The Australian Medical Association highlights the critical need for better indexation of Medicare to address problems of access and affordability, citing poor indexation as contributing to declining bulk billing rates and higher out-of-pocket costs for patients.
The Australian Medical Association (AMA) has warned that issues of access and affordability in general practice cannot be effectively addressed without significant improvements in Medicare indexation.
AMA compared Medicare indexation of just 1.6% with a recently-released figure of 3.7% for public hospital services by the Independent Health and Aged Care Pricing Authority (IHACPA), demonstrating how poorly Medicare is indexed. The AMA has argued that this has contributed to declining bulk billing rates and higher out-of-pocket costs for patients.
The IHACPA recently indexed the National Efficient Price (NEP) for 2023–24 at a rate of 2.9% per annum, along with an additional 0.81% to account for increases in the minimum superannuation guarantee between 2020–21 and 2023–24.
By comparison, AMA President Professor Steve Robson has stated that the formula for indexing Medicare is “broken,” delivering an indexation rate that lags well behind the rate of increase in key economic measures, such as the Consumer Price Index, Average Weekly Earnings, and the Wage Price Index.
Robson notes that “years of inadequate indexation has meant the Medicare rebate no longer bears any relationship to the actual cost of providing high-quality services to patients.”
This has contributed to more practices being unable to offer bulk billing to even the most vulnerable patients, with wages and increasing practice running costs funded entirely from the rebate. The AMA has analysed the effect of poor Medicare indexation on the Level B item, the most commonly-used consultation item, and found that the government has “saved” AUD 8.6 billion since 1993.
Successive governments, according to the AMA Gaps Poster, have stripped healthcare funding from taxpayers through poor indexation, shifting the cost of care onto everyday Australians. As Robson notes, “poor indexation saves the government money, but this is really stripping out essential funding in Medicare by stealth, with patients bearing the brunt of higher out-of-pocket costs.”
The AMA argues that if the government is serious about addressing affordability and access to medical care, including general practice, it must address indexation.
Ritchelle is a Content Producer for Healthcare Channel, Australia’s premier resource of information for healthcare.
