postgraduate experience and are likely to have personal and family commitments.

The face of the medical profession is changing.

Most medical graduates are now women and there is a much greater cultural mix than there used to be.

AMA and other research shows that young doctors want a reasonable balance between their professional and personal lives, not the enormous weekly hours and limitations on personal life which have traditionally been the lot of GPs, especially in the country. But bonding is not the answer.

Conscription in this or any other form is a threat to personal freedom and a disincentive to a GP career.

This kind of bonding all but destroyed teaching in the 1970s. Now they appear to want to repeat that mistake in medicine.

Also, overseas experience shows it does not work. What we need are targeted incentive packages, developed in consultation with junior doctors, which encourage doctors to practise in areas of shortage.

Going into the next election, both the Government and the Opposition must prove to voters they are serious about maintaining Medicare.

The health of all Australians is affordable if your priorities are right.

A healthy nation is a productive nation.

Investing in health is not money going down a black hole - it's money going into the future of the country, particularly if you look at investing in child and youth health.

Health costs...so the key issue for the politicians is keeping patient gaps as low as possible.

Governments of both persuasions have allowed Medicare to decay.

It's been allowed to happen because doctors have been exploited for their compassion and their sense of community responsibility and the GPs themselves have allowed themselves to prop up Medicare, not believing that their patients should have to shoulder that burden of cost

It has reached a point where the balance has been tipped so that GPs, in order for their practice to survive have to look at their sums, they have to look at their costs, and their earnings and say, ' I have to make a decision, here.'

For patients, it's all about access and affordability.

With health at the centre of the political debate, we have a challenge - an opportunity.

For the first time in years, we're actually seeing an ideological divergence between the major parties on health policy.

The first instalment is on the table with the Government's Medicare package. I have spelt out the AMA view.

The Opposition will flag their intentions next week. The AMA will give their proposals an equally forensic examination.

The other critical issue the Government must contend with over the coming weeks is medical indemnity. I could have devoted yet another speech to that topic here today.

To cut a long story short, a lot of doctors will choose early retirement from 1 July this year because of the failings of the Government's medical indemnity package.

This is not a guess or a threat. It will happen.

Following recent AMA protest meetings in Sydney and Melbourne, the Medical Defence Organisations have acted to try to provide cover for doctors in retirement. And the Government is looking at further moves to stabilise the situation.

When I first addressed the National Press Club, in July 2000, I spoke about medical indemnity, the Relative Value Study, GP workforce shortages, and the prediction that bulk billing was heading for extinction.

In concluding that speech, I asked the question: "What kind of health system will we be leaving to our next generation?"

Our Government has still not supplied the answer, but at least we have entered a phase of serious health policy debate that may provide some comfort to our children and their children.

I thank you for your time today and I'm happy to take questions.Question & Answer

CHAIR: Thank you very much for that, Dr Phelps. The first question today, as you've just indicated, is from Danielle Cronin.

QUESTION: Good afternoon, Dr Phelps. You mentioned the polls out today that show that many Australians are against, oppose the Medicare package. Do you think this is a result of Labor lies, as claimed by the Federal Health Minister, or do you think it's a true indication of community sentiment?

PHELPS: I think putting down the community's reaction to lies from the Opposition is a cop out. I think it's also underestimating the intelligence of the Australian people. The Australian people have had an opportunity over many weeks to have a look at these proposals and they don't like them.

So the answer for the government here is to change what the people don't like, go back to the drawing board, and come up with better solutions that the Australian people do like.

As I said in my speech Medicare belongs to the Australian people and our elected representatives are the custodians of that valuable Australian icon, and it is up to them, the Government, to come up with a solution that the Australian people find acceptable.

CHAIR: The next question is from Don Woolford.

QUESTION: Don Woolford from Australian Associated Press, Dr Phelps.

I'm just getting away from policy for a moment. In three weeks and three days and no doubt after a break thereafter, do you have any clear idea of how you see your future and, particularly, are you at all attracted to politics?

