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Medicare is Australia's publicly funded universal health care system, operated by the government authority Medicare Australia. Medicare funds affordable primary health care treatment for all Australian citizens and for permanent residents, except for those on Norfolk Island. Residents with a Medicare card can receive subsidised treatment from medical practitioners, nurse practitioners and allied health professionals who have been issued a Medicare provider number, and can also obtain free treatment in public hospitals. The program was introduced by the Whitlam Labor government in 1975 as Medibank, and was supplemented by a government-owned private health insurance fund (Medibank Private) in 1976. Medibank was renamed Medicare in 1984.
Reciprocal Health Care Agreements (RHCA) are in place with the United Kingdom, Sweden, the Netherlands, Belgium, Finland, Norway, Slovenia, Malta, Italy, Republic of Ireland and New Zealand, which entitle visitors from these countries to limited access to Medicare, as detailed below, and entitles Australian residents to reciprocal rights while in one of these countries.
Since 1999, the public health scheme has been supplemented by a Private Health Insurance Rebate, where the government funds at least 30% of any private health insurance premium covering people eligible for Medicare. Including these rebates, Medicare is the major component of the total Commonwealth health budget, taking up about 43% of the total. The program is estimated to cost $18.3 billion in 2007–08.  In 2009 before means testing was introduced, the private health insurance rebate was estimated to cost $4 billion, around 20% of the total budget.  The overall figure is projected to rise by almost 4% annually in real terms over the next few years.
There was an increase in the number of Australians covered by health insurance plans following the end of the Second World War. However, a large proportion of the Australian population continued to lack coverage for health risks in the early 1970s. In 1972, 17% of Australians outside of Queensland (which had a free public health care system) were uninsured, most of whom were on low incomes. Gough Whitlam's Australian Labor Party government was elected in 1972 and sought to put an end to this two-tier system by extending healthcare coverage to the entire population.
According to the second reading speech of the Health Insurance Bill 1973 delivered by Bill Hayden on 29 November 1973, the purpose of the new universal health insurance scheme, called Medibank, was to provide the 'most equitable and efficient means of providing health insurance coverage for all Australians'. There was opposition to the scheme from the Liberal Coalition controlled Senate, and the Health Insurance Bill 1973 and the accompanying bills were rejected by the Senate on three occasions (12 December 1973, 2 April 1974 and 18 July 1974). The Medibank legislation was one of the bills which resulted in a double dissolution of Parliament on 11 April 1974, and was passed at a subsequent joint sitting of Parliament on 7 August 1974.
Medibank started on schedule on 1 July 1975. In nine months, the Health Insurance Commission had increased its staff from 22 to 3500, opened 81 offices, installed 31 minicomputers, 633 terminals and 10 medium-sized computers linked by land-lines to the central computer, and issued registered health insurance cards to 90% of the Australian population.
Medibank Mark II 
After the dismissal of the Whitlam government in November 1975 and the election of the Fraser Liberal government, the Medibank Review Committee established in January 1976. The Committee findings were not made public but the new program was announced in a Ministerial Statement to Parliament on 20 May 1976. 'Medibank Mark II' was launched on 1 October 1976 and included a 2.5 per cent levy on income, with the option of taking out private health insurance instead of paying the levy. Other changes included reducing rebates to doctors and hospitals.
On 1 October 1976, the Fraser government also passed the Medibank Private bill. This legislation allowed the Health Insurance Commission (HIC) to enter the private health insurance business. This legislation led to the original Medibank closing in 1981.
On 1 February 1984, Medicare was established by the Hawke Labor government. The major changes introduced by the Fraser government were largely rejected by the Hawke government, which returned to the original Medibank model. Although the financing arrangements were different, and there was a name change from Medibank to Medicare, little else differed from the original. Medicare came into effect on 1 February 1984, following the passage in September 1983 of the Health Legislation Amendment Act 1983, including amendments to the Health Insurance Act 1973, the National Health Act 1953 and the Health Insurance Commission Act 1973.
Funding and legal framework 
Program funding 
The original Medibank program proposed a 1.35% levy (with low income exemptions) but these bills were rejected by the Senate, and so Medibank was originally funded from general revenue. In October 1976, the Fraser Government introduced a 2.5% levy.
The program is now nominally funded by an income tax surcharge known as the Medicare levy, which is currently set at 1.5%. An exemption applies to low income earners.
