On the GP tax and medical research rort

I have an op-ed in the AFR this morning that talks about the GP tax and the proposed Medical Research Future Fund idea.

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When Julia Gillard imposed a price on carbon, most people recognised this as being a broken tax promise. Notwithstanding the professed nobility of her cause, few could credibly justify the breach of trust that had occurred, and Gillard suffered the consequences.

The problem for Tony Abbott is that his proposed Medicare co-payment is a tax, and constitutes a broken promise as well.

As with the carbon price, the intentions behind the broken promise are noble. Zero-price at point of sale government services tend to be over-used. Federal governments of both persuasions have long attempted to restrict GP services; co-payments have been suggested before, putting restrictions on the number of foreign doctors, rationing provider numbers, and so on.

The fact of the matter is that welfare recipients are living beyond the means that taxpayers are able and willing to provide.

The proposed co-payment is a transactions tax. Going to a doctor is a transaction that is now taxable at the flat rate of $5 (the doctor gets $2 of the $7 charge). How the tax is payable is complex, but the government always gets $5 per taxable visit. The mechanism is that government will withhold $5, from already collected tax revenue, from the Medicare rebate and divert that money into a medical research fund. The GP may choose whether or not to charge the co-payment. If it is charged, the tax is paid by the patient. If it isn’t charged, the tax is paid by the GP. Either way, the tax is always paid; but the incidence and application of the tax is arbitrary.

Adam Smith identified arbitrariness as the biggest problem a tax system could face. It makes tax collectors – now GPs – particularly unpopular and promotes all manner of corrupt behaviour. We can easily imagine some patients, meant to be rationed out of the Medicare system, over-emphasising their ailments in an attempt to appeal to the GP sympathy. In short, the GP might bear the cost of the Medicare over-use through reduced earnings and not the government. In any event, GPs are now being required to formulate both medical opinions and prop up the welfare state.

TAX IS A RATIONING DEVICE

 
Some could argue that it doesn’t matter that the co-payment is a tax and not a price. The incentives are much the same; but only if the intention is simply to reduce the number of people attending a GP. Prices are charged in markets between willing buyers and sellers – prices convey information. Taxes do not. This tax is designed as a rationing device only and the revenue is being used to finance a medical research fund, not to finance healthcare or even pay down debt.

This part of the government’s proposal is particularly incoherent. The Abbott government has been particularly good on corporate welfare. They said “No” when the auto-manufacturers and SPC asked for handouts; they even refused to guarantee Qantas’s debt. Good decisions. Yet here we see a $20-billion fund being established – money being ripped out of current healthcare expenditure to finance something as vague as medical research.

To be fair – medical research is very popular. That doesn’t mean, however, that medical research is a good use of public funds.

In a report published last year, the Department of Health and Ageing suggested the return to medical research could be as high as 117 per cent. That number doesn’t pass the snigger test and when you dig down, you find that is a generously estimated return over 10 years and less generous assumptions generate estimates as low as –42.7 per cent.

CO-PAYMENT TO PAY HIGHER SALARIES

 
The lower estimate is more likely than the higher.

Arthur Diamond writing in the 2006 European Journal of Law and Economics found that government grant agencies weren’t very good at selecting important research projects compared to the private sector. In a 2011 Journal of Public Economics paper Brian Jacob and Lars Lefgren found that a grant from the US National Institutes of Health was associated with 1.2 additional publications over the next five years. It gets worse; in a 1998 American Economic Review paper, Austan Goolsbee found that increased public research funding results in higher salaries for researchers but little increased output.

In other words, the net result of the co-payment is to take money from patients or GPs to pay higher salaries to medical researchers who will, more or less, continue to do what they would have done anyway. This is likely to crowd out private medical research. It is an open question whether rationing some people out of the Medicare system is a good idea and the co-payment concept should be considered on its merits. The medical research fund idea should be quietly abandoned.

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Last week Terry Barnes had a proposal that will get the Abbott out of the hole it has dug for itself – at least on the GP tax.

First, ditch the $5 cut to GP and other affected Medicare rebates. …
Second, remove bulk-billed pathology and radiology services from the co-payment net. …
Third, turn the MRFF into a comprehensive health infrastructure fund, reinvesting co-payment savings in healthcare here and now. …
Fourth, avoid unintended consequences for the less well-off. …
Lastly, having so modified its co-payment package, the government should ask the Productivity Commission to examine the measure, reporting by the end of 2014. …

In short – strip out the aspects that make the co-payment a tax and more of an actual co-payment.

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74 Responses to On the GP tax and medical research rort

  1. Roger

    … turn the MRFF into a comprehensive health infrastructure fund, reinvesting co-payment savings in healthcare here and now. …
    A point I made here last week, fwiw.
    There is a particular need to address health infrastructure and provision of services in rural and regional Australia, where most of Australia’s wealth is produced (this is where the Nats have let down their constituency badly). Internet based medical services and lateral thinking about service provision offer some hope, but are not in the final analysis a substitute for readily accessible GP & specialist services on the ground.

  2. Beeb

    You are perpetuating the myth that – if the budget measures are passed in full – the poor will be slugged with a $7 copayment, and that this is terribly unfair. The truth is that many people on low and modest incomes already pay a darn sight more than 7 bucks! Whether one is bulk-billed currently does not depend on one’s income, but on whether one’s doctor bulk bills. As the situation currently stands,you can be on an income of over $100,000 and still be BB – if you happen to have access to a BB practice. Where I live there are no BB practices, so you are pay, on average, $30 out of pocket, whether you are a pensioner or not. On the other hand, I know someone in Sydney on $100,000+/year who gets BB every time she visits the GP – because there are many BB practices near where she lives and works. Labor and the Greens are unnecessarily alarming people over this and the Liberals need to get this message out. The only way you get a free consultation is if you have access to a BB doctor – it has nothing to do with your income. You can be as rich as Croesus and still be BB if your doctor BB; and you can be just surviving on a pension and still have to pay a substantial gap if he/she doesn’t. Many of the rich are profiting from this and not paying a cent.

