Happy birthday, Medicare. Now, how can we make you better?

by Stephen Duckett

Published by The Australian Financial Review, Friday 31 January 2014

Medicare is 30 years old this week. When its predecessor, Medibank, was introduced 40 years ago the big issue was extending access to the health system by removing financial barriers to hospital and medical services. The Fraser government’s winding back of Medibank meant the same problem had to be fixed again with the introduction of Medicare.

In terms of what it set out to achieve, Medicare has been a great success. All Australians have access to public hospitals without charge. The vast bulk of general practice consultations also don’t require any upfront payment.

Overall, Australia spends at the low end of the range of what developed countries spend on health care. So Medicare is demonstrably affordable for the taxpayer. We also get good outcomes for our spending – Australia has better life expectancy than other similar countries.

But that doesn’t mean we have grounds for complacency, nor that we have no room to improve.

There are still financial barriers to access. One in 20 people who need to see a general practitioner either delay going or don’t go at all because of cost, according to a recent Australian Bureau of Statistics survey. Financial barriers aren’t the only problems. Waiting times for both elective procedures and in emergency departments are too long.


Healthcare – and hospital care in particular – is the fastest-growing element of government budgets. Total health spending will increase from about 9 per cent of gross domestic product to 12 per cent over the next 20 years.

The increasing proportion of government budgets taken up by health spending and projections of future cost growth periodically lead to “sustainability panic” – rhetoric designed to scare the population (and/or politicians) into quick-fix changes to the health system that throw the baby out with the bathwater. The best recent example was the silly season discussion about a co-payment for general practice visits, a proposal that would undermine equity and almost certainly end up costing more than it would save.

Too much sustainability rhetoric is dangerous. As well as the panic response it typically engenders, it focuses entirely on the spending side, without considering benefits.

Spending decisions are about priorities. The projected 12 per cent of gross domestic product to be spent on health in 20 years is affordable. It’s just a matter of what we won’t spend money on. What will shrink to make way for that spending? Will we, as a nation, accept less on something else to make way for more on healthcare? The evidence to date is that a growing share on health is what we want and the same is true in other wealthy countries.

However, we do need to focus on the issues that Medicare hasn’t tackled. Medibank and Medicare were access policies. They weren’t about the safety and quality of care, or about efficiency. Both of these objectives are more important today than they were 30 years ago. Both need more attention. Medicare also didn’t address prevention.

As chronic disease becomes more prevalent, care needs to change. People with chronic conditions need to draw on a broader range of professionals – nurses to care for wounds, dieticians, physiotherapists, and so on. Unfortunately it’s not a case of the more the merrier. Patients often feel they’re the package in an undignified pass-the-parcel game, information is lost with each transfer between professionals and there are discontinuities in care. Ensuring seamless transitions – that the right provider is involved with the right information at the right time – is one of healthcare’s contemporary challenges.


Overall system efficiency can also improve. Grattan reports in 2013 showed that we pay way above international benchmarks for pharmaceuticals, and that we can extend primary care access in rural and remote Australia cheaply if we better use the skills of health professionals. Forthcoming Grattan work will look at ways of improving hospital efficiency, too.

The agenda for future healthcare policy is quite different from the Medicare reforms of 1984. Back then it was a big financing shift. Now we need to change the way almost every health professional works, change referral patterns and information, provide support to people with chronic conditions to help them manage the problems they live with 24/7, and eliminate waste in the system. Policy also needs to focus on prevention and go beyond traditional health services, and make healthy choices easy choices.

The knee-jerk responses we often see to sustainability panic – shift costs to consumers, swingeing cuts to services – are a sign of policy laziness. Next-generation health policy will involve experimentation to determine what works. It will involve hard yards to design new systems, including consulting with consumers and providers. In particular, it will recognise that there is much that is right with our current system and build on that.

Medicare on its 30th birthday is a mature system that has served us well. The Medicare birthday discussion, though, should involve how we can improve it to build on its strengths and how health policy can fill in the gaps Medicare has left out.