PHELPS: I've been asked this question quite a number of times over the last almost three years. I have said all along that I took on the role of the Federal President of the AMA with the clear intention of giving it everything I had because I believed so strongly in what needed to be done in the Australian health system - and I didn't want to be in any way distracted by any personal ambitions. And I've stuck to that principle.

I don't have any plans beyond my general practice in Sydney at this stage, and I'm going to spend a fair deal of time contemplating how I want to spend my future professional career.

CHAIR: Sue Dunlevy.

QUESTION: Dr Phelps, Sue Dunlevy from the Daily Telegraph.

Would the Labor Party have to offer the AMA and doctors the full $17.45 increase in the rebate to get your support for their package, or could doctors come at a smaller figure, such as $5 or $10. Would that be enough to save the Medicare system?

PHELPS: The answer there is it depends. There are some practices who would truly welcome modest increases in the Medicare rebate. Each practice of course has different economics, depending on where the practice is, what the profile of the practice is, how many patients are on concession cards and require discounting, and what that discount ought to be.

The real question is how much ought doctors to be subsidising Medicare, so anything from where the current Medicare rebate is to the $17.45 will be a compromise by doctors.

I believe that my colleagues have shown over many generations a tradition of being prepared to discount their fees for people that they perceive to be disadvantaged and I believe that that tradition would be likely to continue if they perceive that any offer from government was genuine, fair and likely to be appropriately indexed.

What unfortunately governments, successive governments, have shown is that they haven't been prepared to properly index Medicare and so there's been a loss of trust in governments as the custodians of Medicare.

I think it would have to really be a wait and see, but certainly the offer on the table at the moment is unacceptable to the majority of GPs and, frankly, the opposition to it expressed to us has been quite overwhelming. So it lies somewhere between what we've heard now and the $17.45 full indexation.

CHAIR: A question from Chris Jones.

QUESTION: Chris Jones from The Courier Mail, doctor.

Labor claims that these changes give the green light for doctors to ratchet up consultation fees. Can patients, once these changes are implemented, can patients expect to pay more for consultations?

PHELPS: Under Medicare doctors have always had the green light to charge whatever they felt was appropriate in their practices. What we've seen is over the last few years the red light going off, and that's been because GPs have absorbed all that they can by subsidising Medicare themselves if they bulk bill their patients.

What I think they've seen now with this package is that they can't look to government to the solutions for the economic problems in their practices and what I believe will happen is that as GPs have a look at this package, if it in fact goes through the Senate, what they will do is to have a look at it and say: 'is this something that is going to be worthwhile to me and my patients?'

Certainly it's going to be very difficult for doctors who are in urban areas of need where there are high numbers of patients with health care cards if they've got high populations, for example, of retired or unemployed people, they may not be able to afford to take on this package.

So it really will depend on where the practice is located as to whether the doctors will take off the red light on private billing or not.

QUESTION: David Wroe from The Age.

The proposal that you've outlined today for cuts in spending that could be channelled into lifting up the rebate, did you put those to the Government when they consulted you about their package and, if so, and assuming that they rejected those, is it safe to say that the Government has a deliberate and long term plan to run down the rebate, keep up the incentives and therefore create the American two-tiered system that we're hearing about?

PHELPS: Well I think you'd have to ask the Government what their intentions were, but certainly on the face of it it would look as though the Government has very limited intention, in fact no intention, for the Medicare rebate to keep pace with the cost of providing services, and I suppose that's the concern that we've had all along, and you know, for goodness sake, come right out and say it, if that's what you're doing, and put the Medicare schedule fee where it ought to be and then if you say, well all we can afford this year for this budget is 45% for the rebate, or 65% for the rebate then that's what you do.

But at the moment the Medicare benefit schedule has no integrity because it's meaningless when you look at the cost of running a practice.

As to what the Government's intention is, well certainly whatever their intention is, the outcome will be that doctors will have to look at privately billing all or some of their patients so that they can keep their practices running.

QUESTION:

PHELPS: That's a question that you'll have to ask John Howard. Maybe he's searching his conscience right now.

Ends