Proposed 30% Medicare Rebate Increase Before the May 2025 Election: A Band-Aid on a Broken System
As Australia approaches the May 2025 federal election, both major political parties have revived their promises to increase Medicare rebates by 30%. While this might seem like a generous boost, the reality is that this increase will not fix the fundamental issues plaguing General Practice. The costs of running a medical practice have skyrocketed far beyond what a 30% increase can address, leaving GPs struggling to keep their clinics afloat.
The government has committed $9 billion to fund this rebate increase, but the real question is where this money will come from. The most likely answer is cuts to high-value Medicare items such as Chronic Disease Management Plans (Care Plans). This would further reduce essential funding for General Practices and ultimately harm patient care.
The Hard Numbers: Cost Increases vs. Medicare Rebate Growth
Over the past 30 years, the cost of running a medical clinic has increased at an alarming rate, while Medicare rebates have lagged behind.
| Category | 1994 | 2024 | % Growth |
|---|---|---|---|
| Electricity Cost (Index Points) | 100.0¹ | 256.0² | 156% |
| Medicare Rebate for Item 23 (AUD) | $24.30³ | $42.85⁴ | 76.3% |
| Receptionist Hourly Wage (AUD) | $8.00⁵ | $28.00⁶ | 250% |
Why the 30% Increase Won’t Work
A 30% increase would bring the Medicare rebate for a standard GP consultation (Item 23) to around $64. While this might sound like a substantial rise, it does not even come close to keeping up with the true costs of running a practice. Here’s why:
1. The Cost of Keeping the Lights On Has Tripled
- Electricity costs have increased by 156%, a major expense for clinics.
- Rent, insurance, and medical equipment costs have surged well beyond inflation.
2. Staffing Costs Have Exploded
- The hourly wage for a receptionist has jumped from $8 in 1994 to $28 in 2024—an increase of 250%.
- Hiring skilled nurses, receptionists, and practice managers costs exponentially more than it did in the 1990s.
3. Medicare Rebates Haven’t Kept Up
- The Medicare rebate for a GP consultation has grown by only 76.3% in 30 years—less than half the increase in practice costs.
- Even with a 30% boost to $64, the rebate would still lag far behind the actual costs of providing care.
4. Funding the $9 Billion Increase Will Likely Come From Cuts to High-Value Services
- Medicare cannot magically produce $9 billion without taking from somewhere else.
- Care Plans and other high-value items that support chronic disease management are at risk of being cut.
- If this happens, GPs will lose a critical source of funding, and patients with chronic conditions will suffer from reduced access to care.
What Will Happen if Medicare Remains Underfunded?
If the government fails to address the real financial strain on General Practices, we will see:
- More GP clinics closing, especially in bulk-billing areas.
- Fewer doctors choosing General Practice, worsening doctor shortages.
- More patients forced to pay out-of-pocket, as clinics switch to mixed billing.
- Reduced funding for high-value Medicare items like Care Plans, impacting chronic disease patients the most.
The Real Solution: Medicare Needs a Structural Overhaul
Instead of short-term rebate increases, the government should:
- Link Medicare rebates to real practice costs, ensuring they keep pace with inflation and wages.
- Support GP clinics with subsidies for wages, electricity, and technology.
- Encourage mixed billing, rather than clinging to an outdated bulk-billing model.
- Protect funding for essential services like Care Plans, rather than redirecting it to short-term political promises.
The 30% Increase is Political Theatre, Not a Real Fix
A 30% increase in rebates sounds good before an election, but it does not address the real financial pressures faced by General Practices. Worse still, the $9 billion needed for this promise will likely come from cuts to critical Medicare services, making the overall system even weaker.
If the government truly wants to “Strengthen Medicare”, it needs to fix the funding model, not just throw short-term political promises at a system that is already breaking.
Sources
- Finder.com.au: Electricity price growth
- RACGP: Medicare rebate indexation
- ABS Wage Data for Receptionists
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