But critics say the scheme will create a two-tier system between those who belong to private health funds and those who do not and runs counter to the spirit of the legislation if it is not a direct breach. Opposed to the Medibank scheme: Greens senator Richard Di Natale. Credit:James Boddington Federal Greens spokesman Richard Di Natale has introduced an amendment to the act which bans private health insurers from entering arrangements with GP clinics that give their members preferential treatment. "It's impossible to foresee a situation where one company provides their members with a product that other private health insurers don't attempt to match in some way," Dr Di Natale said. "There's the equity issue, but the second thing is people's premiums are going to skyrocket."

Australian Medical Association president Brian Owler told a Senate hearing on Wednesday that the scheme was a step towards the managed care system that existed in the US, where private insurers dictated which doctors their customers consulted and which procedures they could get. A US-style system would be a disaster: President of the Australian Medical Association, Brian Owler. Credit:Alex Elllinghausen Professor Owler told Fairfax Media that the managed care system was a "disaster". "The AMA's position is there probably is a role for private health insurers to support general practice but it has to be done with the right safeguards," he said. "What we need to do is fast forward to the time where you have that scheme across all general practices. "We know that demand for general practices is quite high and there will be many places where private health gets priority.

"Those without private health insurance won't be able to get in to see their general practitioner or will have to wait much longer." Representatives from the Australian Dental Association said their industry was a case study in what occurs when private insurers seek to dictate providers and treatments. By encouraging their customers into preferred provider agreements, the private insurance industry had artificially inflated the cost of consultations and interfered with patients' ability to choose their own dentist. But Medibank has said it wants to work closer with GPs. "If Medibank can support GPs to assist its members to remain healthy and out of hospital, not only do members benefit but it also makes sense to Medibank from a business perspective," the company said in its written submission.

Medibank said it was not seeking any changes that would permit private insurance companies to pay for GP services currently covered by Medicare or to cover out of pocket gaps. Loading HCF representatives told the hearing they were watching Medibank's trial with interest and would need to consider a similar scheme if it threatened to consume their market share. Follow us on Twitter