  3. Aristogeiton

    The proposed co-payment is a transactions tax. Going to a doctor is a transaction that is now taxable at the flat rate of $5 (the doctor gets $2 of the $7 charge). How the tax is payable is complex, but the government always gets $5 per taxable visit. The mechanism is that government will withhold $5, from already collected tax revenue, from the Medicare rebate and divert that money into a medical research fund. The GP may choose whether or not to charge the co-payment. If it is charged, the tax is paid by the patient. If it isn’t charged, the tax is paid by the GP. Either way, the tax is always paid; but the incidence and application of the tax is arbitrary.

    Lulwut? So the reduction in the Medicare benefit to the non-bulk-billed consumer by $5 is a tax too, and if not why not? It too may be either borne by the GP (in lowering the price of the consultation) or by the consumer (in paying a higher effective price).

  4. Aristogeiton

    Also, I would love to see you fit this into the legal definintion of tax (Matthews v Chicory Marketing Board); what definition of tax are you using?

  5. incoherent rambler

    taxable at the flat rate of $5 (the doctor gets $2 of the $7 charge

    There is something immoral about forcing a citizen to collect tax on behalf of government.
    If government wants to collect, they should be obliged to do it themselves.

  6. Aristogeiton

    I mean, let’s not forget that the way that bulk-billing works is that the patient assigns their right to a payment from government, to their GP.

  7. Max

    The life of GP’s in Australia shows the evil of the state.

    Imagine being the top 1-5% your whole life in terms of intelligence.
    Studying your guts out from early teens to early 30′s because you want to serve your fellow man.
    Working very hard often in shitty conditions.

    for what? to basically be enslaved into the quasi public service to work as a social worker, form filler and tax collector.

    Scrap it ALL and let the free market work…. Afterall those medical services that are free market, namely Lazic eye treatments, cosmetic surgery, and dentistry have gotten both better in quality and cheaper over the last 15 years.

  8. chiller002

    The reason why the majority of the GP tax was announced as going into a “research fund” rather than consolidated revenue or health spending is because the government knew the $7 GP tax had 0% chance of getting through The Senate so smartly announced it being linked to something that won’t affect the bottom line of the budget. Now they can trade away many billions of the “research fund” to get an eventual ~$5 GP tax through (expect it to be means tested and get through due to the Greens and x-bench.)

  9. Max

    Tattoo Parlours charge GP like money and get to do whatever the heck they want.!!

  10. Rob MW

    Sinc – could or should the definition of a ‘tax’ as you ‘may’ have used it and as extended via Ha and Hammond v NSW – (caveat – subject to the co-payment not being the object of more than one subject matter) – mean that the co-payment is actually an ‘Excise’ on the production of a medical ‘Service’ ?

    I’ll stick my neck out and say; that in this instance the reason that I think that the co-payment is an ‘excise’ (tax) is that using this model would then allow the Government to (1) – allow the doctors to become tax collectors and be compensated as such and (2) – bypass the ATO in the collection of the co-payment with the money being directly received by a special collection unit (unless – another caveat) – it becomes a line item on doctors BAS statements.

  11. Aristogeiton

    Rob MW
    #1331145, posted on June 3, 2014 at 11:01 am
    Sinc – could or should the definition of a ‘tax’ as you ‘may’ have used it and as extended via Ha and Hammond v NSW – (caveat – subject to the co-payment not being the object of more than one subject matter) – mean that the co-payment is actually an ‘Excise’ on the production of a medical ‘Service’ ?

    I’ll stick my neck out and say; that in this instance the reason that I think that the co-payment is an ‘excise’ (tax) is that using this model would then allow the Government to (1) – allow the doctors to become tax collectors and be compensated as such and (2) – bypass the ATO in the collection of the co-payment with the money being directly received by a special collection unit (unless – another caveat) – it becomes a line item on doctors BAS statements.

    I’m happy to be corrected, but my understanding is that an excise is a tax on goods not services.

  12. H B Bear

    Liberals take the political heat to leave another bucket of money for when cretins like The Goose get back on the Treasury benches.

  13. Dr Faustus

    To me this is another exemplar of the Abbott Government not learning from the recent past.

    Rudd sprang the Global Carbon Capture & Storage Institute on a surprised world with no justification and less planning. Similarly Gillard produced the Clean Energy Finance Corporation with no visible business plan. The millions dropped those frolics went directly to rent-seekers in the CRC’s, industry and academia – and have swirled down the pipes with no tangible benefit to Australia.

    Amongst the many messages Abbott and Hockey have failed to articulate is how the Medical Research Future Fund will be any different.

    Sure, medical research may be a ‘good thing’ per se. Sure, ‘world class’ sounds impressively like a cure for major diseases. But where was the big hole in Australia that needs $20bill to fix as a budget priority? What was it; who identified it; who will fill it; when; how; what measures will let us know the filling has been successful?

    It seems awfully like a Peppa Pig moment: pass the fuckin’ budget bill, or the Cancer Sufferers get it…

  14. john constantine

    let the health fund invest in any health infrastructure that has a positive cashflow?.

    whatever happened to the techie computer programs that were going to cut down doctor shopping, munchausen by child proxy, and taxpayer funded doctor groupies?.

    rural australia is having its medical needs met by foreign medical staff, taken from the worlds poorest countries.

    the quick solution to australias imbalance of rural medical needs and the reluctance of the new demographic of australian trained medics to leave their cultural comfort zones has been to raid the undeveloped world of medics and fill australias rural gap with them.

    lot of far away brown people robbed of medics to fix australias problems. what is the death toll for that?.

