New measures save billions on costs by making GP patients pay

by Stephen Duckett and Peter Breadon

Published by The Australian Financial Review, Monday 15 December

In the May budget, the government proposed a mandatory $7 co-payment for GP services and tests done outside a hospital. Now, after seven months of fierce criticism, the government has abandoned those plans.

One thing hasn’t changed: the government is still raiding GP payments to save billions of dollars.

The new version is a triple whammy. Medicare funding is frozen for all services, meaning the payment for each service will fall in real terms.

In addition, $5 is cut from government payments for most non-concession visits. Finally, GP visits of less than 10 minutes will now be considered Level A consultations: straight-forward visits with a government payment of $12. Many short visits are now Level B visits, which get a payment of $37.

The new proposal is an improvement on the budget plans. Out-of-pocket costs for tests that doctors order won’t be increased.

Concession-card holders such as pensioners and unemployed people won’t be targeted. Children under 16 are exempt.

Despite these improvements, the changes are still co-payment rises, some overt, some by stealth.

GPs will probably absorb some of the cut in funding, but much of it will be passed on to patients through higher fees and less bulk-billing, particularly in areas with too few GP services to go around.

These changes will all add up. For some patients, GPs could pass on new costs of $20. For people who used to get bulk-billed and now won’t, it could be twice that.

Increasing co-payments is a bad idea. Australia already has a high reliance on patient fees.

Patient fees are already a barrier to care and if more people skip GP visits some of them will get sicker, causing additional costs in the long run.

The real problem with GP funding is not how much the government spends, but how they spend it.

GPs aren’t one of the more costly parts of the health system, or the fastest-growing.

But the basic system for funding them was set up decades ago. It isn’t linked to the cost of delivering services, or the needs of patients. It does need to change.

The bulk of GP funding comes as a payment for each individual service and the prices paid promote shorter visits. About two-thirds of GP services are Level B consultations. Currently these visits last for up to 20 minutes.

If they’re relatively short – six or eight minutes long – they attract the highest government funding per minute.

If it were part of a broader strategy, making Level B visits last for at least 10 minutes could be a good thing.


GPs have the most training and the most sophisticated diagnostic and disease management skills in primary care. It makes sense for them to focus on complex patients who need their time and expertise, such as the growing number of Australians living with multiple chronic diseases.

In many cases other healthcare workers can deal with simple, stable patients who might simply need a repeat prescription for a drug they’ve used for years.

Cutting funding for very short visits could be a nudge in the right direction if it were accompanied by other measures.

The funding that is cut from short Level B visits could be put into longer visits. It could be used to fund co-ordination of care, which is becoming more important as more people need to see a range of health care providers.

Many people report that their care is too fragmented and there is evidence that better co-ordination results in better health care.

Alternatively, the funding could go to incentives to improve the quality of care or to achieve specific health outcomes.

Unfortunately there are no plans for any of this.

The change is another isolated cost-cutting measure.

Cost-cutting is good if it cuts waste, and as a stream of Grattan Institute reports has shown, there is plenty of opportunity to do that in the health system.

But simply shifting costs on to patients shows no real vision about how to make primary care more efficient. Instead, the government seems to see GPs as a savings opportunity.

Funnily enough, they’re right. If we paid GPs in a more rational way they could do more to keep people healthy.

Keeping people healthy is one of the best ways to save money and boost the budget bottom line – far better than simply cutting GP funding.