Beyond the Medicare Debate: Why Australia Needs Both Sustainability and Equity in Primary Care Reform

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Introduction

The Grattan Institute’s recent policy brief, A better Medicare: How to reform GP funding, makes an important and timely contribution to the debate on primary care reform in Australia. It correctly identifies that simply increasing funding into the current Medicare architecture will not solve the growing challenges facing Australian primary care. The report highlights widening inequities in access, the emergence of “GP deserts”, and the limitations of a predominantly fee-for-service system in managing chronic and complex care.

These themes are not new. More than a decade ago, my AHHA paper on bundled payments argued that Australia’s fee-for-service system was poorly aligned to the needs of people with chronic conditions and that reform was required to support coordination, integration, and value-based care. The paper concluded that bundled payments could act as a bridge toward a more mature value-based primary care system.

More recently, in my blog Primary Care Reform at a Crossroads: Using Polarity Management to Find a Way Forward, I argued that current debates about primary care reform risk becoming unnecessarily polarised, particularly around bulk billing versus practice sustainability, or access versus quality or viability. Rather than framing reform as an “either/or” debate, polarity management offers a “both/and” approach that recognises that enduring reform requires balancing competing but interdependent priorities.

The Grattan paper reinforces many of these earlier insights. However, it also provides an opportunity to broaden the conversation further. The next phase of reform should not simply focus on changing payment mechanisms. It should focus on redesigning the primary care system around value, integration, population need, and long-term sustainability.

What the Grattan Institute Gets Right

The Grattan Institute deserves credit for clearly articulating several critical realities facing Australian primary care.

1. Fee-for-service alone is no longer fit for purpose

The report recognises that a payment system built primarily around episodic consultations is increasingly misaligned with the modern burden of disease, particularly chronic illness, multimorbidity, prevention, and care coordination.

This echoes the central argument made in the bundled payments paper in 2015:

“The funding mechanisms, which are predominantly fee for service, are not aligned to the requirements for effective delivery of chronic care.”

The evidence internationally and locally continues to support this observation. Systems designed around activity volume inevitably struggle to reward:

• continuity of care

• multidisciplinary teamwork

• prevention and early intervention

• patient engagement

• integration across sectors

• population health management

These are precisely the capabilities required for modern primary care.

2. Equity matters

One of the strongest aspects of the Grattan paper is its focus on inequity. The report highlights that current funding arrangements disproportionately advantage wealthier areas while underserved communities continue to experience worsening access.

This is critically important.

The people who benefit most from strong primary care are often those with:

• chronic disease

• social complexity

• mental health challenges

• lower socioeconomic status

• rural or remote disadvantage

• cultural barriers to access

Yet these are often the very populations least well served by the current system.

Importantly, the Grattan report recognises that reform must direct resources according to need, rather than simply increasing funding uniformly across the system.

3. Team-based care is essential

The report’s support for multidisciplinary primary care teams aligns strongly with international evidence and previous Australian reform discussions.

Modern primary care cannot rely solely on individual GPs operating in isolation.

The complexity of contemporary care increasingly requires:

• nurses

• pharmacists

• allied health professionals

• mental health clinicians

• care coordinators

• digital and data-enabled workflows

This reflects the direction advocated in:

• the Grattan Institute’s earlier A new Medicare report (grattan.edu.au)

• Australia’s Primary Health Care 10 Year Plan (health.gov.au)

• international patient-centred medical home models

• value-based healthcare frameworks

The question is no longer whether team-based care is needed. The real question is whether the funding system adequately supports it.

Where the Debate Still Risks Becoming Polarised

While the Grattan report advances the reform conversation, there remains a broader risk in the national debate: reform narratives can become framed as oppositional choices.

Examples include:

• bulk billing versus practice sustainability

• access versus quality

• government funding versus professional autonomy

• fee-for-service versus capitation

• efficiency versus clinician wellbeing

These are not problems that can be permanently “solved” by choosing one side over the other.

They are enduring tensions that must be actively managed.

This is where polarity management becomes highly relevant.

In my earlier blog, I argued that Australian primary care reform sits at the intersection of several important polarities:

Pole 1	Pole 2
Accessibility Standardisation Activity funding Equity Accountability Prevention	Financial sustainability Local flexibility Outcome/value funding Consumer choice Professional autonomy Acute responsiveness

The danger in public policy is that when one pole dominates, the downsides of neglecting the other inevitably emerge.

