In 2009, Angela Pratt was chief of staff to the health minister Nicola Roxon when the entire ophthalmological fraternity started running at them with spinning arms.

Roxon had decided to halve the Medicare rebate for cataract surgery, which still reflected the days when the procedure was lengthy and costly, though it became simple and inexpensive. Ophthalmologists were  said to be earning up to $1 million a year.

"Because the technology had improved so dramatically, the ophthalmologists were able to churn through more and more cataract surgery patients in much shorter times – and they were making a lot of money from this," Pratt says.

"We basically decided, and the minister was very strong on this at the time, that we weren't going to quickly back down ... because there was an important principle. Medicare rebates do need to be in line with the service that's being delivered, and where technology means that you can deliver a procedure much more quickly and easily than you used to be able to, there needs to be an adjustment in the rebate to reflect that."

But the ophthalmologists were having none of it. After warning their elderly patients that prices would have to rise accordingly, the government was inundated by correspondence from their constituents and angry rhetoric from the profession. The opposition supported the doctors. After several attempts to change the regulation, the government finally agreed to reduce its proposed $50 million saving to $25 million. And it learned that you take on the medical profession at your peril.

There are differing views as to whether Medicare is becoming unsustainable, but little argument that we should wring maximum value from every dollar.

More people are living longer, the use of expensive technology is increasing, expectations that we should survive previously fatal conditions are growing – and costs are rising accordingly. Private health insurers were this week given the green light to increase their premiums by 6 per cent due to rising expenses.

Over the past decade, the use of pathology and diagnostic imaging services has soared in Australia, costing Medicare $5.25 billion in 2013, far exceeding the $4.51 billion paid for GP visits in the same year.

The cost of pathology services examining all manner of bodily fluids to search for illness has surged 81 per cent over the decade to 2013. There was a 116 per cent increase in Medicare payments for diagnostic imaging, which includes tests such as X-rays, ultrasounds, computer tomography (CT) scans and magnetic resonance imaging (MRI).

While some of this increase has been driven by new and improved tests and rising rates of chronic disease, some experts say it is also symptomatic of one of the most expensive problems in medicine today: over detection, over diagnosis and over treatment of people who would be better off left alone.

Professor of evidence-based medicine at Bond University and a part-time GP, Professor Paul Glasziou, says although it was difficult to quantify how much the evolving problem was costing, it should be an obvious target for governments looking to save money and protect people's health while they are it.

"To me, this trend is probably the biggest threat to the future of medicine," he says.  "With improvements in biomarkers [indicators of disease] and genetic risk factors, everybody is getting labelled with all sorts of things and it's just leading to increased visits, increased anxiety and over-diagnosis."

Over the past 50 years, some over diagnosis has undoubtedly been fuelled by commercial interests such as medical device and pharmaceutical companies looking to create bigger markets, but  Glasziou says wasteful testing also occurred organically in medicine before doctors realised they were doing something superfluous.

A good example of this was the booming diagnosis of people with high cholesterol and prescription of statin drugs to treat it. For many years, Glasziou says doctors followed guidelines recommending six-monthly blood tests for millions of people taking the drugs, to monitor their cholesterol levels. But in 2008, research showed testing was only necessary every three years, or if someone changed their medication regime.

A dramatic jump in Vitamin D tests costing more than $140 million a year has also been questioned in recent years. Despite evidence supporting the test for people at risk of a deficiency, such as those with dark skin or people who see little sunlight, thousands of Australians in their 20s and 30s have been having them done with no clear evidence of benefit.

While these simple blood tests may not cause much harm to people, Glasziou says other questionable interventions, such as X-rays to investigate lower back pain and CT scans of children, were often useless and potentially harmful because they provided doses of radiation that can cause cancer over time. He estimated half of all lower back X-rays done in Australia at the moment would be unnecessary.

"Back X-rays are only appropriate if there is something that makes you suspicious that this person has something other than a musculoskeletal problem," he says.

Some cancer screening tests costing the government hundreds of millions of dollars every year have also become controversial. Glasziou says there is mounting evidence that PSA (prostate specific antigen) tests for men, and to a lesser extent mammography for women and thyroid scans, could be dangerous because of their tendency to "over diagnose" indolent cancers that were never going to cause people trouble.

"For a lot of our common cancers, we've had 50 to 100 per cent increases in incidence but with no change in the mortality. That means we have an over detection problem.

"We get the same sort of thing in musculoskeletal and sports medicine. People are being over detected with imaging that finds all sorts of lesions that don't actually have any real consequence. So in many cases, you'd be best treated with simple physiotherapy or not having imaging done in the first place."

In an effort to turn the trend around, the National Prescribing Service, an independent, non-profit organisation that aims to improve the way health technologies, medicines and tests are used, is preparing to launch a "Choosing Wisely" campaign in April.

The NPS co-ordinated project is asking every specialty group in medicine to provide examples of tests and treatments that are overused and can lead to harm and costs without adding value for patients.

Chief executive of NPS MedicineWise Dr Lynn Weekes hopes the movement will prompt doctors to start scrutinising the evidence for what they are doing and change their practice as a result.

"Sometimes we start using something before we have all the evidence to know how well it is going to work, and that can become entrenched for a whole range of reasons. Then maybe the evidence comes along to challenge that but it doesn't mean practice always changes," Weekes says.

If international experience is anything to go by, the Choosing Wisely campaign will highlight many examples of questionable care for health professionals and patients to reconsider. But history also shows that telling a group of doctors to stop using their expensive new machine or profitable procedure without incentives or disincentives can be useless.

