Prime minister tells question time the latest attempt to introduce a co-payment is ‘dead buried and cremated’ and a new ‘value signal’ would be developed

The Abbott government is now working on a fifth version of its Medicare policy after the prime minister declared its latest attempt to introduce a co-payment “dead buried and cremated” but the health minister said she had not finalised an alternative to achieve the same policy aims.



The government is retaining a freeze on the Medicare rebate that would force doctors to abandon bulk billing over time unless they finally agree to alternative budget savings – and it says its policy goal to restrict bulk billing to the “vulnerable” remains.



The health minister, Sussan Ley, said she was still negotiating with doctors about alternative Medicare savings as she abandoned the fallback policy of a $5 rebate cut announced by the prime minister last December and “put on hold” in January.



She left open the option for the government to achieve what it now calls a “value signal” for healthcare over time, by leaving in place a freeze on the Medicare rebate for four years or even longer if the doctors did not agree to alternative savings.



The freeze, which reaps $1.3bn of the $3.5bn in savings booked over the next four years when the government announced the co-payment in last year’s budget, would mean doctors were eventually forced to abandon bulk billing and charge their patients, according to the Australian Medical Association.

“Leaving the freeze in place is not a viable option. It would mean more and more doctors would struggle to bulk bill. They will have to charge patients to maintain the financial viability of their practices,” the AMA president, Brian Owler, told Guardian Australia.

Michael Moore, chief executive of the Public Health Association of Australia, said he would continue to campaign against the co-payment because “it becomes a death by 1,000 cuts and gradually erodes the value of the Medicare rebate”.

It is understood Ley was proposing that the freeze be reduced to two years as she continued negotiations with the doctors, but cabinet decided maintain a four-year freeze, with its associated savings, as government policy, while she tried to come up with a fifth version.

Despite backing down on the $5 rebate cut, the government did not back down on its main policy aims. Ley said it was “not acceptable” in the long term for seven out of 10 non-concession patients to be bulk billed, and that the Coalition was committed to bulk billing only for the “vulnerable.”

“It is definitely good policy to put the right price and value signals on health care,” Ley said.

And she refused to answer when asked whether the indexation pause could be left in place indefinitely to achieve the government’s aims.

“That’s not something I am prepared to answer,” she said. “I would rather answer that question by saying we’re pausing the indexation on the rebate while we consult with the medical profession. The medical profession has made no secret of the fact that they don’t like that, but they understand that a sensible, sustainable policy needs to be arrived at,” Ley said.

It is understood the government is talking to doctors about alternatives including allowing doctors to claim a rebate and charge patients for the gap, and also ending the current fee-for-service model and instead paying doctors in advance for patients who are chronically ill or have special needs. Owler said the consultations were positive, but not finalised.

Labor’s health spokeswoman, Catherine King, said Ley’s “admission the Abbott government remains committed to the GP tax confirms nothing has changed. The Abbott Government remains committed to the destruction of Medicare and the destruction of bulk billing.”

The Greens health spokesman, Richard di Natale, said that “while the Greens welcome the back down on the $5 rebate cut, freezing rebates is a prescription for a co-payment by stealth.

“From the outset the government’s overriding objective has been to reduce the incomes of doctors so that they will pass on costs to patients. Of the three measures announced in December, freezing rebates for four years was always going to have the biggest impact on GP incomes and out of pocket costs. Anyone who claims that co-payments are gone simply doesn’t understand the policy.”

The ditching of the rebate is the fourth Medicare policy position for the Abbott government in 10 months. In last year’s budget it announced a $7 co-payment but last December if changed to a $5 rebate cut which it called a “voluntary co-payment”. As the medical profession went to war against that policy in January in the lead up to the Queensland state election, newly-installed health minister Ley said it was “shelved”. On Tuesday she said it was now abandoned entirely, with a new policy still under consultation.

Tony Abbott admitted the government had mishandled the policy, saying that “as a former health minister, I suppose I should have been more conscious of this. I should have been more conscious of the fact that proper health reform in this country does require ... the support, the cooperation, the consent of the medical profession.”

“I accept the chastisement, particularly given by experience as a health minister, but it is much better to learn,” the prime minister said, accepting “that it has taken us some time to come to this position.”

Ley said the changes proved the government was listening, and Abbott told parliament during question time that “sensible governments respond intelligently to what we get from the community.”