The Christmas-New Year silly season gave Australia three health policies. At the start of December, the policy from the 2014 budget was still on life support. But in mid-December, then-health minister Peter Dutton announced a new rebate reduction policy. This survived less than a month.
In January, the new health minister, Sussan Ley, dumped the minimum time requirement for a level B consultation – the most common type of patient visit – and promised to consult on what should replace it.
Two other elements of the government’s revised co-payment policy remain: a A$5 cut to GP funding for each service a GP performs for patients who are over 15 and don’t have a concession card; and a freeze on Medicare rebates until 2018.
As I’ll argue today at the hearings of the Senate Select Committee on Health, the cumulative impact of the freeze and the A$5 rebate reduction on general practices, and therefore on patients, will be substantial. Non-concession patients may end up paying a A$30 co-payment, not a A$5 one.
Impact on general practices
Data from University of Sydney BEACH surveys suggest that up to 57% of visits would be exempt from the reduced rebate because the patient has a Commonwealth Concession Card, Repatriation Card, or is a child up to the age of 15.
To account for other exclusions (15-year-olds, patients getting GP health plans and GP management plans) and to be conservative, let’s assume that two-thirds of patients are exempt from the A$5 funding cut.
The average practice (with an average distribution across the four consultation items, an average proportion of exempt patients and an average bulk billing model), would suffer about a 4% reduction in revenue across level A to D consultation items (the overwhelming majority are level B; A is for simpler, shorter consults; C and D are for complex, longer consults).
The more significant impact is the second, slow-burn reduction: the freeze on all rebates. The table below shows the estimated impact on per patient revenue in general practice under this policy for the four common consultation items.
Assuming inflation of 2% a year, the low end of the Reserve Bank target and recent experience, the cumulative impact on the freeze between now and June 2018 will be a further 6% cut in general practice revenue.
Estimated average funding reduction per patient in 2018
![](https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/70907/width668/image-20150203-25557-8bm6p7.png)
In total, if inflation runs at 2% and the A$5 rebate cut goes ahead with its 4% revenue impact, general practices will face effective, real reductions in rebates from these consultation items of just over 10%. Cuts of that magnitude will challenge the business model of most general practices.
The result is likely to be a move away from bulk billing. This is indeed the objective of the government’s policy.
Impact on patients
So, if a practice decides to reduce bulk billing, what fees will it charge?