Why has the Medicare safety net spending increased so much?

Spending has nearly tripled due to the extended Medicare safety net, with specialist fees rising rapidly and contributing to higher costs for taxpayers.

What is the extended Medicare safety net?

Introduced in 2004, it covers out-of-pocket costs after patients spend a certain amount on out-of-hospital services, with Medicare paying up to 80% of future fees.

What is the government doing about rising Medicare safety net costs?

The Albanese government is reviewing the Medicare safety nets and considering reforms to address escalating costs and health system inequities.

Home / Health / Medicare Safety Net Costs Skyrocket

Medicare Safety Net Costs Skyrocket

30 Nov

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Summary

Government spending on Medicare safety net nearly tripled.
Extended safety net costs rose from $324.9m in 2010 to $850.4m in 2024.
Rising specialist fees contribute significantly to increased costs.

Federal health department data reveals a dramatic increase in government spending on the Medicare safety net, which has nearly tripled over 15 years. The extended Medicare safety net, introduced in 2004, is the primary driver of this cost escalation. Spending on this specific program rose from $324.9 million in 2010 to $850.4 million in 2024.

Experts describe this surge as "explosive," noting that specialist fees have increased significantly faster than inflation or the cost of care. This situation is creating two major problems: the system is a poorly designed subsidy benefiting high-fee specialists and wealthy patients, and soaring fees push more individuals over the safety net threshold annually.

The Albanese government is undertaking a review of the Medicare safety nets, considering reform options to address the escalating costs and inequities. Concerns have been raised that the extended safety net has become inflationary, necessitating caps to control fee escalation and ensure affordable private outpatient care.