Medicare at 30

Image: Department of Human Services

Medicare, Australia's universal health insurance scheme marks its 30th anniversary on 1 February 2014. For 30 years Australians have had free public hospital treatment and subsidised medical services; free if the doctor bulk bills. Medicare is part-funded by a 1.5% levy on income tax (which meets around half its cost) and general taxation. In 2012–13, spending on Medicare totalled $18.5 billion. This makes Medicare the third most expensive government program after the Age Pension and family payments.

A short history of increases to the Medicare levy

The Government is proposing to introduce legislation during budget week to raise the Medicare levy by 0.5% in order to help fund DisabilityCare, the name of the new National Disability Insurance Scheme. This recent Flagpost outlined some of the reasons for securing funding for the scheme. The Medicare levy has been increased a number of times, and there have also been occasions where an increase has been proposed in order to fund other proposals.

Health spending: patients bearing higher costs



Recent reports have highlighted the growing cost of health services and the increasing financial burden on individuals. According to data from the Australian Institute of Health and Welfare (AIHW) Australia spent more than $130 billion on health in 2010–11, or around 9.3% of Gross Domestic Product (GDP). Around 70% of this was spending by Government—the Commonwealth and the states and territories combined, through programs such as Medicare, public hospital services and the Pharmaceutical Benefits Scheme (PBS). But a significant and growing component of health expenditure comes from individuals.

Health Insurance in Australia: time for a new debate?



Image: Department of Health, Victoria

 In July 2011 the Government re-introduced its Fairer Private Health Insurance Incentives legislation into the House of Representatives; for an overview of the history of this legislation, see here. The Bills have not yet been debated. The key changes proposed by this legislation are: a means-test on tax-funded rebates for private health insurance (PHI) for those on incomes above a specified threshold, and; a higher Medicare Levy Surcharge for people on high incomes who choose not to purchase PHI.

If passed, the legislation will mean that higher income earners will receive a lower or no tax-funded subsidy when they purchase PHI, and, if they choose not to purchase PHI, they will face higher tax penalties.