  15. Rob MW

    “I’m happy to be corrected, but my understanding is that an excise is a tax on goods not services.”

    Aristo – I agree however, politicians and the public service muppets are forever extending their boundaries under the scenario that ‘necessity is the mother of all invention’.

    The field that I’m in business in, the Feds place an excise on the production (sale of goods) of an animal and the production (sale of goods) of crops to fund Government and moronic ‘Industry’ inspired ‘Service Corporations’ including R & D corporations (i.e – Meat & Livestock Australia Limited or the Grains Research & Development Corporation…….etc)

    I don’t think that the leap (for the politicians that is) into an excise on the sale of a service is too far removed from an excise on the sale of goods.

  16. Bugme

    After working in health for over 30yrs, the amount of waste and inefficiencies is mind blowing. They don’t need more money…they to spend the money they get better. Also the health field has major issues re: over diagnosis – Check the following –

    http://www.bmj.com/content/344/bmj.e3502?ijkey=tzRK2ncLto2JJ9I&keytype=ref

    Most of the major illness have the same mortality rate as 20yrs ago, they have just moved the capture rate to show that the survival rate is improving. Many researchers in health are no different to many climate carpet baggers, keeping the gravy train moving with other people money……

  17. Aristogeiton

    Rob MW
    #1331195, posted on June 3, 2014 at 11:36 am
    “I’m happy to be corrected, but my understanding is that an excise is a tax on goods not services.”

    Aristo – I agree however, politicians and the public service muppets are forever extending their boundaries under the scenario that ‘necessity is the mother of all invention’.

    The field that I’m in business in, the Feds place an excise on the production (sale of goods) of an animal and the production (sale of goods) of crops to fund Government and moronic ‘Industry’ inspired ‘Service Corporations’ including R & D corporations (i.e – Meat & Livestock Australia Limited or the Grains Research & Development Corporation…….etc)

    I don’t think that the leap (for the politicians that is) into an excise on the sale of a service is too far removed from an excise on the sale of goods.

    I don’t understand the point here. The fact that something is an excise is only really relevant insofar as the Commonwealth have an exclusive power to charge excise (s. 90). But in any event an excise is always a charge on goods, not services.

  18. Bushdoc

    I normally find Sinc’s articles interesting and coherent. Sadly this time no. Arguments about whether a co-payment is a tax or not, is both futile and irrelevant. You may as well ague about whether a bird is a dinosaur, the answer is so what. An interesting exercise for pencil heads yes, but functionally irrelevant. Will you sit at the dinner table tonight debating whether your roast chicken is evolved from a therapod dinosaur.
    The question is whether or not a co-payment will change consumer behaviour. Do price signals lead to better use of the health dollar. The answer is yes. I am a rural GP, I can assure any economist or health bureaucrat, that there is a significant difference in frequency of presentations by those who are bulk-billed and those who pay a fee. There is no difference in clinical outcomes. The nonsensical argument about poorer outcomes if people are forced to pay, does not meet the reality. Several years ago, I made the decision to stop bulk-billing for after hours consultations. The outcome was less unnecessary call outs, if people were genuinely sick they came anyway. I got more sleep and people would wait till the morning for me to see their sprains and runny noses.
    Whilst the new system will create some significant logistical accounting problems, I think it is a price worth paying to stop wastage of the health dollar. By the way just as an aside medicare is an insurance policy, not a tax. Something that gets forgotten in the heat of politics. Bulk-billing means a doctor agrees to accept what the insurer thinks is a fair fee. I you think the fee in inadequate for the service, you can charge more, it is just that the payment in effect, gets split between the insurer and the insured. We run into this with insurance companies all the time, for medical reports. If I don’t think the fee offered is adequate I just refuse to do the report, and inform the insurer what I wish to be paid for the service, if they don’t like it, well that’s their problem.
    As for the fund for research, well that is entirely different issue. I think it is a good idea, but accept there is potential for featherbedding. The money could also have been used for an infrastructure fund for health, but that would give state governments the excuse to down tools on infrastructure and cost shift further to the federal government.
    Finally I am very disappointed with the AMA RACGP and other “health lobbies”, seriously, siding with bulk-billing. I suspect this reflects some of my urban colleagues dependence on bulk-billing, for throughput and income. Exactly the reason for limiting it.

  19. The Hunted Mind

    Liberals take the political heat to leave another bucket of money for when cretins like The Goose get back on the Treasury benches.

    Exactly. Stop leaving surpluses Libs. In any shape or form. Give it back in tax reductions. They’re actually popular. Try it and see.

  20. Aristogeiton

    Bushdoc
    #1331216, posted on June 3, 2014 at 11:48 am
    [...]
    By the way just as an aside medicare is an insurance policy, not a tax.

    No it’s not.

  21. Second, remove bulk-billed pathology and radiology services from the co-payment net.

    Idiotic suggestion. The extra services to which doctors refer patients is a major area of over-servicing, and will be one of the main areas of savings. Might as well can the whole thing if you’re going to hobble it that much.

  22. Bushdoc

    Aristogeiton,
    Medicare is paid from taxes (including the medicare levy), but its function is as an insurance policy. Whether or not the doctor chooses to accept the rebate is a matter of choice.
    For the record I wish medicare didn’t exist, sadly it came into existence the year I started practice.

