Bulk Billing Bulk billing Links to an external site. is a payment option under the Medicare system. It can cover a prescribed range of health services.  Under the system, patients don’t have to pay for the medical service from a health professional, usually a General Practitioner (GP). Instead, the GP bills the government and accept the Medicare benefit as full payment for the service. Not all health professionals bulk bill and the rate of professional doing so has decreased over time. The two Australian major parties, Labor and the Coalition, have pledged to raise GP bulk billing Links to an external site. . (*) Let's try to model the market for GP visits using the perfect competition framework of demand and supply. In the figures below, the horizontal axis represents the quantity of GP visits, while the vertical axis represents price, along with the corresponding demand and supply curves. While this model may not be the most suitable for analyzing healthcare markets, assume for now that its core assumptions hold. One justification for government intervention in the healthcare market is the presence of externalities. In this model, the externality would take the form of a positive externality in consumption . In that case, the top-right plot in Figure 1 would be the most appropriate to justify a government subsidy. For the following questions, please refer to the Figure 2. The meaning of the dashed lines is the same as in the earlier figure, where you were asked to pick the most appropriate type of externality. According to the model, and given your answer to the earlier question, the socially optimal quantity of GP visits is Qc whereas in the absence of any government intervention the equilibrium market quantity is Qb . To achieve the socially optimal quantity the government can provide a [ Select ] tax subsidy none of the options equal to [ Select ] Pa Pb Pc none of the options such that the price received by GPs would be [ Select ] Pa Pb Pc none of the options , and the price paid by patients would be [ Select ] Pa Pb Pc none of the options . The model suggests that for GP visits to be free at the point of use, as in bulk-billing, the unit subsidy should be [ Select ] as large as larger than smaller than the subsidy needed to achieve the socially optimal quantity. It is important to note that the criterion for achieving the socially optimal allocation is based [ Select ] only on efficiency only on equity on both efficiency and equity . Now, let's briefly assess whether the perfect competition model of demand and supply is appropriate for this context. The key assumptions of the model are [ Select ] only one seller and many buyers a handful of sellers and many buyers many sellers and many buyers and [ Select ] differentiated products across sellers identical products across sellers . In the GP market, [ Select ] only the first assumption is only the second assumption is both assumptions are very reasonable, which may explain why, according to the articles, GPs charge a different price.