The AMA’s criticism of proposed changes to Medicare highlights the government’s need to lengthen its own consultation times. By Sophie Morris.

Medicare reform plans adrift

When Brian Owler met Peter Dutton after the budget in May, the president of the Australian Medical Association hoped to change the then health minister’s mind about the government’s plan for a compulsory $7 GP fee and cuts to rebates.

Instead, he got a warning.

“My first meeting with the minister shortly after the budget was essentially an ultimatum: you can either support this proposal or be on the outside,” says the straight-talking Sydney neurosurgeon, who took over at the helm of the AMA in late May.

It was a sign of things to come. The relationship between the influential doctors’ lobby and the government deteriorated rapidly.

At one stage, in July, Dutton publicly dismissed an AMA alternative proposal as a cash grab by doctors, even before Owler had finished his press conference unveiling it.

Then, on December 9, Prime Minister Tony Abbott joined Dutton to announce a revised version of the co-payment, as the government scrambled to “remove barnacles” before the year’s end.

There were extra protections for the vulnerable but, to pay for them, the rebate for short consultations would be cut by $20, in an attack on so-called “six-minute medicine”. This further fuelled doctors’ fury.

By January, Owler was warning the measure would backfire, as GPs would likely extend consultations to qualify for the higher rebate, making it harder to get an appointment. Bulk-billing rates would plummet. Every waiting room would have posters blaming the government for fee increases.

“The level of anger and disbelief within the general practitioner community that your government has so little regard for the value of their services at the front line of Australian healthcare is unprecedented,” he wrote to Abbott on January 8.

Failure to sell policies

Spats between the AMA and the government of the day are nothing new, although the latest stoush is the worst since the highly personal dust-ups between Kerryn Phelps and then Liberal minister Michael Wooldridge, circa 2001.

Sometimes, politicians see electoral gains in doctor-bashing as a form of class warfare. In 1993, Paul Keating famously derided the lobby group as “the greedy doctors who are represented by the most rapacious union boss in the country”.

But, in this instance, the interests of doctors and their patients seem to align, as Owler takes up the cause of “everyday Australians” who might struggle to afford extra fees for X-rays, blood tests and GP visits.

When crossbench and Labor senators joined the doctors in voicing their opposition to the cuts to rebates for consultations of less than 10 minutes, making clear these changes would be overturned, the government backed down just days before they were due to take effect.

Announcing the retreat on January 15, new minister Sussan Ley promised to consult widely, giving Owler hope for a fresh start.

Still, he makes a pointed observation, considering Abbott is fond of reminding people that he knows this turf, having served for four years as health minister in the Howard government: “I don’t think there is really the knowledge of the complexities of health funding, particularly in the upper levels of government, in the cabinet, that needs to be there. This whole process has shown a lack of understanding and a lack of willingness to understand.

“They need to convince the public and doctors this is actually a good thing for the health system,” Owler says. “I don’t think that argument has ever been made and that’s a fundamental flaw.”

This last comment could also describe a broader malaise afflicting the Coalition since it announced its first budget eight months ago. The public remains unconvinced of the merits of key measures, a mood reflected by populist senate crossbenchers.

Unlike the largely friendless GP co-payment, the deregulation of university fees has attracted the support of an influential lobby group, endorsed by most vice-chancellors.

Yet it too looks headed for a senate defeat. Even talk this week of further compromises, involving a possible reduction in 20 per cent cuts to course subsidies worth $2 billion, has failed to sway the crucial crossbenchers.

The budget savings are being whittled away and still the measures are stalled.

Leadership tensions

The GP co-payment has become more than just a botched policy with an uncertain future. It has also exposed divisions in the government, with reports Abbott overruled Dutton and Treasurer Joe Hockey to insist on the ill-fated cuts to the rebate for short consultations.

Not true, says Abbott of the reports in News Corp’s Sunday tabloids. Mere “gossip”, according to Hockey.

