This month’s budget contains familiar themes when it comes to health: record investment in Medicare, bulk-billing on the rise, and urgent care clinics proliferating. It may sound positive, but it is really more of the same in an outdated system. What Australia needs is not improvements to the status quo but a thoroughgoing reimagination of how we plan, fund and deliver healthcare in this country.
Medicare was launched in 1984 for a fundamentally different Australia. The average GP consultation then was brief, addressing acute illness. Now, 38 per cent of all Australians – 79 per cent of those over 65 – have multiple chronic medical conditions. Our general practice model is overwhelmingly reliant on fee-for-service payments. It rewards quick consultations of low complexity and is unsuited to an ageing population.
Worsening the stress on GPs is the effect of decades of under-indexation or freezing of rebates under Coalition governments. While the Albanese government has increased investment in GP services, with the national bulk-billing rate now above 81.4 per cent, the last two budgets withheld higher rebates for the longer services needed for increasing patient complexity.
With practice costs rising, domestic physician training chronically under-resourced and patient care increasingly complex, it’s small wonder that the Australian Medical Association projects a shortfall of more than 10,600 full-time GPs by 2031/32. In 2024/25, about 27 per cent of those who needed to see a GP delayed doing so, or didn’t see one. In 29 per cent of cases, that was because of cost.
Labor’s budget promise of $662 million for workforce expansion – including the largest GP training program in history – is significant. Yet we still lack a coherent, integrated national medical workforce strategy. Health Workforce Australia was disbanded in 2014 and hasn’t been replaced. The allied health workforce strategy is still being developed. Training more GPs won’t ensure we have them where we need them most, and that they’re up to managing chronic diseases.
We need to change how we deliver primary healthcare. Comparable high-income countries have moved towards blended funding models that weight payments by patient need and fund multidisciplinary teams working alongside GPs in clinics, providing more holistic and cost-effective care. Community health services in Melbourne – such as cohealth and Sexual Health Victoria – are going to the wall. Their funding has failed to keep pace with demand or cost.
“Medicare 2.0 should fund complexity, not activity. It should integrate primary care, specialist care, allied health, dental and mental health into a more coherent system.”
The government’s Medicare Urgent Care Clinics have been made permanent, with 137 centres funded with more than $1.8 billion over five years. They’re visible, accessible and popular – no one likes sitting for hours in an emergency department with a sick child or a broken arm. Yet an interim report found each presentation to an urgent care clinic costs $246.50 – five times the cost of a GP – and there’s no conclusive evidence that they’re actually reducing emergency department presentations. Urgent care clinics may have a role – but before locking in $525 million a year in permanent funding, they should undergo rigorous independent assessment.
Dental health remains a gaping exclusion from Medicare – and a false economy, given the cardiovascular and other conditions worsened by poor oral health and the cost to emergency departments of presentations owing to delayed dental care. We need incremental expansion of government-funded basic dental services, starting with preventive care for children and maintenance supports for older Australians.
Given that getting in to see a GP remains difficult and expensive in many parts of Australia, the government is keen to allow pharmacists to prescribe for uncomplicated conditions. From January, trained pharmacists will be funded to prescribe oral contraceptives and antibiotics for urinary tract infections – with the budget backing two trials covering 250,000 concession cardholders.
It’s worth remembering that the Pharmacy Guild of Australia – an organisation representing pharmacy owners, not pharmacists – donated more than $600,000 to political parties last financial year, including $360,000 to Labor. The guild’s goal is for 80 per cent of community pharmacists to be prescribing by 2035, and for Australians to “think pharmacy first for healthcare”. Urinary tract infections and contraception are the entry point, but other chronic conditions are the destination.
A GP with a patient asking for contraception for the first time will take a full history, screen for domestic violence and sexually transmitted infections, offer a range of contraceptive options, and offer cervical screening and mental health assessment. A pharmacist’s flowchart – without physical examination or investigations – can’t replicate that care. There’s also a conflict of interest – the person who prescribes a medication should not be the person who profits from its sale – and concerns about antimicrobial resistance. The government is addressing a real access problem by fragmenting care in a way that aligns with the ambitions of one of the most powerful lobby groups in Australia.
Meanwhile, out-of-pocket costs to see a specialist increased 12 per cent in the past year alone. Nearly one million Australians forgo necessary medical treatment each year because of cost. Specialists trying to cover practice costs feel besieged.
The current parliamentary inquiry into the availability and affordability of specialist healthcare services is long overdue. We need a genuine restructure of Medicare Benefits Schedule rebates for specialist services, an examination of how public hospitals staff and run outpatient clinics, more transparency of costs, and a hard look at the gap between what private insurers cover and what patients pay.