  23. Aristogeiton

    Bushdoc
    #1331233, posted on June 3, 2014 at 12:05 pm
    Aristogeiton,
    Medicare is paid from taxes (including the medicare levy), but its function is as an insurance policy. Whether or not the doctor chooses to accept the rebate is a matter of choice.
    For the record I wish medicare didn’t exist, sadly it came into existence the year I started practice.

    But it’s not an insurance policy for the same reason that HECS isn’t a loan agreement. There is absolutely no guarantee that you will receive payment or equivalent benefit on the happening of the ‘insured’ event. I won’t even get into the issues you would have with viewing taxation as a premium. It is not insurance, it is a government benefit and as such can be taken away or its terms of entitlement modified at any time after you’ve paid your ‘premium’.

  24. Rob MW

    “I don’t understand the point here.”

    Aristo – I suppose the point that I’m trying to make is that, and all things being equal, is a ‘Levy’ (medicare levy) or an amendment to that levy (assumed – co-payment) not an excise given the inventiveness of politicians minders. I’ll round that up – is a ‘levy’ a tax, an ‘excise’ or a ‘custom’ or all of the above and simply a ‘bounty’ ?

    What is the medicare ‘levy’ in the first instance; is it for example, a tax on income tax or an excise forming part of income tax. Why define it as a ‘levy’ at all ? I don’t know the answers.

    I know, I’m still sticking my neck out.

  25. Aristogeiton

    Rob MW
    #1331241, posted on June 3, 2014 at 12:14 pm
    “I don’t understand the point here.”

    Aristo – I suppose the point that I’m trying to make is that, and all things being equal, is a ‘Levy’ (medicare levy) or an amendment to that levy

    There are no changes to the Medicare levy proposed that I am aware of. The change is to the Medicare benefit. The thing that Sinc thinks is the tax is the element which the bulk-billing doctor is allowed to charge in concert with a decrease in the Medicare benefit.

  26. Aristogeiton

    The Hunted Mind
    #1331217, posted on June 3, 2014 at 11:49 am
    [...]
    Exactly. Stop leaving surpluses Libs. In any shape or form. Give it back in tax reductions. They’re actually popular. Try it and see.

    If the Libs had any guts at all this and other policies would have gone towards a return to surplus. Then they could go to the next election promising tax cuts. But they’re just a bunch of big-spending big-taxing socialists like the last lot.

  27. Rob MW

    “There are no changes to the Medicare levy proposed that I am aware of.”

    Aristo – I suppose that that is where we are up to and will have to wait to see exactly how the legislation handles what seems, to me at least, as a conundrum.

  28. .

    Aristogeiton
    #1331117, posted on June 3, 2014 at 10:27 am
    Also, I would love to see you fit this into the legal definintion of tax (Matthews v Chicory Marketing Board); what definition of tax are you using?

    Chicory marketing board?

    Statists are demented zealots.

  29. Amen to all the above.

    I only wish I could get a health insurance policy that would cover my GP visits …

  30. The Hunted Mind

    Then they could go to the next election promising tax cuts.

    Who’s going to believe them now? They couldn’t pull it off if they even wanted to.

  31. val majkus

    Arguments about whether a co-payment is a tax or not, is both futile and irrelevant.

    totally agree; but academia is a field of its own and in this case the academic is counting ‘broken promises’
    this would make two I think

  32. Rob MW

    Dot
    “Chicory marketing board?”

    The expanded definition on ““Chicory” is found in Air Caledonie International v Commonwealth.

    5. In Lower Mainland Dairy Products Sales Adjustment Committee v. Crystal Dairy, Ld. (1933) AC 168, at p 175, the Privy Council identified three features which sufficed to impart to the levies involved in that case the character of a “tax”. Those features were that the levies: were compulsory; were for public purposes; and were enforceable by law. In Matthews v. Chicory Marketing Board (Vict.) [1938] HCA 38; (1938) 60 CLR 263, at p 276, Latham C.J. adopted those three features as the basis of what has subsequently been recognized in this Court as an acceptable general statement of positive and negative attributes which, if they all be present, will suffice to stamp an exaction of money with the character of a tax:

    “a compulsory exaction of money by a public
    authority for public purposes, enforceable by law,
    and … not a payment for services rendered”

    (see, e.g., Browns Transport Pty. Ltd. v. Kropp [1958] HCA 49; (1958) 100 CLR 117, at p 129). More recently this Court has drawn attention to other criteria, namely, that a tax is not by way of penalty and that it is not arbitrary (see MacCormick v. Federal Commissioner of Taxation [1984] HCA 20; (1984) 158 CLR 622, at p 639; Deputy Federal Commissioner of Taxation v. Truhold Benefit Pty. Ltd. [1985] HCA 36; (1985) 158 CLR 678, at p 684).

    6. There are three comments which should be made in relation to the above general statement of Latham C.J. The first is that it should not be seen as providing an exhaustive definition of a tax. Thus, there is no reason in principle why a tax should not take a form other than the exaction of money or why the compulsory exaction of money under statutory powers could not be properly seen as taxation notwithstanding that it was by a non-public authority or for purposes which could not properly be described as public. The second is that, in Logan Downs Pty. Ltd. v. Queensland [1977] HCA 3; ; (1977) 137 CLR 59, at p 63, Gibbs J. made explicit what was implicit in the reference by Latham C.J. to “a payment for services rendered”, namely, that the services be “rendered to” – or (we would add) at the direction or request of – “the person required” to make the payment. The third is that the negative attribute- “not a payment for services rendered” – should be seen as intended to be but an example of various special types of exaction which may not be taxes even though the positive attributes mentioned by Latham C.J. are all present. Thus, a charge for the acquisition or use of property, a fee for a privilege and a fine or penalty imposed for criminal conduct or breach of statutory obligation are other examples of special types of exactions of money which are unlikely to be properly characterized as a tax notwithstanding that they exhibit those positive attributes. On the other hand, a compulsory and enforceable exaction of money by a public authority for public purposes will not necessarily be precluded from being properly seen as a tax merely because it is described as a “fee for services”. If the person required to pay the exaction is given no choice about whether or not he acquires the services and the amount of the exaction has no discernible relationship with the value of what is acquired, the circumstances may be such that the exaction is, at least to the extent that it exceeds that value, properly to be seen as a tax.

