Australia’s Health Minister Targets Specialist Fees in Policy Reform
Australia’s Health Minister, Mark Butler, has announced that reducing the fees charged by medical specialists will be a key focus of upcoming health policy reforms. Currently, doctors have the freedom to set their own fees, and over the past 15 years, many have significantly increased them. The average out-of-pocket cost for a non-bulk billed specialist consultation rose from A$46 in 2009–10 to $126 in 2024–25, representing an annual increase of 11.9%. These figures are averages, so actual fees can vary widely depending on the specialty.
Non-GP specialists now hold the highest incomes in the country and operate some of the most profitable businesses. This situation has raised concerns about affordability and access to specialist care, prompting the government to explore ways to bring fees under control.
Steps Taken So Far
This year, the government introduced legislation aimed at making specialist fees more transparent. The Medical Cost Finder website will now display individual specialist charges rather than regional averages, helping patients make informed choices about their healthcare providers.
A Senate committee has also been established to investigate the accessibility and affordability of medical specialists, with its findings expected by late 2026. This inquiry is likely to highlight how high fees and uncertainty about costs deter patients from seeking necessary care. Each year, nearly 1 million people avoid seeing specialists due to financial concerns.
High fees can also influence doctors’ career choices, leading them to favor high-fee specialties over those where patient needs are greater. This imbalance further limits access to care for populations in need.
Can Competition Help?
Economists suggest that increasing competition could reduce market power and lower fees. However, research indicates that more specialists in the same area do not necessarily lead to lower fees. In the 2000s, the number of medical graduates doubled, and the number of specialists grew exponentially, yet fees continued to rise faster than inflation.
Improving consumer information and choice is another potential solution. The current legislation focuses on this, but studies show that fee transparency through the Medical Cost Finder may not be effective unless GPs have this information during consultations. Even then, patients lack objective data on the quality of care.
Patients often lack the medical knowledge to interpret information about diagnoses and treatments. They may also be influenced by fear or hope, making it difficult to make rational decisions about their care.
Four Options for Regulating Fees
If competition fails to reduce fees, direct regulation becomes necessary. The following options are being considered:
Legally Enforceable Price Caps
Doctors have historically used constitutional clauses to resist direct fee regulation, but the minister is willing to test this legally. Previous legal challenges against these clauses have resulted in losses for doctors. Price caps could be set based on evidence of cost variations across regions and patient needs. An independent body might oversee this process, though doctors below the cap could still increase their fees.Conditional Medicare Rebates
Making Medicare rebates conditional on fees being below a certain cap is another approach. If doctors charge above the cap, patients would lose the rebate, potentially increasing out-of-pocket costs. Some high-fee doctors might not change their rates, shifting services to fully private care and maintaining skewed incentives.Increasing Medicare Rebates
Doctors argue that higher rebates could reduce fees. However, previous experiences, such as the Medicare Safety Net, show that doctors may use the extra rebate as additional income rather than lowering fees. Combining this with fee caps could ensure that rebates directly reduce out-of-pocket costs.Standardising Gap Cover Arrangements
For services in private hospitals, health insurers use gap cover arrangements to manage out-of-pocket costs. Standardising these schedules across insurers could reduce variation in fees. Mandating that all doctors accept insurers’ fees as full payment could also help.
Looking Ahead
These options require careful evaluation to determine their effectiveness in reducing fees and out-of-pocket costs. Some involve increased government spending or impose costs on health insurers, while others require legislative changes. A combination of approaches is likely necessary to achieve meaningful reform.
Reducing out-of-pocket costs while maintaining doctors’ earnings is expected to be costly. The path forward will depend on balancing affordability, access, and sustainability within the healthcare system.
