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Medicare’s growth isn’t out of control – It’s actually slowing

by 50 Comments

Ley-feature-image

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.)

Medicare spending in context

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.

Medicare as percent of tax and GDP

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).

Medicare rate of increase

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…

GDP growth rate change

Tax revenue growth is slowing…

Tax revenue growth rate change

Health expenditure growth is slowing…

Health expenditure growth rate change

And Medicare growth is slowing…

Medicare expenditure growth rate change

GP Medicare expenditure growth rate change

Summary? Growth is slowing for all the measures.

Conclusion

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.

Please share

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.

Sources

All the graphs above are mine. I generated them in Excel using data compiled from the following sources.

Medicare expenditure

Health expenditure

GDP

Tax revenue

Ley’s quotes

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.)

Reader Interactions

Comments

  1. Thank you Glen. This is a great help. I’ve just received an email from Bill Shorten to write to the Health Minister to help try and stop this ridiculous GP Tax proceeding. I would like to use some of your comments in my correspondence to the Health Minister.
    Thank you again. Great to receive your emails.

    Reply

  2. Thank once more Glenn. Your painstaking work uneaths vital facts and presents them in readily understandable form It deserves a much wider distribution. I suggest you post it on other sites such as The Conversation, New Daily, Australian Independent Media, and The Guardian. I too would like to pass on your stuff.

    Reply

    • Thanks Phil. Very kind of you. I’ve had a couple of articles re-published on AIMN, but I suspect the others want only original stuff. I barely have enough time to write for myself, let alone other publications. Of course, if they asked me to, I wouldn’t say no. Especially The Guardian. Best publication in Australia, IMHO!

      Reply

  3. Thanks Glenn,
    This is a terrific contribution to the struggle against the government’s agenda. It should be more widely shared and I will make my own modest contribution to that. I will also forward to the ACTU and to my own union – the AMWU – because they also are campaigning against the detruction of Medicare.

    Reply

  7. Adding to the other posts, thank you very much Glenn. It very much helps us ‘ordinary’ and concerned potential voters to have independent sources such as your painstaking work to be able to quote when required. I have shared it on Facebook®.

    Thanks again.

    Reply

    • Thanks Bruce. I’m an ‘ordinary’ voter too. That’s why I started this blog. I knew I was being lied to, and every time I saw it happen, it would make me so frustrated. My blog really started with the LibLab race to the bottom during the 2013 election. I discussed/debated it (mostly on Google+), and eventually I’d researched so much that I had a good base I could refer people to, instead of constantly rewriting the same stuff in different comment threads. But I nowhere to publish it. So I wrote the refugee post http://www.glennmurray.com.au/australia-boat-people-illegal-policy/ (which I still think is the most important piece I’ve written), and just kept going from there. I never intended this to be a ‘political’ blog. Indeed, my About page still describes what I’d pictured. But the lies just keep coming from the gov and mainstream media, and it’s all I can do to keep up with them, let alone write about music and movies! :-\

      Reply

  8. Thanks for another great article. The work that has gone into getting this together is much appreciated. Will be sharing.

    Reply

  9. This issue is the medicare system ya drongo’s its the entire health system. Medicare forms just a small part of it. Now cutbacks must be made, we can make a system where co-payments exist…$5 is not a lot and considering where I live there are no bulk billing doctors (Geraldton WA) you eastern staters should consider yourselves dam lucky the doctor only costs you $5 here it is $40 after the rebate from Medicare.

    Now where else can you make the cut backs and still make the system fair?

    Reply

    • Hi John. Thanks for your comment. The particular issue at hand is, in fact, Medicare, because it’s Medicare they’re lying about (at the moment), and I was correcting their lie.

      You’re right that Medicare is just part of the federal government’s health spend, but it is a third of it. So my analysis is very relevant.

      Yes, health spending is growing faster than Medicare spending, but like Medicare, it’s growth is slowing.

      Furthermore the federal government’s health spend represents only 4.15% of GDP. Even if it were out ofcontrol (which it’s not) it’s not going to break us.

      Also u raise a good point about alternative spending cuts. I’d start with faulty fighter jets, dishonest wars, illegal asylum seeker detention centres, superannuation subsidies, mining subsidies, big business tax cuts, rich tax evasion, pharmaceutical subsidies and private health subsides.

