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In the first major policy announcement of the campaign, Labor has built a wedge on Medicare rebates – and won powerful support. By Karen Middleton.

Labor’s bid to make health central to election

Opposition Leader Bill Shorten on the campaign trail this week.
Credit: AAP Image / Mick Tsikas

In the outer suburbs of the big cities, where many a marginal seat lies, people are talking about the economy with a level of big-picture analysis that has some MPs surprised.

“They’re asking, ‘Where are we headed as a country, for my kids and my grandkids?’ ” one Liberal MP says.

It’s a slightly new take on the usual hip-pocket-nerve debate that tends to dominate election campaigns, as much about how life will be into the future as how it is now. And as focus on the budget begins to give way to the campaign proper, voters are starting to consider whose policies will – or won’t – make life harder.

Of the three traditionally big election issues – jobs, health and education – it is jobs that is gaining the most early traction with marginal-seat voters.

But the opposition has now made a pitch to connect one of those other big traditional issues to this future-prosperity debate, drawing a policy line on health.

It is seeking to contrast itself with the government by promising to end the freeze on Medicare rebates, which Labor introduced in 2013 but which the Coalition continued and has now extended to 2020.

The freeze means that as the cost of doctors’ visits rises, the subsidy from the government – worth about $37 a consultation – will not, leaving either doctors or patients out of pocket.

The Coalition argues the freeze extension was born of necessity. It saves $925 million over four years.

Labor’s promise to restore indexation of the rebate would cost an estimated $2.4 billion over the next four years.

On Thursday, Treasurer Scott Morrison called a news conference before the announcement to condemn it as fiscally irresponsible.

His appearance was also an hour before the Australian Bureau of Statistics was due to unveil the latest unemployment data, rather than afterwards, as is a treasurer’s usual practice, meaning he wasn’t able to be asked to comment on that.

But he was focused on linking the Labor policy move with the fate of future generations.

“One of the key hallmarks of Labor over so many years is they make promises to spend money that they don’t have,” Morrison said. “And when they make those promises, it’s future generations and even current generations that pay that price.”

The Saturday Paper understands the government decided to extend the rebate freeze relatively late in the budget planning process, when it was discovered that other promised savings in the health portfolio couldn’t be achieved. It was about saving money, just as it was when Labor introduced it.

Now, Labor is calling it “a co-payment by stealth” and argues an ongoing freeze means the gap between subsidy and fee will become so large that some doctors will reduce bulk-billing or stop the practice altogether.

Health policy debate

Opposition Leader Bill Shorten chose World Family Doctor Day on Thursday to unveil the plan to end the freeze, Labor’s first big-ticket policy of the election campaign and one he hopes will engage voters more on an issue that traditionally favours Labor.

“There is a battle on [in] this country about the future of bulk-billing,” Shorten said. “There is a battle on in this country about the future of Medicare.”

There has certainly been a battle behind the scenes, and it’s now spilling into the open with the Australian Medical Association and the Royal Australian College of General Practitioners rolling out campaigns against the freeze and the Rural Doctors Association backing their position.

The doctors echo the Labor argument: that they can no longer absorb the cost and patients will be asked to pay more.

“It actually is pleasing that we have now a debate around this health policy, that we have two clear policies, very different policies, that are going to be put to the Australian people,” AMA president Brian Owler said after Labor’s announcement.

“And I think it’s very important that they weigh those up and look at what they want for the Australian healthcare system in the future. And it’s not too late for the Coalition to re-examine some of their policies to make sure that we actually do get the healthcare system that Australia deserves, and it actually needs, if we are going to be a productive and advanced nation, as we should be.”

Some members of the AMA are understood to be uncomfortable with taking sides in an election campaign. But the Coalition’s budget announcement so close to an election, combined with Labor’s policy decision and Owler’s outspokenness, sees them in that position.

Australian Doctor magazine surveyed 510 GPs after the May 3 budget and reported that 60 per cent plan to charge non-concessional patients “more than $15 out of pocket for a standard consult in the next 12 months”.

The AMA campaign thus far has consisted of posters and petitions. It’s now planning to print prescription books bearing messages about the freeze, so every time a patient receives a script, there will be a reminder of the doctors’ concern.

Thus far, Coalition strategists have remained unconcerned about the doctors’ protest, because it has lacked any substantial mass-media presence.

Enter the Royal Australian College of General Practitioners, which is preparing to inject itself into an election campaign for the first time, rolling out advertisements on radio and online, and possibly on television, telling families they will be paying more to see a GP.

“This is not about doctors’ pay increasing, this is about patients,” says college president and West Australian GP Dr Frank Jones. “…GPs have taken it on the chin for four years but they thought the freeze would be lifted.”

Jones says higher costs will lead to some patients not seeing a GP for treatment and ending up presenting at a hospital – the more expensive end of the treatment system – when a condition worsens.

He says seeing a GP is also about preventive care.

“Prevention is embedded in every single consultation I have with my patients.”

Jones says the campaign is designed to make patients aware of what he says are threats to primary healthcare.

“This is the start of the journey to create a sustainable primary healthcare system in Australia.”

Pathologists' win

Government sources insist there will not be any shift in the Coalition’s position: the freeze on the rebate stays. But it has responded to a similar public campaign on a different measure – the removal of bulk-billing incentives it pays to pathologists.

