The bill we are debating today, the Health Insurance Amendment (Safety Net) Bill 2015, concerns the Medicare safety net.
It is a bill which gives effect to a range of measures that were first announced in the 2014 budget, and here we are nearly a year and a half later. We have to ask ourselves why it has taken so long. Perhaps it is because the government has been so preoccupied with issues of their own, and has been so preoccupied within the health portfolio in dealing with the fallout from the disastrous GP tax, that they have not got around to other measures that were contained in that ill-fated budget.
Thanks to this bill, what we see is a cut to the Medicare safety net, which totals some $270 million. The new, so-called simplified safety net will hit the pockets of vulnerable members of the community, and I will explain exactly why. Before I do that, it is probably worth talking about some of the background of this because, as I said, the bill concerns the Medicare safety net—something not well understood, not only in this place but also in the general community.
The original Medicare safety net was set at around $440 from 1 January this year and it provides a rebate for Medicare card holders. It provides an additional rebate for out-of-hospital services when some of the difference between the Medicare benefit schedule fee and the Medicare rebate reaches the threshold in any given calendar year. After qualifying for this Medicare safety net, the Medicare benefit payable increases to 100 per cent of the scheduled fee, rather than the usual 85 per cent. For example, the scheduled fee for attendance with a consultant psychiatrist of more than 45 minutes but not more than 75 minutes is $183.65; the Medicare benefit payable to patients is $156.15—that is, 85 per cent of the fee. Once patients reach the original Medicare safety net, the benefit payable increases to 100 per cent of the scheduled fee rather than 85 per cent of the scheduled fee.
So that is the original Medicare safety net. There are two thresholds under the extended Medicare safety net: $638.40 for Commonwealth concessional cardholders, including those with a pensioner concession card, a healthcare card or a Commonwealth seniors card, and those who receive family tax benefit part A. The second is that $2000 safety net for all other singles and families. This extended safety net was introduced in 2004 and it covers about 80 per cent of out-of-pocket costs once the above-mentioned thresholds have been reached. Benefits are paid in addition to the Medicare rebate and in addition to any benefits that are received under the original Medicare safety net.
In 2009 Labor introduced changes to the extended Medicare safety net that allowed the Minister for Health via a legislative instrument to determine that specific MBS items have their extended Medicare safety net capped to a specific amount. This is an important point: it goes to the argument that Labor has not been active in this space and that Labor is not willing to put in place reasonable measures based on a fairness principle which help to constrain the growth in healthcare costs at the same time as meeting out-of-pocket cost pressures, particularly on the most vulnerable Australians—because in 2009 we did exactly that. Our decision followed two reports that highlighted excessive fees—one of those reports being commissioned by the former government—being charged by some doctors and other practices to take advantage of the extended Medicare safety net. Specifically, the benefit was capped on all obstetric services, some assisted reproductive technology services, cataract services, the item for hair transplantation and varicose vein surgery amongst other MBS items.
There is also a maximum permissible gap and this is the greatest permissible gap, or GPG, which predates the original Medicare safety net and the extended Medicare safety net. It is defined in section 103(3) of the Health Insurance Act and requires that the difference between the Medicare benefit schedule fee for an item and 85 per cent of the Medicare benefit must not be greater than a specified amount. In other words the GPG is a rule that sets a maximum gap dollar amount and it is indexed on 1 November in line with the consumer price index. In 2015 the GPG is set at $78.40. It is important that we have some context around the matters that are before the House today. I will go to some other context in a moment, but let's go to some specific issues within the bill.
The government is keen to point out that the bill lowers the safety net threshold for all patients—a point that was made just now in the house by the member for Lyne.
But the devil is always in the detail, because the bill does two things that the government has been very quiet about. Members opposite who have engaged in the debate have not actually pointed to the second thing that the bill does. First, it places restrictions on the out-of-pocket costs that contribute to a patient reaching the safety net in the first place. They like to argue that they have brought the finishing line closer to the starting line, but what they do not tell you is that they have increased the handicap. They have added additional weights on the racers so it is harder to get to the finish line in the first place.
Under existing arrangements, all out-of-pocket costs for out-of-hospital Medicare services count towards the threshold, with the exceptions of those issues that I raised earlier. But under the proposed changes restrictions are imposed on which out-of-pocket costs can accumulate towards reaching the safety net. What this means, in practice, is that the amount that counts to the safety net is equal to 150 per cent of the MBS fee minus the rebate, not the full out-of-pocket cost. So somebody who sees a specialist and is charged $150 previously had an out-of-pocket cost of $77.25 go towards the safety net. But under the new regime just $55.55 will go towards the safety net. This is going to make a huge difference over time, particularly when you consider that one of the greatest areas of usage for the extended Medicare safety net was GP consultations. The most common form of medical interventions that most of use is a visit to the GP. The second greatest, after GP consultation, for people accessing the extended Medicare safety net was specialist consultations.
