The Rise and Fall in Out‐of‐Pocket Costs in Australia: An Analysis of the Strengthening Medicare Reforms

After a period of steady decline, out‐of‐pocket (OOP) costs for general practitioner (GP) consultations in Australia began increasing in the mid‐1990s. Following the rising community concerns about the increasing costs, the Australian Government introduced the Strengthening Medicare reforms in 2004 and 2005, which included a targeted incentive for GPs to charge zero OOP costs for consultations provided to children and concession cardholders (older adults and the poor), as well as an increase in the reimbursement for all GP visits. This paper examines the impact of those reforms using longitudinal survey and administrative data from a large national sample of women. The findings suggest that the reforms were effective in reducing OOP costs by an average of $A0.40 per visit. Decreases in OOP costs, however, were not evenly distributed. Those with higher pre‐reform OOP costs had the biggest reductions in OOP costs, as did those with concession cards. However, results also reveal increases in OOP costs for most people without a concession card. The analysis suggests that there has been considerable heterogeneity in GP responses to the reforms, which has led to substantial changes in the fees charged by doctors and, as a result, the OOP costs incurred by different population groups. Copyright © 2016 John Wiley & Sons, Ltd.