On Tuesday May 13th 2014, the Coalition’s federal budget 2014/15 has been announced by Joe Hockey, the Treasurer, for House of Representatives’ discussion. The budget, as Tony Abbot, the Prime Minister described as “tough but necessary decision”, has proposed many budgetary changes including temporary 2% tax increase on high income earners, twice yearly fuel excise indexation, pension age increase, tightening the amount and eligibility of family and welfare pay, higher education budget cut with fee deregulation, and reform on health care system.
Among these modifications, Medicare program, the compulsory universal public health care insurance scheme that most Australian citizens have taken ...view middle of the document...
The report proposed a $6 patient co-payment contribution for a bulk-billed general practitioners (GP). NCOR then issued the recommendation report in February 2014, stating that “health care spending represents the Commonwealth’s single largest long-term fiscal challenge” and recommended the introduction of co-payments for all Medicare subsidized services. NCOR also proposed $15 and $5 co-payment fee respectively for general and concessional patients below safety net threshold, along with an advice to ban GPs for waiving the fee for bulk-billed patients (National Commission of Audit 2014 pp. xxi, xli, 98).
However, in the budget announced by the Coalition Federal Government, the proposed fee has been semi-finalized for Parliament discussion at the amount of $7. All patients have to pay, but the payment from concessional patients and children under 16 will be limited to their first 10 services per calendar year. To compromise with the increasing public criticism, the Treasurer has commented, two days after the announcement, that GPs “have a capacity not to charge” patient co-payment fee, if they, case by case, forego their own $2 medical rebate portion of that contribution payment (Parnell 2014, p.1).
Now that it is clear how the issue has developed into Coalition budget proposal, it may be an appropriate time to discuss the advantages as long as detrimental effects. Firstly, the most important reason of co-payment supporters is that it brings political fairness and economic efficiency. The political fairness lays in the way that who need the service has to pay, partially in this case, for it. It acts like a price signal tagged onto the service to prevent the overuse of the system, as users have to balance its gain against the cost they are personally obliged. In other words, it helps reducing the “unnecessary” demand, and then enabling the efficient use of economic scarce resources such as GP time and federal fund. The government then can direct these spared resources to those who are rightly in need.
Secondly, the federal budget cut in hospital funding is conducted on the basic principle that the ones responsible for providing hospital services are the states and the states do have their own ability to raise tax for their funding purposes. The states should therefore take more accountability in their constitutional obligations. With this way, the service efficiency will be significantly improved, since the state has the full sovereignty – both authority and responsibility in the whole management. These lines of logic, which reflect the fundamental belief of liberal minds in small federal governance, are repeatedly mentioned by the Prime Minister.
Thirdly, the budget deficit is thought to be unsustainable. Without policy change, public debt is estimated to grow to $667 billion by 2023/24. However, with the proposed reform, the federal government is expected to save $3.5 billion for co-payment fee, $1.8 billion for hospital fund cut, and $1.7...