The $7 co-payment was supposed to be dead and buried after former Treasurer Joe Hockey’s political cremation. Yet Malcolm Turnbull has again raided funding, risking an increase to the amount less well-off Australians pay when visiting the doctor. Here’s why that could hurt the health of his polling numbers, writes Ben Eltham.

Some decisions in politics are hard to credit. The 2016 budget was full of them.

Why provide tax cuts to millionaires, but not to middle-income earners? Why deliver a budget supposedly about “jobs and growth” and include so little capital investment? Perhaps most strangely, given there’s an election in eight weeks, why not simply spend, spend, spend?

But for all Scott Morrison’s strange half-measures last Tuesday night, perhaps the most difficult to understand are the budget’s cuts to health, hospitals and Medicare. These were sizeable, unwelcome and, strangest of all, entirely unnecessary.

The most important announcement in health from last week’s budget was the decision to freeze Medicare rebates for a further two years. The “freeze” means Medicare rebate rates stay at current levels, and will not increase – even as inflation eats away at their value. It saves the government $925 million. It has also enraged doctors.

Quite why this government hates doctors so much – normally a safe constituency for the Coalition – is one of the enduring mysteries of contemporary Australian politics. Joe Hockey’s 2014 budget was deeply unpopular for a range of reasons, but foremost among them was the decision to slash tens of billions from hospitals and impose a $7 co-payment for GP consultations and pathology investigations.

The GP co-payment was so toxic that it nearly ended Peter Dutton’s ministerial career. It then caused his successor Sussan Ley no end of trouble. It also brought the Australian Medical Association’s Brian Owler to public attention. With a rare ability to cut through, Dr Owler has quickly become one of this government’s most dangerous critics.

One of the reasons doctors are so angry is that the Medicare rebate freeze began in 2013 (under Labor). This means rebates have been declining in real terms for three years now. With the new budget extending the indexation pause out to 2020, that freeze will be very deep indeed. The big firms that increasingly control GP clinics in this country are moving with their feet, and raising their out-of-pocket fees. Bulk-billing looks set to be eroded further.

As Owler told a health policy breakfast last week:

“I think we’ve reached the tipping point now. Because with this extra two years, it’s very clear that practices just can’t hold on any longer. And it’s going to mean, well from this announcement, another billion dollars out of the pockets of patients.”

It’s worth noting that the freeze hasn’t affected bulk-billing rates so far. But perhaps it’s only a matter of time. Doctors have been calling the Medicare freeze a “co-payment by stealth” for some months now. Last week’s budget will exacerbate the problem.

Extension of Medicare freeze is bad news for health @amapresident #Budget2016 pic.twitter.com/zUqauhfyKX — AMA Media (@ama_media) May 3, 2016

Attacking bulk billing matters because, as Owler argued, out-of-pocket fees already deter perhaps one in 20 Australians from visiting a doctor. Primary health care also plays a crucial role in prevention of disease, and improving lifetime health outcomes. It’s also cheaper for the government and better for patients than complex care at a public hospital. That may explain why the Royal Australian College of GPs calls the freeze “illogical.”

GPs are pledging to campaign against the government with a waiting-room blitz that could reach hundreds of thousands of voters in marginal seats. The College of GPs is printing posters and flyers attacking the government. They will reportedly read “Danger. You and your family’s health is being targeted. The extended freeze on Medicare rebates means you will pay more!”

You can hardly blame doctors and health groups for this campaign. The Coalition has attacked public health regularly since coming to office. Even before Joe Hockey’s budget delivered the disastrous $7 fee, the Coalition’s Commission of Audit had recommended a co-payment of $15. Commission chair Tony Shepherd then attacked doctors (or was it patients?) for “abusing the system”. He told the media that the idea came from “a view that the system was being abused as Australians were visiting their GP an average of 11 times a year.” (Typically, Shepherd was wrong: the true figure is closer to seven).

The Coalition also cut tens of billions of dollars from public hospitals in 2014, a figure pegged in that year’s budget papers at $57 billion in ten-year savings. While $2.9 billion extra did go to the states for public hospitals in Morrison’s 2016 budget, the new funding is still well short of what public hospitals would have received under the arrangements left by the Rudd-Gillard government. The Australian Healthcare and Hospitals Association says “this returns less than half of the expected funding that was initially removed by the Government in the 2014 Budget.”

And then there are last week’s cuts to aged care: quite significant cuts, it would appear, with $1.2 billion being subtracted. The savings will supposedly come from stopping an expected blow-out in aged care funding – hence the budget’s language about the “better use of funding,” signalling tighter regulation of the aged care sector.

But even with better regulation, a significant swathe of the $1.2 billion is a true funding cut – for instance, the cut to the indexation of the Complex Health Care payment. Complex health care funding helps aged care facilities to manage the multiple health issues that affect so many of their residents.

The aged and community care sector is unsurprisingly angry. Private providers are already launching a marginal seats campaign. Victoria’s largest private provider, Shepparton Villages, is reportedly bankrolling the campaign.

It’s hard to credit the political logic of attacks on health and aged care in an election budget. Marginal seat campaigns by outside groups are never welcome, but when they come from trusted community figures like doctors and retirement villages, the political damage for the government could be significant.

The evidence from polling would seem to support this: the budget has not been popular. According a recent Essential poll, voter approval of the 2016 budget runs at just 20 per cent, compared to 29 per cent disapproval, and 35 per cent uncommitted. Respondents are sharply divided on party lines, reflecting a budget that played strongly to the Coalition base but gave little to low- and middle-income earners.

The problem for the government is that, in a long campaign, slow-burning issues like aged care cuts could gather momentum. The government’s recent cuts to superannuation were also disliked by older Australians (although in fact hardly any of them will be affected). 51 per cent of those surveyed in the Essential poll thought the budget was bad for older Australians. That’s a figure calculated to give Liberal campaign supremo Tony Nutt some sleepless nights.

The government has made some powerful enemies with its ongoing budget cuts to health – enemies it didn’t need to make, in fights it didn’t need to pick. If Labor can make health a central issue of the 2016 campaign, the Coalition could be badly hurt.