Taxpayers are increasingly subsiding 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” (what the government deems the appropriate amount for the service) and the Medicare rebate (85-100% of the schedule fee). It means that once a patient’s yearly gap costs reach $576 (the threshold set for 2025), Medicare pays 100% of the schedule fee for each additional service that year.
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 or health professional actually charges. Once a patient pays $2,615.50 (the threshold for 2025) in out-of-pocket costs in a year, Medicare will pay for up to 80% of future out-of-pocket costs for the remainder of that year.
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.
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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 who can afford to repeatedly see them. In addition, 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 to curb fee inflation 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, issued a consultation paper for feedback 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.
After Guardian Australia’s series highlighting Australians’ struggles to access specialist care, former chief medical officer Prof Brendan Murphy said while safety nets had provided some relief for patients, the extended safety net had proven “… inflationary and required additional caps to limit further fee escalation”.
High fees have left patients unable to afford specialist consultations and pushed them into the “overcrowded public hospital system”, his comments published in the Medical Journal of Australia said.
“This, sadly, is a failure of one of the original aims of Medicare, that even uninsured people could access private outpatient care with an affordable copayment,” he said in the article.
He said high specialist incomes, and the fees that generate them, have created challenges and that the disparity between the income of GP specialists and most other non-GP specialists is now “unjustifiable”.
While some have proposed redirecting extended safety net savings from caps towards higher specialists rebates, Murphy argued any new Medicare investment should focus on primary care and that “additional investment in specialists is harder to justify when incomes are high”.
“Given the community and government angst about this issue, specialists would do well to reflect on the impact of their fees on patients and potentially consider a minor trade‐off in income,” he said.
Read more:
$1,000 for a one-hour appointment: why are fees for Australia’s specialist doctors skyrocketing?
What are my rights when I need to see a specialist doctor – and what if I can’t afford the fee?
Opinion: Specialist doctor fees are far too high. Australia’s next national health funding deal is a chance to change that – Peter Breadon
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• This article was amended on 2 December 2025 to accurately describe the original Medicare safety net. An earlier version said that the Medicare rebate was 75%, when it should have said 85-100% of the schedule fee.
