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Tony Abbott faced a backbench revolt on his plan to slash the Medicare rebate for short doctors' visits with former cabinet minister Mal Brough prepared to go public and denounce the idea, prompting the Prime Minister's backdown.
Queensland Premier Campbell Newman, who is in the middle of an election campaign, also wanted the issue killed, fearing a repeat of the Victorian election where federal issues dragged down the vote and the state Coalition government was dumped after one term.
Former AMA president and Liberal candidate Bill Glasson intervened and in a phone call with the Prime Minister urged him to dump the cuts, which were due to take effect from Monday.
New Health Minister Sussan Ley on Friday warned the government still intended to introduce a "price signal" for doctor visits for those who could afford to contribute, but vowed to do a better job consulting doctors before announcing changes.
"Elements of the backbench" had "gone spare" and felt "angry and let down" by the government's mishandling of the policy according to one Liberal, while Queensland backbencher Bert van Manen has gone public in calling on the leadership to fix its communication problems.
On Wednesday morning Mr Abbott had publicly defended the $20 cut to the Medicare rebate for 10-minute appointments as a "price signal" and "economic reform". But backbenchers, especially in Queensland, threatened to revolt, prompting the Prime Minister to take soundings on Wednesday afternoon.
Dr Glasson urged Mr Abbott to drop the rebate cuts and sit down with doctors and work on a more holistic approach to Medicare. Mr Brough is understood to have been preparing to criticise the policy publicly.
Mr Abbott decided that evening to dump the idea during a phone call with new Health Minister Sussan Ley. Senior ministers were told there would be a phone hook-up of the leadership group on Thursday morning, and at the meeting the decision to abandon the policy was rubber stamped. Ms Ley cut short her holiday to make the announcement on Thursday afternoon.
On Friday she said the increase in the number of people seeing the doctor for free through bulk billing "has been extraordinary" and said people on higher incomes, including herself, should not have their appointments "heavily subsidised".
About 83 per cent of GP visits were bulk-billed in the last financial year, while the rate was as low as 67 per cent when Tony Abbott was health minister in the Howard government.
"Most people in their heart of hearts would admit that it's also OK for them to pay a little bit more than a concessional patient," the Minister said.
Opposition Leader Bill Shorten denied that the cost of Medicare is unsustainable and said the government was intent on "wrecking" bulk billing. "Australia now knows ... that if you want to protect Medicare you need to change the government of Australia," he said in Queensland.
Mr Shorten also denied that the level of bulk-billing was too high.
"Most Australians live from pay cheque to pay cheque, fortnight to fortnight, and I'm not going to start making their life harder by getting rid of bulk-billing. The Abbott government has an ideological bent against bulk-billing."
The rebate cuts would have saved the government $1.3 billion but sparked a furious backlash from doctors, in the community and in the Senate, were it would have been vetoed when Parliament resumed in February.
Queensland Liberal Bert van Manen said he supports asking wealthier Australians to contribute to the costs of doctor visits and making bulk-billing available for the vulnerable but was one of the backbenchers pushing for the idea to be dropped.
He said the government needed to open up discussions with the community and argue the case for change, as opposed to surprising voters with policies.
"There's an old saying 'Before you harvest a field, you need to sow the seeds'. We're failing to sow the seeds," he told Fairfax Media.
"We need to have discussions with the community about why we should be mounting these changes. It's about communicating the message and that's not being done," he said.
Another Liberal said the debacle served as a final warning shot to the Prime Minister that this was his last chance to reform his office.
