Reimagining Australia's Healthcare System for the Future

This month’s budget reflects familiar trends in health care: a record investment in Medicare, an increase in bulk-billing, and a rise in urgent care clinics. While these developments might seem positive, they represent merely an extension of an outdated framework. Australia does not need superficial upgrades to the existing system; it requires a comprehensive rethinking of how healthcare is planned, funded, and delivered.

Medicare, which was introduced in 1984, was designed for a different era. At that time, average general practitioner (GP) consultations were brief and focused primarily on acute illnesses. Currently, the demographic landscape has drastically changed, with 38 percent of all Australians and 79 percent of those aged 65 and older living with multiple chronic conditions. The general practice model predominantly operates on fee-for-service payments that incentivize short, less complex consultations, failing to accommodate the complexities of an aging population.

Moreover, GPs are under increasing strain due to decades of stagnant or frozen rebate indexing under various coalition governments. Despite the Albanese administration’s increased funding for GP services—which has helped lift the national bulk-billing rate to over 81.4 percent—the last two budgets have not adjusted rebates to reflect the longer consultations required for complex patient needs. As the costs of practice continue to rise and medical training in Australia remains under-resourced, challenges in patient care are likely to worsen. The Australian Medical Association forecasts a deficiency of over 10,600 full-time GPs by 2031/32, with around 27 percent of people in 2024/25 delaying or avoiding GP visits due to costs.

The government's commitment of $662 million for workforce expansion, including the largest GP training initiative in history, marks a significant step. However, Australia still lacks a cohesive, nationwide strategy for its medical workforce. Health Workforce Australia, which was dismantled in 2014, has yet to be replaced, and a strategy for allied health workers is still in progress. Merely training more GPs will not ensure their distribution aligns with the areas of greatest need or that they are adequately equipped to manage chronic conditions.

There is an urgent need for a transformation in how primary healthcare is delivered. Other high-income nations have adopted blended funding models that adjust payments based on patient needs, supporting multidisciplinary teams working alongside GPs to provide comprehensive and cost-efficient care. Community health services in Melbourne, like cohealth and Sexual Health Victoria, are struggling financially as their funding does not adequately match increasing demand.

A proposal for a 'Medicare 2.0' has emerged, suggesting that funding should prioritize complexity instead of merely activity. This new system would integrate primary care, specialist services, allied health, dental, and mental health into a unified healthcare model. The government's Medicare Urgent Care Clinics have now been made permanent, with 137 centers established and over $1.8 billion allocated over five years. These clinics are popular for their visibility and accessibility; however, a recent report indicates that each visit costs around $246.50—five times the price of a GP visit. Currently, there is no substantial evidence proving that these clinics lessen emergency department visits.

While urgent care clinics could serve a practical purpose, their funding warrants thorough independent evaluation before committing to the annual expenditure of $525 million. In addition, dental care continues to be a significant exclusion from the Medicare framework, leading to increased costs in emergency services due to untreated dental issues. Incremental development of public funding for basic dental services, particularly preventive care for children and maintenance help for older Australians, is essential.

With difficulties and high costs in accessing GP services, the government is exploring allowing pharmacists to prescribe for straightforward cases. From January, pharmacists who receive the necessary training will be funded to prescribe oral contraceptives and antibiotics for urinary tract infections, supported by two trials covering 250,000 concession cardholders. However, it is crucial to note that the Pharmacy Guild of Australia—representing pharmacy owners rather than individual pharmacists—donated over $600,000 to political parties last year, including $360,000 to the Labor party. The Guild envisions that by 2035, 80 percent of community pharmacists will be prescribing medications, positioning pharmacies as a first point of healthcare contact.

Despite the apparent benefit of improving access, this initiative raises concerns regarding the quality of care. A GP discussing contraception would conduct a full patient history and might screen for domestic violence and sexually transmitted infections, whereas a pharmacist's prescriptive process often lacks the depth of an examination. Such interactions raise ethical questions, particularly in regards to conflicts of interest in prescription and sales.

In addition to this, the burden of costs for consulting specialists has increased by 12 percent in the past year, contributing to nearly one million Australians avoiding essential medical care each year due to expenses. This trend necessitates examining public outpatient clinics and their operations while seeking greater transparency in healthcare costs. Furthermore, the upcoming modification to the private health insurance rebate for seniors, which will affect about three million older Australians in 2027, raises concerns. This policy may save the government about $482 million but could also push $547 million in additional expenses onto public hospitals, warranting careful scrutiny before implementation.

Starting April 1, 2027, changes in the private health insurance rebate will increase pressure on our already strained public healthcare system. The new National Health Reform Agreement for 2026-2031 is poised to inject an additional $25 billion in federal funding over the next five years, aiming to have the Commonwealth cover 45 percent of public hospital costs by 2035. Nevertheless, without genuine reforms to how hospital and community services are integrated and funded, more money may just perpetuate the acute care model that struggles to manage preventable admissions.

Australia currently allocates only 2.9 percent of its total health budget to preventive strategies—far below the 5 percent goal outlined in the National Preventive Health Strategy. The formation of the Australian Centre for Disease Control is a welcomed development, but without sustained, long-term funding, its effectiveness will be compromised. Australia is presently grappling with its most significant diphtheria outbreak in recorded history, chiefly affecting Aboriginal and Torres Strait Islander communities in remote areas—a grim reflection of decades of policy failures.

Delays in accessing medications are also problematic; the gap between regulatory submission and technology assessment has ballooned to 534 days in 2024, up from 428 days in 2020. The average wait for reimbursed medicines is currently 3.6 years, with only 27 percent of new innovative medications making it onto the Pharmaceutical Benefits Scheme. This glaring issue arises from structural deficiencies in the access pathways that hinder optimal care.

The government’s Health Technology Assessment review presented 50 recommendations last September, none of which have been fully acted upon. Additionally, external pressures, such as the United States' 2025 Most-Favored-Nation executive order, complicate Australia's pharmaceutical landscape. Improvement in regulatory processes is imperative; otherwise, pharmaceutical companies may hesitate to introduce their products to the Australian market.

Healthcare research also requires greater financial support. The Medical Research Future Fund has reached nearly $25 billion but currently provides only $650 million annually. With grant success rates plummeting below 10 percent, young researchers are leaving the field, causing systemic pressure on institutions. While this year’s budget did release an extra $508.5 million over four years and an increase in disbursements to $1 billion annually by 2030-31, it still falls short of achieving comprehensive reform.

The National Health and Medical Research Strategy, recently introduced, presents an encouraging direction for resource allocation. Notable provisions include $210 million for cancer and precision health research and the initiation of a high-risk funding stream for innovative discovery science. However, aging budget declines for the Australian Research Council must be addressed for real change.

Medicare was originally crafted for a healthcare landscape that has fundamentally shifted since its inception. Our fragmented workforce and protracted medicine approvals are critical issues in light of rising out-of-pocket costs, which rank among the highest in the developed world. With rightful expenditure occurring, the misalignment of financial resources with the current realities of healthcare signifies that more funding towards outdated frameworks is insufficient.

Moving towards 'Medicare 2.0' that emphasizes funding based on complexity rather than volume is crucial. The integration of primary, specialist, allied health, dental, and mental health services into a unified system is essential. The proposals for healthcare reform are already prepared; however, the lack of political will to implement a fresh, progressive healthcare paradigm poses a major barrier to building a system that meets the needs of the future.