For example:

• An excessive focus on bulk billing and low-cost access without adequate practice sustainability risks workforce burnout, reduced innovation, and practice closures.

• An excessive focus on financial viability without equity safeguards risks widening disparities in access and outcomes.

• An excessive focus on rigid performance measures can undermine professional trust and intrinsic motivation.

Sustainable reform therefore requires balancing these tensions and not choosing one side at the expense of the other.

Bundled Payments: Still Relevant, But Not Sufficient Alone

The Grattan paper advocates for blended funding models that combine fee-for-service with flexible patient-based funding.

This direction is highly consistent with the conclusions from the bundled payments paper.

Back in 2015, the AHHA paper argued that:

• pure fee-for-service was inadequate for chronic care

• bundled payments could incentivise coordination and integration

• blended funding approaches would likely be necessary

• payment reform should support value rather than volume

• bundled payments could act as a transition toward more mature population-based funding models

Many of those ideas are now entering mainstream policy discussion.

However, we should also recognise an important lesson from international experience: payment reform alone is insufficient.

The evidence consistently shows that successful reform also requires:

• strong data systems

• outcome measurement

• organisational capability

• trust between funders and providers

• co-design with clinicians and communities

• aligned incentives across sectors

• investment in change management

Without these enabling foundations, changing payment structures risks simply redistributing financial pressures without fundamentally improving care.

The Missing Conversation: Integration Across the Whole System

One of the most important lessons from both Australian and international reform efforts is that primary care funding cannot be considered in isolation.

The fragmentation between:

• Commonwealth and state funding

• primary and hospital care

• physical and mental health

• health and social care

• prevention and treatment

continues to undermine outcomes and create inefficiency.

The bundled payments paper highlighted this challenge explicitly:

“No single level of government has all the policy levers to create an integrated health system.”

This remains true today.

If Australia genuinely wants:

• fewer avoidable hospitalisations

• better chronic disease outcomes

• improved patient experience

• greater health equity

• sustainable workforce models

then reform must move beyond Medicare item redesign alone.

We need stronger integration mechanisms across the entire health system. This may include:

• pooled funding models

• regional commissioning approaches

• shared accountability frameworks

• integrated data systems

• outcome-based commissioning

• stronger roles for Primary Health Networks and local partnerships

The Grattan paper opens the door to this conversation but the broader system architecture still requires attention.

A Better Medicare Requires a Better Reform Conversation

Perhaps the most important contribution of the current reform moment is the opportunity to elevate the quality of the conversation itself.

Too often, healthcare reform debates become trapped in:

• short political cycles

• simplistic slogans

• binary framing

• stakeholder protectionism

• isolated funding announcements

But healthcare systems are complex adaptive systems.

Transformational reform requires:

• long-term thinking

• systems thinking

• collaborative leadership

• adaptive implementation

• humility about uncertainty

• willingness to pilot, learn, and refine

Importantly, reform should not be framed as choosing between:

• clinicians and governments

• patients and providers

• sustainability and equity

• public and private sectors

The real challenge is designing systems capable of balancing these interdependent priorities over time. That is the essence of polarity management.

Conclusion

The Grattan Institute’s policy brief is an important contribution to the evolution of Australian primary care reform. It correctly identifies that the current Medicare funding model is no longer sufficient to meet Australia’s future healthcare needs.

Importantly, many of the themes now entering mainstream policy debate: blended funding, team-based care, equity-focused resource allocation, and value-based reform. These ideas have been emerging for many years through Australian and international reform discussions.

The next step is ensuring the reform conversation itself matures.

Australia does not need another cycle of polarised debate between bulk billing and viability, or between activity and capitation.

It needs:

• balanced reform

• integrated thinking

• patient-centred design

• smarter funding models

• better data systems

• collaborative implementation

• and a sustained commitment to value.

The future of primary care will not be built through simplistic either/or solutions.

It will be built through managing the tensions inherent in a complex system while keeping patients, communities, and long-term value at the centre of reform.

References

1. Grattan Institute. A better Medicare: How to reform GP funding. 2026.

2. Dawda P. Bundled payments: Their role in Australian primary health care. AHHA, 2015.

3. Dawda P. Primary Care Reform at a Crossroads: Using Polarity Management to Find a Way Forward. Prestantia Health.

4. Grattan Institute. A new Medicare: Strengthening general practice. 2022.

5. Australian Government. Australia’s Primary Health Care 10 Year Plan 2022–2032.