Government wants doctors to pass on $5 cut after co-payment back down

The federal government is encouraging doctors to pass on a $5 cut to the Medicare rebate onto patients after it ditched plans for a $7 GP co-payment.

Health Minister Peter Dutton says it will be up to doctors to decide whether they will charge patients for a consultation to make up for the planned rebate reduction, which the government is replacing its unpopular co-payment proposal with.

The government has defended the new package as an "optional" co-payment which would be at a doctor's discretion to impose or bear the cost themselves.

Asked if as many doctors as possible should pass on the $5 cut, Mr Dutton told the ABC's 7:30 program: "If they choose to do so then that's something that we would encourage."

Mr Dutton qualified the statement by arguing it was senseless to pretend that every Australian could expect free consultations.

"We believe the people on higher incomes ... that we do ask a $5 co-payment, but that we haven't mandated it."

Only pensioners and other concession card holders, children under 16 and those living in aged-care facilities will be exempt from the rebate reductions.

Mr Dutton defended the government's back-down on the GP co-payment, saying it had listened to the people, its backbenchers and crossbench senators on "sensible" proposals.