Australia’s Health Minister, Sussan Ley, says Medicare is out of control:
…our Medicare system is growing at a rapid and unsustainable rate.”
This is an outright lie. Here are some graphs that show the truth…
Medicare spending in context (in millions)
This graph shows the Federal government’s expenditure on Medicare in comparison to our GDP and its tax revenue, as well as its overall health spending. (NOTE: Medicare GP expenditure is the amount the Federal government spends on GP Medicare rebates.)
As you can see, Medicare spending and GP rebates cost us bugger-all, relatively speaking. (Medicare represents just 30% of the Federal government’s overall health spending, and GP rebates only 8%.) And our GDP and tax revenue are increasing by a lot more each year than our health and Medicare spending.
Of course, the above graph doesn’t illustrate the rate of increase each year, just the absolute dollar amount. As Ley is talking specifically about the rate, let’s have a look at it…
Medicare’s growth rate in context
Firstly, let’s look at Medicare expenditure as a percentage of GDP and tax revenue.
The red line shows us that Medicare expenditure is growing more slowly than our tax revenue, and at almost the same rate as our GDP.
Now let’s take a look at the actual rates of growth. The below graph shows Medicare’s growth rate – the purple line. E.g. From 2003-04 to 2004-05, Medicare spending increased by 15%. And from 2004-05 to 2005-06, it increased by 10%. That’s the metric Ley’s talking about when she says “growing”. I’ve also included growth rates for the other measures for comparison (GDP, tax revenue, and so on).
This confirms what we saw in the first graph: That everything is still growing. GDP, tax revenue, health expenditure and Medicare expenditure are all still increasing. So no surprises there.
It also shows that, at the moment, everything’s increasing at about the same rate: Between 2.28% and 5.45%. (Sure, that’s still a difference, but it’s nothing like what was going on in 2008, when tax revenues decreased due to the GFC and health expenditure was increasing at its fastest rate since 2002.)
And it shows that the rates of increase have settled down and drawn closer together. There seems to be less volatility.
Importantly, we can again see that, at the moment, Medicare is growing more slowly than our tax revenue, and only slightly faster than our GDP.
But it’s when you look at the overall trend of the lines that you see the real lie in our Health Minister’s words. Because the trend tells us about the ongoing growth rate, and it’s this that she says is “rapid and unsustainable”.
The rate of growth is slowing… for everything
The following graphs show each of the above charts, but with a ‘line of best fit’ added, to illustrate the trend. To show whether the growth rate has been increasing or decreasing over the years. In other words, we know all the measures are increasing (growing); these graphs show whether that growth is speeding up or slowing down.
GDP growth is slowing…
Tax revenue growth is slowing…
Health expenditure growth is slowing…
And Medicare growth is slowing…
Summary? Growth is slowing for all the measures.
Yes, Medicare is still growing each year, just as our GDP and tax revenue are. But that growth is slowing down.
Hardly the “rapid and unsustainable rate” our Health Minister is spruiking!
And naturally, Ley wasn’t the first government minister to lie about Medicare. Back in 2014, Treasurer Joe Hockey said Medicare was costing $65 billion per year. That year it cost only $19.1 billion.
Our government has a habit of completely disregarding the truth. And our media tends not to correct them. I write these posts to try to bring some balance and evidence to the discussion. So please share. The more people who read the facts, the less often our government will get away with pulling the wool over our eyes.
All the graphs above are mine. I generated them in Excel using data compiled from the following sources.
- http://health.gov.au/internet/main/publishing.nsf/Content/Quarterly-Medicare-Statistics 02 – Australia Figures (Mar QTR 2003 onwards) – NOTE: GP Medicare expenditure figures are out of hospital, non-referred attendances.
- http://www.aihw.gov.au/WorkArea/DownloadAsset.aspx?id=60129544711 – 2002-03 to 2011-12, Figure 2.5: Health expenditure and tax revenue for the Australian Government, current prices, 2001–02 to 2011–12
- http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Budget_Office/reports/Australian_Government_spending – 2012-13
- http://apo.org.au/research/2013-14-budget-analysis-health-and-ageing-provisions – estimate for 2013-14
- http://www.aihw.gov.au/WorkArea/DownloadAsset.aspx?id=60129548869 – 2002-03 to 2012-13, p.9 (on-page numbering), constant prices expressed in terms of 2012-13 prices
- http://www.abs.gov.au/AUSSTATS/abs@.nsf/mf/1345.0?opendocument?opendocument#from-banner=LN – 2013-14
- http://www.abs.gov.au/ausstats/abs@.nsf/Previousproducts/5506.0Main%20Features22007-08?opendocument&tabname=Summary&prodno=5506.0&issue=2007-08&num=&view= – 2002-03
- http://www.abs.gov.au/Ausstats/abs@.nsf/Previousproducts/5506.0Appendix12008-09?opendocument&tabname=Notes&prodno=5506.0&issue=2008-09&num=&view= – 2003-04
- http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/5506.0Main%20Features22009-10?opendocument&tabname=Summary&prodno=5506.0&issue=2009-10&num=&view= – 2004-05
- http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/5506.0Main%20Features22010-11?opendocument&tabname=Summary&prodno=5506.0&issue=2010-11&num=&view= – 2005-06
- http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/5506.0Main%20Features22011-12?opendocument&tabname=Summary&prodno=5506.0&issue=2011-12&num=&view= – 2006-07
- http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/5506.0Main%20Features22012-13?opendocument&tabname=Summary&prodno=5506.0&issue=2012-13&num=&view= – 2007-08 to 2012-13
- http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/BudgetReview201314/Revenue – 2013-14
- http://www.illawarramercury.com.au/story/2818704/medicare-rebate-changes-off-the-table/ (quote in feature image)
- http://thenewdaily.com.au/news/2015/01/15/government-abandons-cuts-gp-medicare-rebate/ – “rapid and unsustainable rate”
As I used multiple sources, there are doubtless some slight inconsistencies. For example, the tax revenue data I used were slightly different from the data published here: http://www.treasury.gov.au/Policy-Topics/Taxation/Pocket-Guide-to-the-Australian-Tax-System/Pocket-Guide-to-the-Australian-Tax-System/Appendix-C. But the differences were too minor to affect the trends illustrated above. (I had to use multiple sources, because I couldn’t find all the data I needed in one.)