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Australia’s health system is under significant pressure. The Labor government has inherited a system with declining bulk-billing rates for GP visits. These fell from almost 90% of all GP attendances bulk billed in December 2021 to .

Significant workforce shortages remain in rural and remote Australia, despite a raft of incentive programs to improve access to health care. In 2021-22, about , with higher rates of missed care outside metropolitan areas.

This means it would be possible to radically alter the Medicare system. One option is to restrict Medicare access to GPs who agree to bulk bill all patients, while allowing those who don’t bulk bill to rely solely on out-of-pocket payments.

A new Medicare agenda should address the problems of fraud, geographical inequity, and bulk-billing decline. This can be done by conceptualising access to Medicare rebates by practitioners as a privilege, not a right.

Why were policymakers constrained?

Health policy in Australia has been limited for decades by assumed constitutional constraints, which have been by the medical profession to prevent policies they oppose.

After the second world war, the Chifley Labor government began a series of social security reforms. Legislation for one element of the reform – a pharmaceutical benefits scheme – was struck down by the High Court because there was no relevant head of power in the Constitution.

In response, the government proposed amending the Constitution to give it broad social welfare powers. This proposal had bipartisan support and was passed at a referendum in 1946. A new sub-section (xxiiiA) was consequently added to section 51 of the Constitution, giving the Commonwealth power to make laws about:

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.

The parenthetical civil conscription constraint was included following an amendment from the Liberal Party. This was motivated by a desire to prevent the creation of a scheme like the United Kingdom’s ³Ô¹ÏÍøÕ¾ Health Service, which required all GPs to work under contract to government and hospital specialists to be salaried employees.

The presumed constitutional constraint seemed to shape the Labor Party’s thinking about what might be constitutionally possible when designing Medibank, the precursor to Medicare. Despite some members of caucus supporting a salaried hospital system, this was not pursued.

But in and , the High Court narrowed the meaning of civil conscription. This meant the subsection no longer constrained government power in the way it once had.

Medical practitioners now work in a diverse range of settings, not all of which rely fully on revenue from Medicare. So the nexus between access to Medicare rebates and the ability to work as a doctor has been broken. The government can now expand the constraints it puts on billing rights without it being considered civil conscription.

A bold way to restructure Medicare

It is time for a complete rethink of how Medicare payment arrangements are designed and regulated, free from the assumed constitutional constraints.

The recent highlighted that:

the current state of Medicare, and some of the challenges […] are the result of previous attempts to apply discrete and band-aid solutions to single issues over time and a lack of system thinking and consideration.

The band-aid approach no longer works. A fundamental rethink of Medicare is required, moving away from practitioners’ relatively unconstrained and uncapped access to fee-for-service rebates.

Presently, all specialists – including GPs – can apply for a Medicare provider number which enables rebate payments for their services, with few constraints.

Rather than an “all comers” approach, a new basis for Medicare could be one where practices sign up to Medicare and agree to meet Medicare’s contractual conditions such as agreement to bulk bill all patients, participation in training future health professionals and in quality improvement programs, and that practices are multidisciplinary. Again, fair remuneration needs to underpin all this.

Participating practices could be paid on a variety of bases, including number and type of patients enrolled, number of patient attendances (enrolled or not), and other payments.

Payment rates would need to be seen as fair by both government and practices.

A participation basis for Medicare, moving away from an unconstrained approach, coupled with adequate workforce planning, could also be used to encourage new graduates to work in locations and specialties in short supply by limiting access to rebates for specialties in locations of oversupply.

This would also facilitate management of fraud and over servicing through contractual controls, rather than cumbersome administrative law processes.

A “participating provider” approach would transform the patient experience. Most importantly, the bulk-billing lottery would end: practices displaying a Medicare sign would bulk bill all patients, not just some.

There would need to be a new deal for doctors too, with remuneration set fairly – not at the whim of government – ending the political .

Australia’s Medicare fabric has many holes

Although Medicare has served Australia well, it’s beginning to fray at the edges with reductions in bulk billing and provider satisfaction, and geographical shortages.

The old incentive structures have not addressed these problems and now new approaches, which may previously have been thought impossible in part because of the perceived constitutional constraints, must be considered.

What we have is shown is that the policy agenda is more open than might have hitherto been considered. The time is right for these options to be considered.

This article was co-authored by Emma Campbell, former Grattan Institute intern and current LLB/BPPE student at The Australian ³Ô¹ÏÍøÕ¾ University.

Stephen Duckett was a member of the Strengthening Medicare Task Force.

Fiona McDonald receives funding from the Medical Research Council (UK).