There is an additional levy of 1.0%, known as the Medicare Levy Surcharge, for individuals on high annual incomes (which increased to $70,000 in the 2008 federal budget) who do not have adequate levels of private hospital coverage. This was part of an effort by the former Howard Coalition Federal Government to encourage people towards private health insurance.
Constitutional framework 
Section 51 (xxiiiA) of the Commonwealth Constitution was inserted following the successful referendum of 1946. It gave the Federal Parliament power, subject to the Constitution, to make laws with respect to: The provision of maternity allowances, widows’ pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorise any form of civil conscription), benefits to students and family allowances.
This power supports the Commonwealth operating the Medicare program, but not the entire Australian health system. The authority to operate public hospitals remains the province of the State and Territory governments. In practice, the state governments, as well as private doctors, act as pseudo-contractors. This is done by a provider number system controlled by the Commonwealth.
Privately run hospitals are also part of the Medicare system. Medicare benefits are payable for medical treatment provided to admitted patients of private hospitals as well as public hospitals. However, a patient in a private hospital (by definition, a private patient) would need private insurance coverage to help him or her meet any of the hospital charges such as accommodation costs, as well as some or all of the remainder of the doctor's charges above the 75% Medicare benefit.
Medicare rebates 
Standard Medicare rebate 
The standard Medicare rebate is 85% of the Medicare-determined schedule fee, called the Medicare Benefits Schedule (MBS). Patients need to pay the balance of the fees above the 85% of schedule fee level, until the safety nets cut in.
Where practitioners "bulk bill" patients, they agree with Medicare to accept 85% of the schedule fee in full payment for their services. The MBS is not indexed, but is reviewed from time to time.
Medicare safety nets 
To provide additional relief to those who incur higher than usual medical costs, Medicare safety nets have been set up. These provide singles and families with an additional rebate when an annual threshold (determined on a calendar year basis) is reached for out-of-hospital Medicare services. There are two safety nets:
- the original Medicare safety net, and
- the extended Medicare safety net.
The thresholds for both safety nets are indexed on 1 January each year to the Consumer Price Index.
Original Medicare safety net 
Under the original Medicare safety net, once an annual threshold in gap costs has been reached, the Medicare rebate for out-of-hospital services is increased to 100% of the schedule fee (up from 85%). Gap costs refer to the difference between the standard Medicare rebate (85% of the schedule fee) and the actual fee paid, but limited to 100% of the schedule fee. The threshold for calendar year 2012 is $413.50. This threshold applies to all Medicare-eligible singles and families.
|1 January 2006||$345.50|
|1 January 2007||$358.90|
|1 January 2008||$365.70|
|1 January 2009||$383.90|
|1 January 2010||$388.80|
|1 January 2011||$399.60|
|1 January 2012||$413.50|
Extended Medicare safety net 
The extended Medicare safety net (EMSN) was first introduced in March 2004. At that time the general threshold for singles and families was $700 and $300 for singles and families that hold a Commonwealth concession card, and families that received Family Tax Benefit Part (A) (FTB(A)) and families that qualify for notional FTB(A). On 1 January 2006 the thresholds were increased to $1,000 and $500 respectively. From then the EMSN was indexed by the Consumer Price Index on 1 January each year.
Under EMSN, once an annual threshold in out-of-pocket costs for out-of-hospital Medicare services is reached, The Medicare rebate will increase to 80% of any future out-of-pocket costs (now subject to the EMSN fee cap) for out-of-hospital Medicare services for the remainder of the calendar year. Out-of-pocket costs are the difference between the fee actually paid to the practitioner (subject to the fee cap) and the standard Medicare rebate.
Since 1 January 2010, some medical fees have been subject to an EMSN fee cap, so that the out-of-pocket costs used in determining whether the threshold has been reached are limited to that cap. The EMSN fee cap also applies for any rebate that is paid once the EMSN threshold is reached. The items subject to a cap has expanded since 2010, the latest being in November 2012.
For calendar year 2012, the general threshold is $1,198.00 and the concession threshold is $598.80.
Medicare and private health insurance 
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Debates regarding Medicare focus on the two-tier system and the role of private health insurance. Controversial issues include:
- Whether people with means should take up private health insurance
- Whether rebates/incentives should be given in terms of private health insurance
- People with health insurance still accessing the tax-payer funded public system rather than relying on their insurance.
- People with private health insurance are still required to pay a 1.5% levy on their taxes regardless of their income and usage of the system.