  33. TerjeP

    In terms of GP services Medicare is just a government subsidy paid to doctors. Just reduce the subsidy.

  34. Dave Owen

    As I remember it, bulk billing was introduced to save doctors paperwork and costs. If they chose to treat patients for the schedule fee then they could get paid directly by the government but had to take a discount. Many practices , particularly new ones, used bulk billing as a marketing tool. Our GP does not bulk bill and charges $75 for a consultation. He is not very busy but he reckons he has a ‘better’ class of patient and he does better than his bulk billing competitors who have to work much harder. Tired of paying out so much, I tried a bulk billing practice nearby. It was difficult getting an appointment and they had me coming back and back which I felt was merely to increase their income. I believe they over service. We have gone back to our high charging GP. I think the $7 fee is fine as we pay more than that already.

  35. brc

    money being ripped out of current healthcare expenditure to finance something as vague as medical research.

    I can’t be bothered contributing to the rest of the debate, but this language is Plibersek-like in it’s use. You could easily have used a more appropriate and sober word like ‘diverted’ instead of ‘ripped’. That’s labor-party speak and shouldn’t be encouraged.

    For the record I support the co-payment, dislike the research fund as it will be populated with future Q&A appearing lefties wagging their fingers at people enjoying themselves and the money should just be used to pay down debt.

  36. Aristogeiton

    If the person required to pay the exaction is given no choice about whether or not he acquires the services and the amount of the exaction has no discernible relationship with the value of what is acquired, the circumstances may be such that the exaction is, at least to the extent that it exceeds that value, properly to be seen as a tax.

  37. Aristogeiton

    TerjeP
    #1331340, posted on June 3, 2014 at 1:33 pm
    In terms of GP services Medicare is just a government subsidy paid to doctors. Just reduce the subsidy.

    This is what is being done. The Medicare benefit is being reduced by $5.

  38. john malpas

    It w2ould be nice if the GPs actually provided a service rather than ‘click clack’ medicine with a preoccupation with blood tests.
    or “plentiful ,painful, profitable , puncture procedures producing piss all.

  39. Sly Gryphon

    The proposed co-payment is *not* a tax; you only mention part of the transaction.

    Go to the doctor is a transaction that involves, under the proposed changes, the government paying (for a regular consultation) $31.30 to the doctor (a reduction from the $36.30 they currently pay), plus the patient paying $7 per visit.

    Yes, the government _saves_ $5.00 compared to what they used to pay, while the doctor in total gets $2.00 more ($5 less from the government, but $7 from the patient), but at no point does the government collect any money.

    In fact the government is still paying $31.60 per transaction, so how can that possibly be a tax?

    If you read the budget paper no 2 under “Medicare Benefits Schedule”, it mentions two changes:
    * “reducing Medicare Benefits Schedule (MBS) rebates from 1 July 2015 by $5 for standard general practitioner consultations”
    * “allowing the providers of these services to collect a patient contribution of $7 per service”

    The government has saved $5 per visit by reducing the subsidy it pays, and yes, it is using these savings (from _already collected tax revenue_, as you point out) to invest in a research fund, but it’s not collecting any tax.

    I would prefer the government not put this money into a fund, but instead use the _savings from the reduced subsidy_ to pay off debt. But that does not make it a tax; the government still pays $31.30 per transaction, and collects nothing.

  40. Aristogeiton

    Sly Gryphon
    #1331419, posted on June 3, 2014 at 2:41 pm
    The proposed co-payment is *not* a tax; you only mention part of the transaction.

    Go to the doctor is a transaction that involves, under the proposed changes, the government paying (for a regular consultation) $31.30 to the doctor (a reduction from the $36.30 they currently pay), plus the patient paying $7 per visit.

    Yes, the government _saves_ $5.00 compared to what they used to pay, while the doctor in total gets $2.00 more ($5 less from the government, but $7 from the patient), but at no point does the government collect any money.

    In fact the government is still paying $31.60 per transaction, so how can that possibly be a tax?

    If you read the budget paper no 2 under “Medicare Benefits Schedule”, it mentions two changes:
    * “reducing Medicare Benefits Schedule (MBS) rebates from 1 July 2015 by $5 for standard general practitioner consultations”
    * “allowing the providers of these services to collect a patient contribution of $7 per service”

    The government has saved $5 per visit by reducing the subsidy it pays, and yes, it is using these savings (from _already collected tax revenue_, as you point out) to invest in a research fund, but it’s not collecting any tax.

    I would prefer the government not put this money into a fund, but instead use the _savings from the reduced subsidy_ to pay off debt. But that does not make it a tax; the government still pays $31.30 per transaction, and collects nothing

    A man after my own heart. Everything you write is true.

  41. Aristogeiton

    Sorry, actual thread of doom (above thread just prefigured the doom to come):

    http://catallaxyfiles.com/2014/05/26/co-payments-keep-medicare-healthy/comment-page-1/

  42. SomeGuyOnTheInternet

    The mechanism of the copayment means it isn’t a tax. The author is wrong.

