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Massive health services shake-up: report

Federal Labor has taken the government to task over reports Medicare, pharmaceutical and aged-care benefits could be delivered by the private sector.

The $50 billion-plus outsourcing would be the first time the private sector has delivered a national service subsidised by the government, The West Australian reported on Tuesday.

"When the Liberals start dabbling with Medicare it means the cost of medicine gets more expensive for sick people," Opposition Leader Bill Shorten told reporters in Canberra.

The West Australian says planning is well advanced, with a view to making it a key feature of Treasurer Scott Morrison's first Budget in May.

The plan involves replacing back-office operations done by bureaucrats.

The private sector would administer claims and payments while overseeing eligibility criteria.

Australia Post, eftpos providers, Telstra and the big banks are showing interest, given they have online payment and supply structures.

Opposition human services spokesman Doug Cameron fears the private health information of Australians could be kept by multinational companies overseas without the required security.

"This is another example of a government desperate to please its big-business backers," he told reporters.

"Big business funds the government's election campaign and that is why they are going to hand over billions of dollars of work to the private sector."

Liberal Democrats senator David Leyonhjelm said it made no difference who delivered benefits as long as they went to needy people.

"If we can trust our banking details to a private-sector institution we can trust recipients of pensions and benefits with private organisations as well," he said.

The potential for leakage and misuse of data was no higher in the private sector than it was in the public sector.

A spokeswoman for the health department said emerging digital technologies provided an opportunity to explore innovation in the current payment systems.

The department had established a task force responsible for seeking a market response for the commercial provision of health and aged-care payment services, similar to Department of Veterans Affairs payments and compliance services payments.

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