Medicare Guarantee Fund
The Government has proposed the establishment of a Medicare Guarantee Fund (MGF) as a special account to be used to cover the costs of the Medicare Benefits Schedule (MBS) and Pharmaceutical Benefits Scheme (PBS). The MGF will be funded by raising revenue from the Medicare levy (excluding amounts to fund the National Disability Insurance Scheme), with any balance to be funded by a portion of personal income tax receipts. The establishment of the special account will be effective from 1 July 2017.
The MGF’s main objective is to guarantee the Government’s commitment to the MBS and PBS into the future. The introduction of the MGF is to ensure that all Australians can be certain they will continue to have access to the essential healthcare services they need.
The forecasted annual contributions to the MGF will be updated at every Budget update to be in line with the forecast of the MBS and PBS expenditure over the forward estimates. The MGF will be used solely for funding the MBS and PBS.
It has been the case for many years that the Medicare Levy does not cover the costs of the MBS and PBS. While badged as a ‘guarantee fund’ there is no way in which the levy will ever cover the costs of the MBS and PBS. As such, this is an accounting public relations exercise and nothing more.