Yet the reports were believed by other government sources, who had their own theories about how and why the story had leaked. Was it from a minister with designs on the top job? Or someone disappointed by the reshuffle, or looking to protect their own reputation?

The fact that such conjecture is being shared by Coalition MPs says much about the state of the government and the internal angst about its prospects and, indeed, about Abbott’s leadership.

He starts this year on the defensive.

Proposals remain with new minister

The proposal for a GP co-payment may be haemorrhaging badly, but it is not yet terminal.

Ley insists the government remains committed to the principle. The AMA also says it could accept a modest co-payment in some form, though it opposes the scaled-back version and the freeze on the indexation of all Medicare rebates that remain on the table.

From July, it is planned that bulk-billing GPs would be able to charge a $5 fee to non-concessional payments to offset a proposed cut to the Medicare rebate – but only if the senate allows it, which remains a big if. Labor has now dug in against the measure and crossbenchers are also unimpressed. So the government still has some persuading to do. And that, again, raises the question: what is the rationale for the change?

Initially, it was pitched largely as a budget savings measure, but that argument was clouded by the fact the money will be redeployed to fund future medical research. The election promise to fix the budget was clashing with another promise not to cut health spending.

Restating the case for change this week, the prime minister mentioned price signals – code for wanting to deter people from unnecessary visits to the doctor – but focused mainly on the need to make Medicare sustainable.

“A decade ago we were spending $8 billion on Medicare. Today, we’re spending $20 billion on Medicare,” he said. “Without change we’d be spending $34 billion within a decade on Medicare, so we do need change to make a great system sustainable for the long term.

“Now, the principles that this government is following are very clear,” Abbott continued. “We want to absolutely protect bulk billing for the vulnerable. We want to maintain and, if possible, improve our health services. We do want to see more price signals in the system over time, but fundamentally, we want to protect what is a good system and that does mean ensuring that costs are under control.”

A sustainable Medicare is surely a worthy goal, but his comments, echoing Ley’s first statement in the job, have sparked a backlash from some health economists, who accuse the government of overstating the growth in spending by ignoring inflation and population growth.

Need for refom

Even the staunchest critics of the proposed co-payment model acknowledge it’s time for debate about the future health needs of an ageing population.

Greens senator Richard di Natale, a former GP, says there are plenty of options for reducing waste in health spending but the starting point needs to be that Australia has a good and efficient health system.

“As a proportion of GDP, we spend about 9 per cent. The US spends double that and gets much worse healthcare,” di Natale says.

“If you look at what’s driving up health costs, it’s not people going to see their GP. It’s improving medical technology, access to new medicines and new diagnostic techniques. That’s a really good problem to have. Most countries would be really pleased to have as their challenge that they have new lifesaving drugs and need to work out new ways to pay for them.”

Di Natale finds rare common ground with one of parliament’s other medicos, ophthalmologist and Liberal MP Andrew Laming.

Both men see need for debate about how to reward GPs for providing high-quality care for patients, in what could be a dramatic departure from Medicare’s current fee-for-service model, which focuses on the volume of consultations rather than health outcomes.

Laming says there is scope for the government to consider this as it again rejigs the co-payment in consultation with doctors.

“In the package there will have to be ways of rewarding quality practice, and there’s a chance for us to look at some of those options and for there not just to be a series of cuts,” he says, “which was part of the problem with the previous package – that there was not much to love about it.”

On Thursday, Owler met with Ley and felt they had moved beyond Dutton’s ultimatum and would be able to discuss other options and a long-term health strategy.

But even if the doctors are again talking with the government, the problem may be that Abbott, with his bungled pursuit of his unloved budget, has already squandered his chance for any real reform.

This article was first published in the print edition of The Saturday Paper on Jan 24, 2015 as "Doctors’ orders ". Subscribe here.

Sophie Morris
is The Saturday Paper’s chief political correspondent.