Medical specialist fees have been rising far beyond Medicare support, leaving patients with heavy out-of-pocket costs, long public waiting lists and a health system that needs stronger public controls.
Medical specialist fees have been out of control for years. Waiting times for treatment can be up to six years.
The Minister for Health Mark Butler has drawn attention to the extraordinary increase in specialist fees, saying they are “getting out of control”. He hinted that controlling fees might be practicable and necessary.
The problem had its origin under the Coalition government when Peter Dutton was the Minister for Health. In 2014 he froze Medicare rebates. The freeze lasted for six years. That was used as the pretext for specialists and others to increase fees. The escalation of specialist fees has continued ever since. It is a system without any “guard rails”.
It is not surprising that the income of specialists has increased dramatically. Taxation statistics from 2022/23 revealed that of the top five occupations in Australia for taxable income, four were for medical specialists – surgeons, anaesthetists, internal medicine specialists and psychiatrists. They’ve been having a field day at the expense of patients and taxpayers.
These higher incomes for private specialists is also a problem for public hospitals, with specialists in public hospitals chasing higher income as private specialists.
The problem is both costs and waiting times.
Some specialist doctors such as psychiatrists and surgeons and now charging up to $1,000 upfront for the first appointment. One in two patients do not know their fee before attending their first appointment. Cataract surgery and knee replacements can leave patients $2,000 or more out of pocket, even with private health insurance.
There is also a geographic and specialist inequality. Specialists are heavily concentrated in major cities. Regional and rural patients face higher fees with the additional cost of travel to see a specialist. The National Party doesn’t seem to care as it increasingly identifies with the fossil fuel lobby.
The average out of pocket costs for non-bulk billed specialist consultation increased from $46 in 2009/10 to $126 in 2024/25 or 12 per cent per year.
Two decades ago, Medicare covered 72 per cent of specialist fees. It now covers only 52 per cent. In 2009, 60 per cent of the obstetric costs were covered by Medicare. It is now down to 39 per cent.
Fees for 90 per cent of knee replacements have doubled in the past six years from $560 to $1,080. One in 10 Australians who had a knee replacement were charged more than $5,300 dollars. For hip replacement the medium out of pocket fee was $1,240 and 10 per cent of patients were charged more than $5,500.
More than 10 per cent of Australians aged over 15 delayed seeing eye medical specialists because of cost.
Each year approximately one million people report avoiding specialists because of the cost.
Those who cannot afford private fees are left to languish on public waiting lists. It can sometimes take up to six years to see neurosurgeons. In Tasmania some people wait more than five years to see paediatric allergy and respiratory specialists. Waiting times to see an ENT specialist is more than 3.7 years for some Victorians and more than 1.7 years in Queensland.
So, what can be done?
More specialists
Australia has a shortage of doctors and specialist trainees. Increasing the number of specialists would be helpful but probably only minimal in its effect. The market is rigged.
Increase the Medicare rebate
The AMA suggest that rebates should be increased and that lower fees would result. However, doctors may not reduce fees and take the extra rebate as extra income. Increasing the rebate might be marginally helpful for many conscientious doctors, but it would still be left to doctors to charge what they chose.
Better data to help decisions about specialist fees and skills
The Coalition introduced a voluntary Medical Cost Finder website so that patients could be better informed. However, it attracted only 88 specialists after three years. Specialists did not cooperate in revealing their fees. The government has now introduced legislation to make fee disclosure mandatory. This will tell us what fees are being charged. It won’t control fees. In any event patients are often confused about specialist fees and increased information may not be very helpful.
Further, specialist fees may be regarded by some people as a measure of the quality of care. However, experience shows that older and more responsible specialists often charge less than younger, less experienced specialists. If the bill passes, the government will be able to upload billing data that’s routinely collected for Medicare claims. This would allow patients to compare out of pocket costs before they book an appointment. I suspect that the public will find this marginally helpful but confusing.
Denial of rebate if fee above negotiated cap
This would involve making eligibility for Medicare subsidies conditional on not exceeding a maximum fee. There would be a maximum fee negotiated between the government and the profession. There is precedent for this in Canada. Denial of the Medicare subsidy would of course have impact on the patient. But hopefully most specialists would appreciate that he/she must conform to a reasonable fee or the patient will suffer.
Set fees
Australian governments have been reluctant to set medical fees because of concern that it would be contrary to section 51(xxiiiA) of the constitution that the Commonwealth has power to make laws providing for “medical and dental services but not so as to authorise any form of civil conscription”. The intention was that the Commonwealth government could not direct doctors to work in various parts of the country, but the power has been interpreted more widely to include the regulation of fees. But some lawyers suggest that setting fees is not civil conscription. Hopefully Minister Butler will test this issue. He has said the government is willing to “test the boundaries” of constitutional limits.
The AMA might decide to challenge in the courts the setting of such fees. But in doing so they would have little public support. Most people are aware of fee gouging by many specialists.
It might be possible for the Commonwealth government to get the cooperation of some or all states to legislate for capping or setting of medical fees. That would avoid the constitutional issue. It might also be possible for the Commonwealth to impose an income tax surcharge on specialists who choose not to comply with the caps or set fees.
Fund specialists in public hospitals
Additional funding could be directed initially to areas of high demand such as cardiology, dermatology and psychiatry. Professor Graham Stuart, a leading physician and highly published medical researcher, has suggested the Commonwealth should take over 100 per cent funding of all public hospital outpatient services. This was recommended in the 2009 report of the National Health and Hospital Reform Commission. He warned that simply giving extra funds to the state health bureaucracy to expand outpatient services would be a recipe for failure. He suggested that there must be a new model of authority, shared between state and commonwealth managers and medical specialists. He added that here are many young specialists who would be pleased to give back to the institution that trained them by staffing public clinics and performing daily procedures. Action to reduce fees charged by private specialists would also encourage more specialists to return to work in public hospitals.
Too often Medicare is viewed as a funding device for the way that health services are currently delivered. That needs a radical rethink. Health services in many instances would be more efficient and more effective if the government considered how health services could be better delivered through public hospitals and public clinics.
Are there still democratic socialists in the Labor Government?
John Menadue is the Founder of Pearls and Irritations and a board member. He was formerly the Editor-in-Chief. John was the Secretary of the Department of Prime Minister and Cabinet under Gough Whitlam and Malcolm Fraser, Ambassador to Japan, Secretary of the Department of Immigration and CEO of Qantas.