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Sheeple




22 December 2014
by John Passant

The GP co-payment and the Goods and Services Tax – more than $60 to go to the doctor?

Through the back door the Abbott government has introduced what is in effect a $5 co-payment on visits to the doctor and also frozen the indexation of the Medicare rebate until 2018.

At the moment, the Medicare rebate is $37.05. This is well below the rate needed to cover the real cost of attending the doctor.

The Australian Medical Association for example recommends doctors charge $75 for each standard consultation and many, including mine, do. That rate will increase to $85 by 2018.

The Abbott government has by regulation reduced the Medicare rebate to $32.05. Now keep in mind this will be the rate until 2018 unless the Senate disallows the regulation next year when it sits.

Even if it does disallow the reduction to $32.05, the freezing of the rebate was done by administrative action and cannot be overturned by the Senate. So the rate for the next 3 years will be frozen at either $32.05 if the Senate doesn’t vote down the cut or $37.05 if it does.

I will work through an example in a minute, assuming the rate is $32.05. However we also need to be aware of likely GST developments and the impact that will have on the cost of going to the doctor.

Treasurer Joe Hockey the other day announced there won’t be an increase in the GST. It will stay at 10%. The money just wasn’t there, he claimed, to pay for the necessary compensating income tax cuts (and increased welfare payments.)

income tax cuts in compensation for a shift to consumption taxes are smoke and mirrors. As wages increase over time it pushes taxpayers into higher tax brackets. The compensation is eroded by bracket creep.

For example the GST income tax cuts were clawed back by bracket creep within four years, according to the Australian Council of Trade Unions, echoing one of its unions.

It shows how much the ideology of budget crisis and its incessant parroting has infected the Abbott government that one of their underlying goals, increasing consumption taxes on the poor and working class and tax cuts for the rich and companies is not on the agenda.

While Abbott and Hockey may be idiots, they aren’t complete political idiots. They are incredibly unpopular for their unfair Budget. This may be why the white paper on tax has been put back to early next year; to rewrite it to argue against increasing the rate at this time.

That just leaves extending it to fresh food, health and education. Hockey hasn’t ruled this out, so maybe they are more stupid than I thought. That should be a big vote winner at the next election. If they can’t sell a Budget that attacked poor people with specific proposals like the then $7 GP co-payment, imagine how well they’ll go selling increased prices for fresh food, for going to the doctor and on education outlays, especially if they don’t have the money to pay for income tax cuts. The imposition of GST on these non-taxed categories will raise about $12 bn. News reported these figures in May this year.

According to Deloitte Access Economics figures, applying the GST to health and education would raise $6 billion a year.

Broadening it to include fresh foods would raise another $6 billion — a combined $12 billion annual saving from closing loopholes in the GST base.

Even if they do scrape a bit of money out of the lurks and rorts the rich and powerful get to give some sort of income tax cut for workers, or use some of the $12 bn to give a bit to workers and those on welfare payments, the whole point would be to limit that compensation. It will more likely be used to help cut the budget deficit and/or give tax cuts to companies. Maybe they can pull a rabbit out of the hat that will have us cheering in the streets for paying more for fresh foods and going to the doctors but I can’t see it.

In 2014 the cost of seeing a non-bulk billing doctor would be $75 (the standard AMA charge) less the Medicare rebate of $37.05, that is $37.95. What about in 2018?

Let’s imagine a worst case scenario. It is 2018 and the GST has been extended to fresh food, health and education, and the Medicare rebate is frozen at $32.05. The standard AMA approved consultation fee has risen from the 2014 rate of $75 to $85 to cover increased costs. So here is a typical situation for a person on the average wage (about $78,000) and their family going to the doctor.

You see your doctor and because you are working you are charged $85. On top of that you have to pay ten percent GST, so you pay $85 plus $8.50, meaning you pay $93.50 just to go to the doctor. Under the 3 year freeze on the cut Medicare rebate you get back just $32.05. That simple ten or 15 minute trip to the doctor has cost you 0ver $60 ($61.45 to be precise).

The price of seeing the doctor has risen in just over 3 years under Abbott and Hockey from $37.95 to $61.45, or $23.50. That is almost 62% over that time, or about 14% per annum every year for four years.

Your wages haven’t kept pace with inflation and are falling rapidly in real terms.

You realise the cost so you don’t go to the doctor. You save yourself $60 but at what cost to the long term health of you or your family?