      Reply

  10. We have tragically entered a period when “integrity” is a swear word to politicians. They actually believe they know everything, yet my analysis indicates the know absolutely everything about absolutely nothing and will never hire advisers who are likely to tell them the facts when they only want to be told lies. That gives them the excuse they need when the facts are revealed.

    Reply

    • From what they say in public, it certainly seems they’re ignorant. But I have to say, I’m a little more cynical than that. I think they know the truth, but they have another agenda.

      Reply

  11. I was listening to a preview of tonight’s (19/01/2015) edition of The Health Report in which Dr Norman Swann gave a list of examples where huge savings could be made throughout the medical and hospital sectors. He listed, for example, many unnecessary CT and other scans and many many procedures that are a waste of time and money. The savings amounted to over $1 billion dollars.

    Reply

  12. The rule for politicians, of all colours, is if you’re going to tell a lie make it a big one. and repeat it often, very often. They have access to the media, and mental apathy which rules the majority suggests that what they say is absolutely correct. Politicians depend on gormless citizens, already softened up by red-necked, hairy-chested shock jocks, to carry their lying message to their network. Analysis is something which politicians avoid like leprosy, preferring instead the given thought for the day, which is vomited forth at first sight of cameras (Pavlov reflex), as the ten-second grab, which is supposed to be incorporated into out thought systems. What a legacy to be remembered by, trying to wreck Medicare?

    Reply

  13. Meticulously researched and presented. Thank you very much, Glen. I have shared as widely as possible.

    Reply

    • Haha! Thanks Sam. My wife has forbidden it. No politics for me. Plus, I hate that all politicians seem to think of it as a battle or a game. Never about doing the right thing.

      Reply

  15. Well researched and presented, Glen. I’ll be happy to promote this anywhere I can. I’m sick to death of lying governments, whatever their colour.

    Reply

  16. Would be interesting to see the Govt/personal share of GP expenditure. How has the gap changed? I suspect that the Govt share has decreased significantly. Also, costs per capita would be good. Again, I suspect it’s gone down.

    Well researched and referenced article: a rare item these day. Keep up the good work.

    Reply

  17. Change in the rate of change of rate of change does not negate the original change. It’s simple second order derivatives. What this says that spending is not increasing as rapidly, not that it isn’t increasing at all.

    Reply

    • Hi Michael. Thanks for your comment. You’re completely correct, and that’s exactly what the post says: “Medicare is still growing each year, just as our GDP and tax revenue are. But that growth is slowing down.”

      Reply

  20. Hi Glenn

    Thanks for compile the statistic, you give hard truth here
    Most media just spreading government words whether it’s true or not
    I don’t understand why government should lie to us

    Reply

  21. Awesome stuff I will pass it on to the financial matters instructor who can utilize it in social arrangement and different themes about levy, % of GDP utilized for different types of gov consumption and so forth.

    Reply

  22. Hi Glen,

    Thanks for that loved it. I am in the medical field and I see what stupid things the government spend money on and then they go ooophs that’s not going to work. They never ask the people in the field if things are going to work in there surgeries. Like the $4000 dental plan for people. This should have been means tested.
    I knew people like doctors kids getting $4000 dollars worth of free dental work because they had asthma. But now the poor people who are still struggling can’t get that help. Here’s another the government gave $6000 for doctors to get computers with Skype. ( which would have been great for people in rural area’s)
    No Doctors in the same building were skyping. But they got $6000. Waste of money. But I wonder how much that cost us.

    Reply

  23. By standing back and looking at the whole government budget situation, a few things are glaringly obvious. They have not funded anything! ALL social programs are to be paid for with future tax revenues. Insane! And since 2007 they have borrowed every year with no view in sight of even balancing the budget. They will increase the debt persistently. Interest rates are at 5000 year lows and they spent 16 billion of our tax dollars on interest last year! INTEREST RATES ARE RISING! How much do you think they will spend on interest when rates are normalized, say 5 or 6%? Interest payments are also not funded. They also are coming from future tax revenues. Dig up a chart of interest payments vs tax revenues and you can see the future crisis!

    Reply

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