Medicare, pharmaceutical and aged-care benefits would be delivered by the private sector under an extraordinary transformation of health services being secretly considered by the Federal Government.
The West Australian has learnt that planning for the ambitious but politically risky outsourcing of government payments is well-advanced, with a view to making it a key feature of Treasurer Scott Morrison’s first Budget in May.
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To be put to the market a few weeks later, the $50 billion-plus outsourcing would be the first time the private sector has delivered a national service subsidised by the government.
It would replace back-office operations done by bureaucrats.
They would administer claims and payments while overseeing eligibility criteria, meaning they would require access to people’s sensitive private information.
Doctors would also have to open their books to the provider, , which would be subject to regulatory oversight.
The payment system task force run by bureaucrat John Cahill is believed to have proposed a “proof of concept” trial next year. It would require companies being selected this year.
Australia Post, eftpos providers, Telstra and the big banks are showing interest given they have online payment and supply structures.
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Foreign multinationals may also bid including Serco, Fuji-Xerox and Accenture. When former treasurer Joe Hockey flagged outsourcing Medicare payments in 2014, the Community and Public Sector Union warned of thousands of job losses. The Australian Medical Association has also spoken against the privatisation of Medicare and the Pharmaceutical Benefits Scheme.
Within a fortnight, accountants Ernst & Young, KPMG, PricewaterhouseCoopers, McKinsey, Deloitte and Boston Consulting will lodge bids to design the business case for the potential privatisation.
Though it would come with a short-term cost — possibly billions of dollars — to rebuild data and payment systems, the Government believes it would recoup much more later.
The savings would rely on the private sector being faster and more efficient, especially in high-tech platforms with which the government’s ageing computer system cannot compete.
Prime Minister Malcolm Turnbull, who is yet to sign off on the plan, would have to deal with fallout from any move to privatise the iconic services.
Opposition Leader Bill Shorten said the coalition was “anti-Medicare” and should take the plan to the election.
"The Liberals are always running around attacking Medicare. They did it in the 2014 budget, they did it in the 2015 budget," Mr Shorten said.
"And it looks like Malcolm Turnbull is no different to Tony Abbott. They just want to flog off Medicare and privatise services.
"My message to Malcolm Turnbull and his Liberals is 'hands off Medicare'. The Australian people love their Medicare and you have no right to trash it."
The Health Department 18 months ago asked for expressions of interest to deliver Medicare, PBS and Veterans Affairs payments. The three programs will dispense a combined $39 billion in 2016-17 — $22 billion in Medicare benefits and $10.5 billion in PBS subsidies.
Total payments for aged care, including home and community care programs, will be $15.8 billion this financial year.
To prepare for baby boomers, the Government wants to deregulate aged care with packages bought from brokers. Over time, Australians face paying more towards their aged care under a means-tested, user-pays system.
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An industry insider said Australia Post, one of seven remaining government businesses, would be worth a lot more when privatised if it had a multi-billion-dollar health contract.
A Health Department spokeswoman said Mr Cahill’s task force had asked an official panel of consulting firms to provide “specialist commercial, technical and other resources not readily available within the department and to operate for a concentrated period”.
"The RFQ (request for quotation) does not pre-empt any decisions by Government to deliver Medicare, aged care or other payments services in a particular way,” the spokeswoman said.
“The Government has made no decisions about this and is simply seeking additional capability to the department to consider options and progress market testing work that was publicly undertaken in late 2014.
“Emerging digital technologies provide opportunity to explore for innovation in the current payment systems to improve the consumer experience.
“The Department of Health has established a Digital Payments Services Taskforce responsible for seeking a market response for the commercial provision of health and aged care payment services, similar to Department of Veterans' Affairs payments and compliance services payments.
“Health will collaborate with the Department of Human Services which currently provides the payment services and with DVA in progressing this important work to support the consumer focussed approach.”