On top of this, the amount patients receive back once they reach the safety net is also reduced. So not only is it harder to reach that finish line; the amount you get back is reduced as well. It will be capped at 150 per cent of the MBS schedule fee, less the standard MBS rebate. It is a double whammy that will impact on Australians who can least afford it. But there is another issue here, and I was expecting to hear about it from the member for Lyons over here, who is the son of a former GP and represents one of the most disadvantaged in Australia. Perhaps we will hear from the good Dr Gillespie on this shortly. There is a double whammy on this, and it goes to something that has not been uttered much in this debate. That is the impact of the Medicare rebate freeze. The impact of the Medicare rebate freeze is to ensure that over time people receive less and less from the Medicare system when they see their GP. We know that there is already an extensive gap between the scheduled fee and the Medicare rebate fee. I should put that another way: the Medicare schedule fee and the AMA recommended fee. In fact, the Medicare Benefits Schedule is about half the AMA recommended fee for a normal GP consultation.
So, if you think about the impact of these two strategies, what you have is low-income Australians—in fact, all Australians—being hit with a pincer movement. They are being hit with a pincer movement because on the one hand they are going to see less and less rebate from the MBS system for visiting their GP, and it is going to be harder and harder to reach the MBS safety net. And then when you do reach the MBS safety net you are going to get less back through the safety net rebate. So it is actually a double whammy, one that members opposite are not very keen to talk about for obvious reasons. I heard the member for Lyons in his contributions talk about the fact that in his electorate those on lowest incomes were going to be protected, that they were not going to be impacted by these changes. Well, I have got news for the member for Lyons: that is not what is going to happen. And I will explain why in a moment. But let us just assume for a moment that he is right. I know the demographics of his electorate in regional and rural Tasmania quite well.
I know that the practices that work there often are dealing with very fiscally tight environments. The economic viability of many of those regional and rural practices is challenged. So the only way that medical practitioners, be they GPs or specialists operating in the electorate of the member for Lyons, are going to do what he says—and that is protect the poorest and the vulnerable—is to cross-subsidise the costs within their practice. That is, they will pass on the growing costs of running a medical practice, whether that be in rural and regional Australia or elsewhere, to those people within that practice area who the GPs or the specialists believe can pay.
We know that will happen because we know that is happening right now. We know that it is happening right now, so the double whammy effect is actually a triple whammy effect for members such as those that we have just heard from. The only way the practices are going to be able to maintain their economic viability and protect—as the member for Lyne suggests that they will—those vulnerable members within those practices is to pass on additional costs to middle-income earners within his electorate. So, far from him being able to stand here and argue that they are going to be protected, we say with good evidence that that is not going to be the case.
We know that what it means in practice is that the amount that counts to the safety net is equal to 150 per cent of the MBS fee minus the rebate, so not the full out-of-pocket amount. Let us give an example. Somebody who sees a specialist and is charged $150 previously had an out-of-pocket cost of $77.25 go towards the safety net. Under the new regime, $55.50 goes towards the safety net. So we know that it is a double whammy. We know that it is a typical coalition trick, where they are giving with one hand and taking with the other. We know that the most vulnerable in our community are going to be impacted. We know that all members of the community are going to be impacted.
We are particularly concerned about the impacts that these changes are going to have on radiation oncology patients, on patients needing ongoing access to psychiatrists and on patients accessing certain IVF services. In particular, Labor is concerned that radiation oncology patients who had previously been bulk-billed will see significant new out-of-pocket expenses. According to one example, a patient with a malignant melanoma receiving radiation treatment could face new out-of-pocket expenses of some $7,400.
I ask you to contemplate this because we have experience in my own family of the impact on somebody once they are diagnosed with a disease such as malignant melanoma. They are no longer working. The income of the entire household is disrupted by this because the carer often has to give up their job to look after them well. So, at the most crippling time in the household's lives, they are going to be whacked with new out-of-pocket costs of up to $7½ thousand for radiation oncology.
This is just one example. I have cited in my contribution to this debate many other examples. Is it any wonder that the entire medical community is up in arms about these proposals? They add to the other misguided, misdirected and unfair health policy proposals that have been brought to this place by this government, and they should be rejected.