    The Medicare rebate will reduced by$5. The doctor is allowed (but not forced) to collect up to $7 without losing their ability to bulk-bill the rest of the rebate. The co-payment is no different to the gap charged by non-bulk-billing doctors – it’s a fee for service.

    Doctors are not forced to pay the $5 if the patient doesn’t – they just receive $5 less in rebates.

    Reducing an existing government welfare payment is not a tax. It’s almost the opposite.

    So where does the $5 being put into the medical research fund come from, you ask? Same place all medicare payments come from – the medicare levy, income tax, borrowing, and other government revenue measures.

  43. OldOzzie

    Sinclair,

    I am missing something here, I go to a group of Superb Female GPs (with a shotgun in my back from the ladies in my family), my last visit to their practice was a type B visit $85 – Medicare rebate $36.30 – net cost to me $48.70 – under new scheme I understand i would have to pay an additional $7 out pocket – irrelevant in the scheme of things.

    What probably concerns me more was a week in Hospital last year (really crook for about 9 months) where on a 4 person nurse rotational shift, I did not see the same nurse twice in that week – If I had not been keeping a close eye on the prescribed meds I would not have got the correct medications – that did concern me.

  44. Aristogeiton

    SomeGuyOnTheInternet
    #1331511, posted on June 3, 2014 at 3:39 pm
    The mechanism of the copayment means it isn’t a tax. The author is wrong.

    The Medicare rebate will reduced by$5. The doctor is allowed (but not forced) to collect up to $7 without losing their ability to bulk-bill the rest of the rebate. The co-payment is no different to the gap charged by non-bulk-billing doctors – it’s a fee for service.

    Doctors are not forced to pay the $5 if the patient doesn’t – they just receive $5 less in rebates.

    Reducing an existing government welfare payment is not a tax. It’s almost the opposite.

    So where does the $5 being put into the medical research fund come from, you ask? Same place all medicare payments come from – the medicare levy, income tax, borrowing, and other government revenue measures.

    Bolding mine. Yes, yes, yes, yes.

  45. Aristogeiton

    OldOzzie
    #1331514, posted on June 3, 2014 at 3:40 pm
    Sinclair,

    I am missing something here, I go to a group of Superb Female GPs (with a shotgun in my back from the ladies in my family), my last visit to their practice was a type B visit $85 – Medicare rebate $36.30 – net cost to me $48.70 – under new scheme I understand i would have to pay an additional $7 out pocket – irrelevant in the scheme of things.

    You would receive a rebate of $31.30 instead of $36.30. The transaction is unchanged, unless the lower level of Medicare benefit reduces the cost of the service in the first place; perhaps those more economically literate than myself could explain this to me.

  46. Sinclair Davidson

    OldOzzie – sorry to read you’ve been ill.

    Nursing is a state-government responsibility.

  47. Perpetual Motion

    In terms of GP services Medicare is just a government subsidy paid to doctors. Just reduce the subsidy.

    Technically speaking it’s a subsidy to the patient, not the doctor.

    Bulk-billing involves the patient agreeing to Medicare paying the rebate directly to the doctor, rather than to themselves.

    But yes, keep reducing the subsidy.

    Listen to Bushdoc and Sly G.

    Sorry, Sinc, it’s not a tax. It’s a reduction in a subsidy.

  48. Aristogeiton

    Perpetual Motion
    #1331571, posted on June 3, 2014 at 4:13 pm
    In terms of GP services Medicare is just a government subsidy paid to doctors. Just reduce the subsidy.

    Technically speaking it’s a subsidy to the patient, not the doctor.

    Bulk-billing involves the patient agreeing to Medicare paying the rebate directly to the doctor, rather than to themselves.

    But yes, keep reducing the subsidy.

    Listen to Bushdoc and Sly G.

    Sorry, Sinc, it’s not a tax. It’s a reduction in a subsidy.

    Nobody listened to me *sulk*.

  49. Squirrel

    “Dave Owen

    #1331346, posted on June 3, 2014 at 1:38 pm

    As I remember it, bulk billing was introduced to save doctors paperwork and costs. If they chose to treat patients for the schedule fee then they could get paid directly by the government but had to take a discount. Many practices , particularly new ones, used bulk billing as a marketing tool. Our GP does not bulk bill and charges $75 for a consultation. He is not very busy but he reckons he has a ‘better’ class of patient and he does better than his bulk billing competitors who have to work much harder. Tired of paying out so much, I tried a bulk billing practice nearby. It was difficult getting an appointment and they had me coming back and back which I felt was merely to increase their income. I believe they over service. We have gone back to our high charging GP. I think the $7 fee is fine as we pay more than that already.”

    I am reliably informed that, in some areas, bulk-billing GPs spend far too much of their highly-qualified time having non-medical conversations with people who don’t have much else to do, and for whom a (too) regular visit to the GP is a cost-free highlight of their lives. So “high charging” GPs would miss out on most of that – except from well-heeled people who probably make less dreary chit-chat.

    On the practical details, I wonder why any co-payment,/tax/fee/contribution – call it what you bloodywell like – cannot be collected annually, through either the tax or welfare systems, using data aggregated from every swipe of an individual’s Medicare card. That would deal with a lot of the practical problems which have been raised about the up-front co-payment, and while there’d still be a degree of squawking and media alarmism and pandering about “bill-shock for battlers”, a 70 buck, or whatever it is, bill for a year’s worth of otherwise cost-free medical treatment worth thousands would be easier to put into context.

  50. Notafan

    So are co-payments for prescriptions also a tax?

  51. Notafan

    I listened to you Aristogeiton.

