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Friday, 16 January 2015

Medicare’s growth isn’t out of control — it’s actually slowing

Medicare’s growth isn’t out of control — it’s actually slowing



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Australia's new health minister says Medicare spending is
out of control and must be pegged back or we'll all be ruined!
Unfortunately for her, the hard numbers show her claim to be absolute
furphy. Glenn Murray reports.








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.



The following are some graphs that show the truth.



Medicare spending in context (in millions)



The first graph shows the Federal Government’s expenditure on
Medicare in comparison to our GDP and its tax revenue, as well as the
its overall health spending. (NOTE: Medicare GP expenditure is the
amount the Federal government spends on GP Medicare rebates (out of
hospital, non-referred attendances).)




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 was talking specifically about the rate, let’s have a look at that.



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.



So, 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.




We can see that GDP growth is, in fact, slowing:



GDP growth rate change



Just like 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 too:



Medicare expenditure growth rate change



GP Medicare expenditure growth rate change



So, in summary, growth is slowing for all the key measures.



Conclusion



Yes, Medicare is still growing each year, just as our GDP and tax
revenue are — but that growth is slowing down. This is hardly the “rapid and unsustainable rate” our Health Minister has been citing to alarm the public.




This story was originally published at glennmurray.com.au
and has been republished with permission. The graphs were prepared by
Glenn and compiled using official Government figures. For more on the
methodology used and the precise sources, refer to Glenn Murray's
original story here. Also, follow Glenn on Twitter @divinewrite.


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