The Medicare levy is not payable below certain income levels and 'shade-in' ranges also apply. The rationale for the Medicare levy has been much misunderstood. It was never intended to meet all of the Commonwealth's outlays on health which also include pharmaceutical benefits, nursing home subsidies and health services for veterans and their dependents. He further described it as 'simply a much fairer way of funding health cover so that people pay according to their income'. Excludes approximately 1.6 million taxpayers who were exempt from paying the Medicare levy for various reasons.
All figures are estimates only.
Taxation Statistics, 1994-95, Australian Taxation Office. Although the Medicare levy can be described as just another means of raising revenue, the fact that it is earmarked for Medicare tends to give people the impression that they are paying for their health costs. However, the levy raises only a minor portion of the funds the Commonwealth government spends on Medicare. Table 2 below indicates the revenue raised by the Medicare levy for each year since Medicare began in 1984 as well as Medicare outlays and outlays by the Commonwealth government on health. The revenue raised by the Medicare levy is expressed both as a percentage of Medicare outlays and also as a percentage of Commonwealth health outlays.