Exempt prison health services from the Medicare exclusion
Section 19(2) of the Health Insurance Act keeps people in custody outside Medicare and the PBS. It was written to prevent double-dipping between governments. Its effect on prisons is that continuity of care breaks at both ends, for the population that uses health care most.
Steps this would change
Rationale
Section 19(2) of the Health Insurance Act 1973 prevents a Medicare benefit being paid for a service rendered by, on behalf of, or under arrangement with a State. Its purpose is to stop the Commonwealth paying twice for something a state already funds, and in most settings that is exactly what it does.
Applied to custody, it means people in prison are outside Medicare and outside the PBS. Their care is delivered by a state prison health service, from a state budget, on separate records.
Three consequences, and the third is what a process database can see.
The excluded population is the one that uses health care most. Rates of mental illness, blood-borne virus, chronic disease and substance dependence in custody are far above the general population.
Continuity breaks at both ends. Entering custody, a person leaves the Medicare system: prescriptions, referrals and specialist waiting list positions do not travel. Leaving, they re-enter it with no current Medicare relationship, no regular prescriber, and records that do not follow.
And the exit is abrupt. On the day of release, medication supply, prescriber and funding source all change at once — for someone who is simultaneously trying to prove their identity and claim a payment within seven days. The telehealth relationship requirement compounds it: a rebated telehealth consultation requires a face-to-face visit with a practice in the previous 12 months, which a person who has been in custody for two years does not have.
Why this is filed as an idea, not a proposal. The fiscal and federal questions are the whole substance and they are outside what this database can adjudicate. An exemption shifts cost from state corrections budgets to the Commonwealth, which is precisely what s 19(2) exists to prevent, and there is no principled line that admits prison health and excludes every other state-delivered service. Whether that line can be drawn is a question for people who understand health financing, not process mapping.
What this project can say is narrower: the continuity break is real, it is caused by an administrative boundary rather than a clinical one, and it lands on the day a person is least able to absorb it.
What is being traded away
This is a cost shift dressed as a continuity reform, and that must be said first. An exemption moves prison health spending from state budgets to the Commonwealth. States would welcome it for that reason, which is not evidence that it is good policy. The subsection exists because the alternative — Commonwealth benefits flowing for services a state has already funded — is a genuine problem, and any exemption invites the next class of service to argue for its own.
It may not improve care at all. Making MBS and PBS available in custody does not by itself produce more clinicians willing to work in prisons, which is the actual constraint on prison health capacity. A funding change that does not change supply changes who pays and nothing else — this database has recorded the same pattern in aged care capital and social housing.
Prison health services are not simply GP clinics behind a wall. They operate under custodial security constraints, with involuntary patients, in a setting where the therapeutic relationship is complicated by the fact that the same state detains and treats. Fee-for-service Medicare funding is designed around a different model, and grafting it on may not fit.
And the population has no constituency. That is a reason this has been argued in the literature since at least 2018 without moving, and a reason to be honest that recording it here changes nothing. This entry is filed as an idea because this project can identify the boundary and cannot cost crossing it.
Precedent
Targeted exemptions from s 19(2) already exist for defined services and settings, so the mechanism for carving out a class of provider is established. The reform argued for in the clinical literature is an exemption for prison health services, not repeal of the subsection.
Sources
- Health Insurance Act 1973 (Cth), s 19(2): Medicare benefit not payable for a service rendered by, on behalf of, or under arrangement with a State
- Published academic argument for exempting prison health services from s 19(2) so that MBS and PBS funded services are available to eligible people in custody
- Department of Health, AskMBS advisory on eligible telehealth practitioner requirements