  52. Aristogeiton

    Notafan
    #1331775, posted on June 3, 2014 at 6:26 pm
    I listened to you Aristogeiton.

    Thanks bro ;)

  53. Aristogeiton

    Squirrel
    #1331738, posted on June 3, 2014 at 5:47 pm
    [...]
    On the practical details, I wonder why any co-payment,/tax/fee/contribution – call it what you bloodywell like – cannot be collected annually, through either the tax or welfare systems, using data aggregated from every swipe of an individual’s Medicare card.

    Nothing is collected. For the first time GPs can charge up to $7 and still bulk-bill. In concert, the Medicare benefit is going down by $5 for everyone. See above linked threads for the same point made in as many ways as I am capable.

  54. Leo G

    Now Bill Shorten is suggesting that the copayment may have an effect on “hospital emergency department waiting lists”.
    I never realised that there could be waiting lists for elective treatment in hospital emergency departments.

  55. Perpetual Motion

    Ari: Nobody listened to me *sulk*.

    Sorry mate, you were right too. I just hadn’t got over your crazy talk on the immigration policy thread yet.

    Listen to Ari:-)

  56. Squirrel

    “Aristogeiton

    #1331805, posted on June 3, 2014 at 6:49 pm

    Squirrel
    #1331738, posted on June 3, 2014 at 5:47 pm
    [...]
    On the practical details, I wonder why any co-payment,/tax/fee/contribution – call it what you bloodywell like – cannot be collected annually, through either the tax or welfare systems, using data aggregated from every swipe of an individual’s Medicare card.

    Nothing is collected. For the first time GPs can charge up to $7 and still bulk-bill. In concert, the Medicare benefit is going down by $5 for everyone. See above linked threads for the same point made in as many ways as I am capable.”

    “Nothing is collected”….but it can be charged – if only this subtle, but crucial, distinction could be understood by all those currently in meltdown at the prospect of a co-payment, all would be well, the Government would rocket back to a commanding lead over Labor, and we could get back to tending our gardens.

  57. Aristogeiton

    Squirrel
    #1332472, posted on June 4, 2014 at 2:37 am
    [...]
    “Nothing is collected”….but it can be charged – if only this subtle, but crucial, distinction could be understood by all those currently in meltdown at the prospect of a co-payment, all would be well, the Government would rocket back to a commanding lead over Labor, and we could get back to tending our gardens.

    You were talking about the co-payment being collected by the Government and proposing means by which to do so. Don’t try and divert attention from your mistake with sarcasm.

  58. Aristogeiton

    Perpetual Motion
    #1332123, posted on June 3, 2014 at 9:28 pm
    Ari: Nobody listened to me *sulk*.

    Sorry mate, you were right too. I just hadn’t got over your crazy talk on the immigration policy thread yet.

    Listen to Ari:-)

    Trouble follows me wherever I go :)

  59. Rob MW

    Aristo –
    Sorry Aristo I still don’t buy your opinion about this.

    My problem is this – the Government collects a tax (Medicare levy) to fund a Universal Health Care scheme and as part of that scheme there is a scheduled benefit to the taxpayer paid either directly (doctors fee claimed by the taxpayer) or indirectly (bulk-billed) for a doctor’s visit – all hunk-dory to here – that’s why they collect the tax (levy) in the first place.

    At this point a change occurs in that the Government now wants to redirect $5.00 of the scheduled taxpayer benefit (doctor’s visit), contrary to what the taxpayer originally paid the tax (levy) for, to something else – it doesn’t matter what – which means that the benefit to the taxpayer is reduced by $5.00 for which to pay the scheduled fee to the doctor.

    At this point the Government can either lower the scheduled benefit to the taxpayer by $5.00 per visit and therefore scheduled fee to the doctor AND amend the scheduled fee structure to reflect the lower benefit OR lift the rate of the Medicare levy (tax) OR compensate the doctor for his/her taxpaying patient being unable to meet the unamended Government scheduled benefit for which the tax (levy) was collected in the first place and call it a co-payment.

    The Government, by all accounts, has chosen the third option to meet this dilemma.

    It is in the fact that the Government will have to either introduce new legislation or amend existing legislation that will in effect give authority to the doctor to charge an increased fee to the medicare levy paying patient to replace not only the redirected $5.00 per visit part of the scheduled medicare benefit, for which the patient/taxpayer has already paid for, but to also add a $2.00 per visit fee on top of, as a type of coercion (incentive) for the doctor to adopt the co-payment scheme on behalf of the Government including that part of the redirected Medicare levy.

    I rest my opinion on the notion that the Government cannot introduce legislation or amend existing legislation that authorises via coercion, or otherwise, a business to charge a fee that in effect replaces, or a portion of, a tax (medicare levy) that has been redirected without that legislated fee or charge being called a ‘Tax’.

    I really don’t have anything more to say about this other than sorry to be stick in the mud about this but that is just my opinion. Btw – it’s pretty hard going for me, being the odd one out on this, but nonetheless it is a great discussion just the same.

  60. Aristogeiton

    Rob MW
    #1332874, posted on June 4, 2014 at 11:56 am

    The Government collects the Medicare levy, yes, but it just goes into the CRF. It does not raise enough money to pay for Medicare in any event.

    At this point the Government can either lower the scheduled benefit to the taxpayer by $5.00 per visit and therefore scheduled fee to the doctor AND amend the scheduled fee structure to reflect the lower benefit OR lift the rate of the Medicare levy (tax) OR compensate the doctor for his/her taxpaying patient being unable to meet the unamended Government scheduled benefit for which the tax (levy) was collected in the first place and call it a co-payment.

    Why would they lift the Medicare levy? The Government are saving money here.