From April 1, 2027, the government will reduce the private health insurance rebate for Australians aged over 65. This change is slated to affect about three million older Australians, most of whom will fall within the base income tier. It could reduce federal expenditure by about $482 million. The private system now performs more than 70 per cent of all planned surgeries in Australia – if older Australians drop their private cover, it would shift $547 million in extra costs onto public hospitals. This measure deserves more scrutiny before it’s legislated. The new 2026-2031 National Health Reform Agreement, which takes effect on July 1, commits an extra $25 billion in federal funding over five years and sets a trajectory towards the Commonwealth covering 45 per cent of public hospital costs by 2035. Without genuine reform of integration and funding of hospital and community services, however, more money will continue to flow into an acute care model that is ill-suited to preventing the admissions it is trying to manage.
Australia spends only 2.9 per cent of total health funding on prevention; well below the 5 per cent target in the National Preventive Health Strategy. The establishment of the Australian Centre for Disease Control is welcome and long overdue, but the centre won’t succeed if it doesn’t receive adequate long-term funding.
The consequences of chronic underinvestment in preventive healthcare are not abstract. Australia is currently experiencing its largest diphtheria outbreak since national records began. About 94 per cent of cases are Aboriginal and Torres Strait Islander people, mostly in remote communities. This tragedy is an indictment of decades of public policy failure – the predictable consequence of declining vaccination rates, inadequate primary care infrastructure and years of underinvestment in public health.
Meanwhile, the time from regulatory submission to health technology assessment blew out to 534 days in 2024, up from 428 days in 2020. It takes an average of 466 days from registration by the Therapeutic Goods Administration to listing on the Pharmaceutical Benefits Scheme. Australia’s average wait for access to reimbursed medicines is 3.6 years – and most medicines are not reimbursed. Only 27 per cent of globally available innovative medicines are listed on the PBS. Structural failures in our access pathways are denying us best-practice treatments.
The government’s Health Technology Assessment review – the most comprehensive in more than 30 years – made 50 recommendations in September 2024. None have been fully implemented. The situation is further complicated by United States President Donald Trump’s Most-Favoured-Nation executive order of May 2025, which directed pharmaceutical companies to benchmark US drug prices against the lowest prices charged in developed nations such as Australia.
If we don’t show good faith by improving our regulatory pathways, pharmaceutical companies won’t launch their medicines in our market. The government’s inaction on the Health Technology Assessment review is not just a domestic health failure; it is a foreign policy vulnerability. We have a narrow window in which accelerating PBS listing processes could simultaneously help patients, address industry concerns and provide a credible argument to the US that our system is fair.
The government can also demonstrate its commitment to healthcare research. The Medical Research Future Fund (MRFF) has swollen to nearly $25 billion, disbursing only $650 million a year. As this lag continues, the sector deals with grant success rates under 10 per cent, young researchers leaving the sector and systemic pressure on medical research institutes.
Facing a sustained campaign, the government finally moved in this year’s budget, releasing an additional $508.5 million over four years and increasing fund disbursements to $1 billion a year by 2030-31 – but it could still do more. Parliamentary Budget Office costings suggested the government could spend $1.4 billion a year without decreasing the balance of the MRFF.
The recent cancellation of the Australia’s Economic Accelerator program, and funding cuts at the CSIRO, have partially undone goodwill around this budget. Every $1 invested in medical research returns nearly $4 to the Australian economy: it’s a long-term investment in our future. The government’s new National Health and Medical Research Strategy, released last Friday, is a promising step – offering genuine direction for how funds will be deployed and establishing a National Strategy Advisory Council to oversee implementation. It includes welcome commitments: $210 million for cancer and precision health research, a high-risk high-reward funding stream for discovery science, and acknowledgement of the indirect cost burden on medical research institutes.
However, a strategy is only as good as its implementation. The 19 per cent real decline in funding for the Australian Research Council and the National Health and Medical Research Council over 12 years was not reversed by this budget, and the strategy’s connection to the broader Strategic Examination of Research and Development must be more than rhetorical. Good intentions on paper are not the same as sustained investment in practice.
Medicare was built in 1984 for a health system that no longer exists, designed around a population with far less chronic disease. Our workforce is fragmented, our medicine approvals too slow, and our private and public hospital systems are under structural strain. Our research infrastructure is underfunded and our out-of-pocket healthcare costs among the highest in the developed world – in a nominally universal system.
The government has spent money, some of it well. Yet spending more money on 1984 architecture is not the same as building a system fit for 2035. Medicare 2.0 should fund complexity, not activity. It should integrate primary care, specialist care, allied health, and dental and mental health into a more coherent system. Much of what is needed is already in the reviews before the government. What is missing is the political will to build a brave new medical system for our future rather than just patching up the one we have.