Pathology Australia had been promoting the slogan “Don’t kill bulk bill”, suggesting that without the incentives paid direct to pathologists to keep up the practice of bulk-billing for most pathology services, they would start charging patients for blood tests and Pap smears.

The measure didn’t only affect pathology services but radiology services, netting a saving of $650 million as outlined in the government’s midyear economic and fiscal outlook, or MYEFO, when it was unveiled in December.

But the pathologists also wanted something else from the government, and their bulk-billing campaign was leverage.

Many pathologists now co-locate collection rooms in GPs’ buildings but have been protesting they are being charged too much rent. They wanted the government to intervene to force the GPs not to charge more than normal commercial rates by including a definition of “market value” in legislation governing the practice.

So they used the bulk-billing campaign to force the government to the table. It worked. The two biggest pathology providers, Sonic Healthcare and Primary Health Care Australia, also happen to have been donors to the Liberal Party, as has Pathology Australia.

In the middle of the first leaders’ debate on Sky News, and in answer to the only question on health, Prime Minister Malcolm Turnbull revealed the Coalition had struck a deal with the pathologists.

“So the concern that has been expressed about patients who go to have their blood tests done and so forth, being charged extra, not being bulk-billed is… that concern is gone, the pathologists have agreed to continue bulk-billing,” Turnbull said.

After the announcement, the stocks for Sonic Healthcare rose 5 per cent and other health stocks also gained value.

The deal meant the government would do as Pathology Australia asked in relation to regulating rents. In return, the organisation’s members would continue bulk-billing.

“The announcement by the Coalition today includes both a deferment to the changes to the bulk-billing incentive and a workable solution to the high rents being paid for pathology collection centres,” Pathology Australia chief executive officer Liesel Wett said after the announcement. “This in turn will allow the sector to maintain current billing practices, in the best interests of patients.”

Politics of status quo

So, why would the government do a deal on pathology but not on the broader rebate freeze?

It involves a cost-benefit analysis and the psychology of voter expectations.

On the Coalition side, the argument goes that voters know money is tight and realise something has to be done about that. So leaving something already in place – the freeze on Medicare rebates – apparently doesn’t surprise or alarm voters as much as introducing a new measure – the end of bulk-billing for Pap smears, blood tests and other pathology services.

Reintroducing the indexation of the Medicare rebate was going to cost a lot. And as long as the freeze wasn’t causing a huge amount of political damage, it wasn’t necessary.

But the pathology campaign was biting.

The pathology deal doesn’t actually restore the bulk-billing incentives; it simply ends the political campaign against their removal. Some smaller pathology providers who may not benefit from the rent control measure enough to offset the impact of the cut to bulk-billing incentives have not ruled out ending bulk-billing and charging up to $50 for pathology services. Catholic non-profit providers are among those organisations saying they will charge more.

Primary Health Care is not a member of Pathology Australia and therefore not a party to the deal.

No deal on GPs and radiology

The pathology deal is also having a separate knock-on effect.

The GPs believe the pathology deal squeezes them even further. They argue that the government restrictions on the rent they can charge the pathology collection centres, combined with the freeze on Medicare rebates, puts them in a financial pincer movement.

And the pathology deal has angered the radiology sector, too.

Its bulk-billing incentives were also cut in MYEFO and it hasn’t been offered any tradeoff.

The Australian Diagnostic Imaging Association argues the impact of the cuts will be much greater in dollar terms on individual radiology patients than pathology patients. It says they will cost between $4 and $80 a visit, depending on the procedure. It puts the average cost impact at $14 a service and says the decision will affect three million patients who are now bulk-billed.

The association says it will hit hardest on the cost of MRI scans for patients at high risk of breast cancer or with diagnosed cervical cancer, adding $80 to the cost of a visit.

“It’s important now that the government has resolved the issue with pathologists that they don’t ignore the issues faced by radiology patients,” the association’s chief executive, Pattie Beerens, told The Saturday Paper.

“The cuts are higher in diagnostic imaging and many patients are already facing higher upfront costs.”

She says the rebates for radiology have not increased for 18 years and the fact that patients have to pay the whole fee upfront before receiving any rebate means some patients simply don’t undertake the recommended scans.

The radiology sector hasn’t run the same sort of campaign against the cuts. But that may be about to change.

It’s not clear how politically damaging the radiology cost increases might be and whether this sector, too, can leverage some change out of a government conscious of every dollar.

The release of the Pre-election Economic and Fiscal Outlook – the Treasury and Finance departments’ confirmation of the state of the books – signals that the election campaign and its associated spending-and-saving debate now begins in earnest.

But there are still five more weeks before voters go to the polls.

With the traditional wisdom suggesting that winter election campaigns are risky because they put voters in a bad mood, the unseasonably warm autumn weather is probably a boon for the government.

But if winter actually arrives before July 2, bringing the usual colds and flu and visits to now-very-cranky doctors, health in general and the Medicare rebate freeze in particular may just become an election issue after all.

This article was first published in the print edition of The Saturday Paper on May 21, 2016 as "The pathology of Labor’s health bid". Subscribe here.

Karen Middleton
is The Saturday Paper’s chief political correspondent.

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