Capitation Model is De-capitation of Medicare
Or a story of a lack of talent in the Governments
The Medicare conversation in Australia has taken a dangerous turn. After years of underfunding and band-aid solutions, policymakers are now floating capitation as the magic fix. On the surface, it sounds elegant: Clinics get a set amount per patient, regardless of how many times that patient walks through the door—stability, predictability, and efficiency.
But in practice, it’s a blueprint for disaster.
Let’s call it what it is: the decapitation of Medicare. And an alarming sign of how little real talent sits inside government policy rooms.
Why Capitation Is a Trap
Capitation models shift risk away from the government and onto the shoulders of primary care providers. Instead of funding each consultation, Medicare would pay clinics a fixed amount per patient per year if a patient comes once, great. If they come fifteen times, too bad.
The dangers are obvious.
1. Bureaucrats Will Decide
Under capitation, someone has to set the price. That someone won’t be a working GP. It will be a committee of bureaucrats, consultants, and political advisors. People far removed from daily clinical work.
This opens the door to lobbying, favouritism, and political horse-trading. It’s a hypothetical road to cronyism and corruption—where connected groups get more funding and real clinics doing the hard work are underpaid.
2. Clinicians Will Be Demotivated
There’s no faster way to crush clinical morale than by telling doctors their work is worth the same, no matter how much—or how little—they do. The capitation model decouples effort from reward. It turns medicine into paperwork.
It removes any financial recognition of taking more time, managing complex patients, or providing continuity of care. In effect, it pays GPs to do the bare minimum.
Some will rise above it. Many won’t. That’s not a risk we can afford.
The Real Reason Capitation Is Popular with Government
Capitation is attractive to the government because it’s neat. It’s easier to model. It’s easier to budget. It lets Treasury pretend it’s solved the Medicare problem with a spreadsheet.
But real healthcare doesn’t happen on spreadsheets. It happens in rooms with people. And if the government can’t see that, then maybe the real problem isn’t Medicare—it’s the lack of talent and clinical understanding in health policy circles.
A Better Way: Paul Soloviev’s Two-Prong Fix
I’ve criticised enough. So now I’ll propose a solution.
A real fix needs to be clinically grounded, economically sustainable, and politically achievable. Here’s how we can do it.
1. Keep Fee-for-Service—but Restructure It
The fee-for-service model isn’t the enemy. The problem is how poorly it’s been structured.
We need to rebuild item numbers around:
- Continuity of care
- Patient outcomes
- Complexity of management
- Preventive and team-based care
Incentivise clinics that look after their patients over time. Reward those who reduce hospital presentations, manage chronic conditions well, and provide mental health support.
Don’t punish success. Fund it.
2. Fund Medicare from a New Source: International Medical Research Capital
Here’s the big idea.
Australia should introduce a Medicare Funding Scheme that invites international medical research firms to settle here. The offer: a very low tax rate—one of the lowest globally—if they register in Australia and contribute a fixed percentage directly to Medicare.
Why would they come?
- Political stability
- Clean regulation
- Proximity to Asia-Pacific markets
- Safe and skilled workforce
These firms are already parked in offshore havens with zero tax. We don’t need to beat zero. We just need to offer low tax plus something real—like access, talent, or trial environments.
This model would:
- Fund Medicare without hitting taxpayers
- Create new jobs in biotech and medical science
- Bring money movement into the country
- Lead to facilities and labs being built, not just P.O. boxes
It’s a win-win. And it’s achievable with political will and the right commercial law framework.
Final Word: Reform Needs Talent, Not Templates
Capitation is a lazy answer from people who don’t understand how primary care actually works.
Real reform takes creativity, clinical insight, and bold thinking. If we keep following overseas trends without local nuance, we’ll destroy the very system we’re trying to save.
It’s time to stop listening to spreadsheets and start listening to the people who actually run general practice in Australia.
This is the third article from the ‘Medicare Politics’ series by Paul Soloviev.
Proposed 30% Medicare Rebate Increase Before the May 2025 Election: A Band-Aid on a Broken System, https://generalpracticetraining.com.au/proposed-30-medicare-rebate-increase-before-the-may-2025-election-a-band-aid-on-a-broken-system/
I Asked ChatGPT How to Fix the Medicare Crisis in Australia, https://generalpracticetraining.com.au/i-asked-chatgpt-how-to-fix-the-medicare-crisis-in-australia/
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