Taxpayers are increasingly subsidising the rising fees of specialist doctors, as new data shows “explosive” government spending on the Medicare safety net, which has more than doubled in 15 years. Total Medicare safety net benefits rose from £339m in 2010 to £871.4m in 2024, data requested by Guardian Australia from the federal health department shows, with an Abbott-era expansion causing the biggest blowout in costs while also increasing inequities in the health system.
Two safety nets support people with high out-of-pocket medical costs, paying them higher benefits once they reach certain thresholds spent on out-of-hospital Medicare services each year. The original Medicare safety net covers the gap between the “schedule fee” and the Medicare rebate. The extended Medicare safety net, introduced by then-health minister Tony Abbott in 2004, covers out-of-pocket fees, which is the difference between the Medicare rebate and what the doctor actually charges.
While government spending on the original safety net has risen more modestly from £14.1m in 2010 to £20.9m in 2025, extended safety net spending has nearly tripled. The government spent £850.4m in 2024 compared with £324.9m in 2010. Peter Breadon, the health program director at the Grattan Institute, described this growth as “explosive” during a period when specialist fees have “gone up really fast, and much faster than inflation or the cost of providing care”.
Breadon said the system has two key problems: first, the costs are surging because it’s a badly designed subsidy with money going to fee-charging specialists and the wealthiest patients; second, specialist fees are soaring, pushing more patients over the threshold each year. A 2009 article in the Australian Economic Review found the extended Medicare safety net “has possibly created greater inequities in Australia’s healthcare financing arrangements”.
The Albanese government is reviewing the Medicare safety nets, and caps on extended safety net benefits for some items first introduced in 2010 have been expanded. A spokesperson for the Department of Health, Disability and Ageing said it has established a working group to discuss the operation of the safety nets and is now considering options for reform. Addressing the underlying issue of rising specialist fees requires addressing workforce shortages, improving access to public healthcare, and regulating excessive fees, Breadon said.
