The key to examining whether one side or the other wants to destroy Medicare is the baked-in feature that makes it work: bulk-billing.

It's far more clever than is widely realised, far more than a convenience.

Gough Whitlam and his social security minister, Bill Hayden, faced a problem in the mid-1970s when they swept away the confusing dog's breakfast of schemes that left some people unable to afford visits to the doctor. If they simply paid doctors on behalf of their patients, the doctors would take the money and charge more on top, right up to what the market could bear, which is probably what they were charging in the first place. It's what happens these days with childcare rebates, with subsidies to farmers to cover the cost of fodder in droughts and with first-home buyer grants. The alternative of forbidding doctors to charge more than they were offered would have been attacked as socialised medicine and might have been unconstitutional.

So they came up with an ingenious scheme to encourage doctors to charge no more. Those who chose to accept just 85 per cent of the scheduled fee would get a Rolls-Royce payments service. In return for sacrificing 15 per cent of their reasonable fee and the right to add more on top, they would be paid automatically and wouldn't need to hassle their patients. They wouldn't even need tills. If they wanted more, all of the convenience would be withdrawn. They would have to present their patients with bills setting out the full horror of what they were charged. In those days, before the widespread adoption of credit cards, the patients would have to pay by cash or cheques. And they would have to claim the rebate themselves, quite possibly travelling into town to do it. Doctors who chose this route would be disadvantaged. Over time they would lose customers to those who bulk-billed.

The Coalition twice knocked it back in the Senate, forcing Whitlam to call a double dissolution. When the newly re-elected Senate rejected it again he called Australia's first joint sitting of both houses of parliament to ram it through, fending off a High Court challenge from the Coalition in the process. (Malcolm Turnbull has threatened a second joint sitting later this year, in order to get his Building and Construction Commission legislation through).

The full scheme had been operating for only a month when Whitlam lost his job. While campaigning, the Coalition's Malcolm Fraser promised to maintain it, but in office wound it back. The authors of the best account of what happened, Making Medicare, Anne-Marie Boxall and James Gillespie say "even at the time it was difficult for people to understand the Fraser government's changes".

He abolished bulk-billing for everyone but pensioners and the disadvantaged, made private health insurance compulsory on pain of a tax levy, then made it voluntary, then abolished Labor's scheme altogether.

Bob Hawke won office in 1983 partly on a promise to restore it and his legislation sailed through with scarcely any Coalition opposition. The proportion of services bulk-billed climbed each year as it was designed to, growing from 44 per cent to 76 per cent as (at least in the big cities) surgery after surgery stopped charging in order to remain competitive.

After winning office promising to maintain Medicare, although as a "safety net", John Howard used his first budget to freeze doctors rebates so that they no longer climbed with inflation. At first slowly, and then quickly, they bailed. The bulk-billing rate slid to 72 per cent.

Then, chastened by a 2004 election campaign fought largely over bulk-billing, he switched course. Reversing the decline he had helped start became an absolute priority. Flush with money from the mining boom, his health minister Tony Abbott bought an increase. He boosted the rebate to 100 per cent of the scheduled fee and threw in an extra payment of $2.50 for each bulk-billed concession card holder. It worked. The Coalition left office with the bulk-billing rate approaching 80 per cent.

But its heart might not have been in it. In its final year, as a convenience to patients, it allowed doctors to install Medicare Easyclaim terminals. Patients could pay and claim with a swipe of a card. The built-in inconvenience – a central design feature – had been broken.

And then, on the way out, Labor did what Howard did on the way in. It froze doctors' rebates, initially for a year. The Abbott and Turnbull governments extended the freeze, and then extended it again. It won't come off until 2020, by which time the incomes of doctors who bulk-bill will have fallen 15 per cent compared to other incomes. For now, bulk-billing numbers are at a record high. No one wants to be the first in their street to leave. But as the squeeze bites they'll be forced to ditch bulk-billing, at first in a trickle and then in a flood. It's happened before.

Who's the best friend Medicare ever had? You can look at what they say or look at what they've done. History suggests that, with one important exception, it hasn't been the Coalition.

Peter Martin is economics editor of The Age.

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