Why Medicare is breaking

Australia used to be the home of free healthcare for all. Once an international bragging right of our country is now turning into a lie. If you are a regular Australian visiting the GP in 2023, you will have to pay. We can no longer say that we have free healthcare in Australia. Medicare is breaking. 

Sure, if you find yourself in the depths of poverty or are in your twilight years the government may still cover you through social security. For the rest of the country, you will likely be paying at least $50 dollars for a general doctor’s visit. This issue I am sure is not lost on you with nearly one in five Australians skipping or avoiding the doctors due to the cost. That is 20% of Australians that are in pain because they have to pay. How is that for free healthcare? 

So what happened to Australia’s medicare? Like it or not your GP is running a business. They are not government employees. That doctor you visit when you have a cold is actually a businessman. They have revenue and they have costs. They may have rent, utility bills and administrative costs. Since 1984 Australians could hand over their medicare card at the end of their visit to the doctor and after the receptionist recorded some details you were off. Nothing to pay. No stress about how much it was going to cost. 

For the “consumer” or the sick patient rather, that was the end of the process. Behind the scenes the doctors surgery would send off a bill to Medicare for all the patients they had seen that week. Medicare would give the doctors X amound of dollars per patient. I am sure that I don’t need to tell you that over time costs go up. This includes the cost of running a doctor’s surgery. This has been particularly true in the past 12 months or so with decade high inflation. 

Over the past ten years, gradually the costs have creeped upwards for doctors. Despite these increased costs, from 2012 until 2020 increases in the federal funding for medicare were decreasing rather than increasing each year. Over almost a decade, although doctors costs were rising, our tax dollars were being fed into the medicare system less and less. 

Government spending into our beloved Medicare program was faltering at a time when it needed to be reinforced. Many people cite Australia’s population growth as the reason for Medicare’s decline. Often spruiking about how our population is too large to uphold a completely free healthcare system. They’ll then usually go on to blame immigration.

It is actually our distribution of our population demographic, rather than its size that is our major issue. I’ll keep it simple. Our grandparents (The silent generation) had roughly three to four children. In the 1950s and 60s, the average Australian family was two parents and four children. Those children grew up and only had one to two children on average. The number of children that Australian families had on average halved in a generation. 

Why does this have any effect on medicare? It’s a simple answer but not an obvious one. When the baby boomers were working, the Medicare system worked well. There were roughly two working people for one elderly person. Of course the older you get, the more likely you will need regular medical help. Now those baby boomers who did the heavy lifting for medicare are retiring and they’ve left less people younger than them working to hold the system up. As the baby boomers age, they will need more medical care. We are experiencing the very start of this. The issue is that for every elderly person that needs their medical appointments paid for, there are less workers to tax than the previous generation. We would have to tax each worker an unsustainable amount to pay for medicare to cover it all.

I once heard someone say that Australia’s medicare system is a bit of a pyramid scheme. They weren’t far off. In previous generations, there were enough workers on the base to hold the elderly’s medical needs up. Now, the pyramid has flipped upside down. There aren’t enough workers as a base in order to hold up so many elderly people and all their needs.

This is the exact reason superannuation was introduced to Australia. Everyone knew that the age pension was going to become far too expensive to fund once the baby boomer generation entered retirement. We would have had to tax the younger generations far too high to pay for that much social security. So, we introduced Superannuation. Where people are forced to save for their own retirement in order to take pressure off the age pension. It’s bewildering how we saw the age pension problem coming but not that medicare would suffer from the same issue. 

Right now, our Medicare system is shifting as a result of our aging population. Perhaps the simplest way to understand this is to compare the two time periods. The population that makes up the over 65 age bracket has doubled since 1980. There are now twice as many old people that the medicare system has to fund. 

The issue is twice as bad as you first might think though. Why does it matter? Won’t it clear out the doctors surgeries leaving space for people who only really need to see the doctor? A few legacy media columnists have been trying to convince the public that this is the way forward. That these changes are ultimately for the best. This line of thinking is going to cost our hospitals double. 

Whilst trips to the doctors may cost you, the emergency room is still free. People with small issues who avoid a visit to the GP due to the cost will ultimately show up to our emergency rooms. When small medical issues get left untreated, they turn into much larger and far more painful issues. So the number of people in the emergency room grows.

On top of this, a visit to the GP has become a luxury that many families cannot afford. Some charities have estimated that nearly 50% of Australian households live paycheck to paycheck over a 5 year cycling period. If within 5 years, nearly half of our households will struggle to pay their current bills, how will they find an extra hundred dollars to visit the doctor that week? The simple answer is they won’t. Now adults might be able to put up with a cold for a week or two but families and children can’t. This means that families who are struggling to pay their bills already will have no choice but to show up to the emergency room with their children for basic issues that a GP could tend to. So the number of people in the emergency room grows.

It’s crucial to remember that this systemic issue has been quietly creeping up on our cherished Medicare system for a long time. Rather than the government bolstering funding for Medicare, it has in fact, been steadily diminishing its support. Ultimately failing to get ahead of the problem now will cost us more as a society later. Australia no longer has free medical care for all.