People who take up private health insurance are currently rewarded in a number of ways. They receive a Private Health Insurance Rebate that subsidises 30% of their insurance premiums, increasing to 35% or 40% for people over 65. Critics say that the rebate is an unfair subsidy to those who can afford health insurance, claiming the money would be better spent on public hospitals where it would benefit everyone. Supporters say people must be encouraged into the private health care system, claiming the public system is not universally sustainable for the future. Similarly, even after the introduction of the rebate, some private health insurance organisations have raised their premiums most years, somewhat negating the benefit of the rebate.
As at March 2010 approximately 44.5% of Australians also retain private health insurance, even though they are already entitled to free treatment in public hospitals.
The proportion of Australians with private health insurance was declining, but has increased again with the introduction of Lifetime Health Cover (where people who take out private hospital insurance later in life pay higher premiums than those who have held coverage since they were younger) and tax incentives to take out private cover (such as the Medicare Levy Surcharge).
Other health care programs 
Pharmaceutical Benefits Scheme 
The Pharmaceutical Benefits Scheme (PBS) subsidises certain prescribed pharmaceuticals. The PBS pre-dates Medicare, being established in 1948. It is generally considered a separate health policy to 'Medicare'. However, the PBS is now administered by Medicare Australia (formerly the Health Insurance Commission) under the Health Insurance Act 1973, with input from a range of other bodies such as the Pharmaceutical Benefits Pricing Authority.
State/territory programs 
Practitioner review programs 
This is a basic overview of the practitioner review process in point form:
- Medicare Australia provide a federal framework to deliver a health system to the people of Australia.
- Delivering health care to millions relies on proper utilisation of limited resources.
- As such, to make sure the services provided under the Medicare umbrella (including medicines administered by the PBS), reviews and audits are conducted.
- To quote the Medicare website, "identification and reviews of practitioners' practice profiles protect patients and the community from the risks and costs of inappropriate practice".
- Inappropriate practice is defined twofold:
- "services that would be unacceptable to the general body of members".
- includes the rendering of "80 or more professional attendances on each of 20 more days in a 12 month period", i.e. rorting the system through false services rendered.
- When practitioner is reviewed, their data is compared with that of their peers.
- If this data is markedly different than this practitioner may be referred to the Practitioner Review Program.
- If concerns still remain at the end of the Practitioner Review Program, then a referral to the Professional Services Review (PSR) can be made.
- The PSR:
- Practitioners are always contacted by the PSR when a review concerning them is conducted.
- Practitioners covered by the PSR include all who provide services within the PBS and/or Medicare framework (this includes doctors, dentists, allied health professionals).
- The Medical Director of the PSR acts as a last-ditch arbitrator.
- The Medical Director will compare the reported case to random data.
- The outcome may be no further action, a reprimand (administered by the Determining Authority), counseling, etc.
See also 
- Health care in Australia
- Medicare card (Australia), on the card itself
- Medicare (Canada)
- Medicare (United States)
- National Health Service
- General Government Expenses, Budget 2007–08.
- Metherell, Mark (29 July 2009). "High Cost of Health Reform". The Sydney Morning Herald. Retrieved 8/01/2012.
- Health Reform: Public Success, Private Failure by Daniel Drache and Terry Sullivan
- Understanding the Australian Health Care System by Eileen Willis, Louise Reynolds, and Keleher Helen.
- Biggs, Amanda (29 October 2004). "Medicare – Background Brief". Parliament of Australia: Parliamentary Library. Canberra, ACT: Commonwealth of Australia. Retrieved 16 April 2010.
- Australian Taxation Office (19 June 2007). "What is the Medicare levy?". Archived from the original on 22 October 2007. Retrieved 15 February 2008.
- – Medicare Levy Surchage ATO page
- Medicare Benefits Schedule - Note G10.2
- 1 January 2010 Medicare Safety Net Thresholds
- 2012 safety net
- Extended Medicare Safety Net Review
- Extended Medicare Safety Net 2011 Review of Capping Arrangements
- Medicare Safety Net Review and Responses
- Fact Sheet - EMSN Summary
- Medicare Australia's website: http://www.medicareaustralia.gov.au/
- Medicare Australia and the Professional Services Review Scheme, Sara Bird, Australian Family Physician (Volume 37, Number 9), September 2008.
- Medicare (Australia) Official website
- MEDICARE ephemera digitised and held by the National Library of Australia
- Department of Health and Ageing Bulk Billing Rates
- APH Background Briefing on Medicare
- Medicare Benefits Schedule Online contains a searchable index of all fees Reciprocal Agreements
- Department of Health and Ageing – Overseas Visitors' Health Cover