    It is in the fact that the Government will have to either introduce new legislation or amend existing legislation that will in effect give authority to the doctor to charge an increased fee to the medicare levy paying patient to replace not only the redirected $5.00 per visit part of the scheduled medicare benefit, for which the patient/taxpayer has already paid for, but to also add a $2.00 per visit fee on top of, as a type of coercion (incentive) for the doctor to adopt the co-payment scheme on behalf of the Government including that part of the redirected Medicare levy.

    The present scheme is coercive as well, so I don’t understand what you imagine turns on it. In order to receive the benefit of the assignment of the patient’s Medicare benefit, the GP is prevented from charging any fee at all. Why can’t they charge what they like? I don’t know that coercion and incentive are cognates as you suggest. Again, too, there seems to be some confusion between the Medicare levy and the Medicare benefit.

  61. Helen

    What probably concerns me more was a week in Hospital last year (really crook for about 9 months) where on a 4 person nurse rotational shift, I did not see the same nurse twice in that week – If I had not been keeping a close eye on the prescribed meds I would not have got the correct medications – that did concern me.

    Big concern. When Captain was in for his emergency appendectomy Christmas time, I felt like sometimes there were no bed notes, as we had to tell staff over and over what was going on. In a private hospital too, btw.

    Aristo, you were right, the other guy just said it in plain speak, so ’twas easy for me to understand. :-)

  62. Aristogeiton

    Helen
    #1332934, posted on June 4, 2014 at 12:38 pm
    [...]
    Aristo, you were right, the other guy just said it in plain speak, so ’twas easy for me to understand. :-)

    Dot once described me as a babbler, which is probably on the money.

  63. Rob MW

    Aristo

    “Why can’t they charge what they like?”

    Agreed…….. but the problem with that statement is that being philosophical and operating a business in Australia are two different phenomenon’s.

  64. Ross B

    I haven’t had time to read all of the posts, but why not rationing through a voucher system? If your average person knew they had 5 free trips to the GP per year (before a co-payment cut in) would it not rationalise behaviour?

  65. Aristogeiton

    Rob MW
    #1332990, posted on June 4, 2014 at 1:16 pm
    Aristo

    “Why can’t they charge what they like?”

    Agreed…….. but the problem with that statement is that being philosophical and operating a business in Australia are two different phenomenon’s.

    The point I was making was in response to your charge that the new scheme was ‘coercive’ in allowing the GP to charge a fee for service. My counterpoint was that disallowing a charge is no less coercive, and I would submit, more so.

  66. Aristogeiton

    Ross B
    #1333096, posted on June 4, 2014 at 2:17 pm
    I haven’t had time to read all of the posts, but why not rationing through a voucher system? If your average person knew they had 5 free trips to the GP per year (before a co-payment cut in) would it not rationalise behaviour?

    http://catallaxyfiles.com/2014/06/03/on-the-gp-tax-and-medical-research-rort/comment-page-1/#comment-1331419

  67. Chris

    Big concern. When Captain was in for his emergency appendectomy Christmas time, I felt like sometimes there were no bed notes, as we had to tell staff over and over what was going on. In a private hospital too, btw.

    If I had one piece of advice for someone going to (public or private) hospital it would be make sure that you have someone who really cares with you stay with you as much as possible. To advocate for you if you’re not able to.

    I’ve been through both public and private hospitals recently. Private hospitals from what I’ve seen are no guarantee you’ll get better care (beyond the privacy of your own room). If anything the ICU care in the public hospital was not only better and the nurses a lot more compassionate than the private hospital, but that’s just a one off experience so I wouldn’t generalise based on that (perhaps just that one private hospital). I’ve had great nursing care in private hospitals at other times too.

    The one great thing about both systems was their empahsis about treatment first and paying for it a very low priority. Even when getting discharged from the private hospital there was no discussion about payments not covered by the health insurance (which was in the order of thousands of dollars) or non trivial cost of the discharge drugs – they didn’t even ask. Just go home and continue to get better. All the paperwork then just comes after a few weeks.

  68. Rob MW

    Aristo

    “The point I was making was in response to your charge that the new scheme was ‘coercive’ in allowing the GP to charge a fee for service. My counterpoint was that disallowing a charge is no less coercive, and I would submit, more so.”

    Yep agreed if the purpose was solely a check (limitation) on the taxpaying patient but the reality is that the purpose is not only a check on the taxpaying patient but also a redirection of an amount equal to the limitation that the taxpaying patient had already contributed via the Medicare levy or some other revenue raising measure (tax).

  69. Aristogeiton

    Rob MW
    #1333639, posted on June 4, 2014 at 8:15 pm
    [...]
    Yep agreed if the purpose was solely a check (limitation) on the taxpaying patient but the reality is that the purpose is not only a check on the taxpaying patient but also a redirection of an amount equal to the limitation that the taxpaying patient had already contributed via the Medicare levy or some other revenue raising measure (tax).

    I don’t understand. It is a limitation on the liberty of the doctor to charge what he pleases such that the consumer will bear.

    You need to get it out of your head that there is a 1:1 relationship between measures which the Government chooses to link together for political reasons. The levy does not pay for Medicare in dollar terms and goes into CRF in any event. When the Government decreases the Medicare benefit this will not change. So what? The only other impost is on the GP, who has to lump receiving the Medicare benefit and no more or charge full feel. This is just a fractional marketisation of bulk-billed transactions and no more.

  70. Aristogeiton

    s/full feel/full fee/

  71. Rob MW

    “I don’t understand.”

    A levy (medicare levy) is usually imposed to fund a specific measure. Whether it meets that obligation or not is a moot point.

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