This has been seen in orthopaedic surgery. Research published in the Medical Journal of Australia in 2012 reported that many surgeons continued to perform arthroscopies for osteoarthritis of the knee in tens of thousands of patients despite evidence it was ineffective.

Melbourne rheumatologist and Professor of Clinical Epidemiology at Monash University, Rachelle Buchbinder, says while a slowly growing number of orthopaedic surgeons were dumping the procedure, it had been difficult to shift the convictions of many who had ingrained beliefs it worked.

"Unless there is some way of enforcing change through financial incentives, the practice will probably continue," she says.

One disincentive would be for the Medicare Services Advisory Committee to review the evidence for it and exclude it from the Medicare Benefits Schedule so it does not receive a payment. But Buchbinder says professional interest groups would likely protest, making it a difficult decision for the government.

She says there was great scope for the committee, which reports to the Health Minister, to be more courageous and hard-headed in its approach to the MBS.

"If people want a new item to go on to the MBS, the process is pretty rigorous ... but where the problem remains and hasn't been fully addressed is for existing item numbers," she says.

Tony Abbott had his own taste of warfare with the medical profession last week when he tried to cut the rebate for short GP consultations. The citizens rose up, and the government backed down.

Most health researchers believe the government's focus should be redirected from primary care, which potentially saves more money than it costs through its role in preventative medicine.

Stephen Duckett, a former head of the Commonwealth health department who is now health program director at the Grattan Institute, says targeting primary care for savings has the potential to backfire.

"Primary care is generally seen as an area where you want to increase your expenditure, because it's the front door. You want to get the front door right.

"A GP visit, by the time you add some pathology tests and so on, might cost $50, but a hospital admission costs $5000. If you can prevent one hospital admission for every 100 GP visits, you've saved money."

But Lesley Russell, an adjunct professor at the Menzies Centre for Health Policy at the University of Sydney, says Abbott's problem with the health budget is partly one of his own making, dating to his 2004 decision as health minister in the Howard government to introduce the extended Medicare rebate, which pays 80 per cent of individuals' out of pocket expenses after they reach a threshold amount.

John Deeble, the architect of Medicare, described the policy to the ABC at the time as "the greatest invitation to raise fees that I've ever seen – and it will happen".

It did. Obstetricians and gynaecologists seemingly increased their fees by as much as the market was prepared to bear, with Medicare paying the difference.

"Some of them may have been thinking about their patients but a lot of them were thinking about their own hip pockets," Russell says. "It's a really classic example of what happens when you implement something without any sound policy behind it."

She believes that the Medicare Benefits Schedule should be re-examined to bring the actual cost of delivering treatment into line with rebates. "There was once a fairly reasonable connection between the MBS reimbursement, the rebate and what doctors charged. Especially for specialists, that connection has long since been broken."

This goes both ways. For some doctors the cost of delivering care has gone up, but there is little incentive for them to call for change.

"Why should they waste their breath trying to argue with the government about spending more money on the MBS item when they can just charge whatever they want? Most patients find it difficult to say, 'Wait a minute doctor, I'm not sure I can afford this'."

The doctors have certainly not missed out.

Surgeons have had the highest taxable incomes of any profession for at least 10 years, according to data provided by the Australian Tax Office. Their incomes are also among the fastest growing. The average taxable income for surgeons leapt by $55,000 to more than $350,000 between 2008-09 and 2011-12, the latest period for which comparable data is available.

Anaesthetists, the second highest earners, experienced a similar growth in income to just over $300,000 over the same period. General practitioners' take-home salaries rose by about $12,000 to $139,000.

By comparison, the average taxable income for barristers dropped from $134,000 to $109,000, while mining engineers' incomes rose by $18,000 and nurses incomes remained stable at around $44,000.

But Royal Australasian College of Surgeons president, Dr Michael Grigg, says these figures did not reflect the take-home salaries of the vast majority of surgeons, and that a few rogue practitioners were bringing up the average.

"Some of these outliers ... really do charge outrageous amounts," Grigg says. "It's not only surgeons. It's also anaesthetists and other specialists."

Some surgeons charge 10 times the fee recommended by the Australian Medical Association, which is itself much higher than most surgeons would charge, he says.

"There's a belief among patients that the more they charge the better quality of services they get, and yet we have pretty good evidence that that's not the case and in fact it may even have inverse consequences. The more the surgeon charges, the less responsible they are."

He is calling for more transparency around charging practices and encourages patients who feel they have been overcharged to report their surgeon to the college.

Total out-of-pocket expenses for primary and secondary care increased by 76 per cent over the decade to 2011-12, to $17 billion.

Abbott's former health adviser Terry Barnes, who is currently researching the charging practices of medical specialists, says he encountered one surgeon who charged $16,000 for a procedure that was worth less than $2000 on the Medicare Benefits Schedule.

"It was a very expensive tummy tuck," he says.

He says much of the rise in specialists' earnings over the last decade has not been paid for by Medicare, but by patients.

"Patient out-of-pocket expenses are a very significant part of the problem," he says. "Most specialists try and do the right thing by their patients. Not all specialists dig into their patients' pockets. But those who do, dig very deep indeed."

He is concerned that the focus on the GP co-payment has made it politically impossible for the government to reform Medicare, but thinks private insurers should publish more information about the prices and quality of different specialists, and supports calls for an overhaul of the MBS.

In the late 1990s, the government funded the Relative Value Study, which attempted to parse what different procedures actually cost and whether the amounts charged by different specialists actually reflected their worth. But after three years, it came to nothing.

"They tried to do the same thing in the United Sates and the US effort went nowhere for exactly the same reason, because you had to rob Peter to pay Paul," Russell says. "You had to take away from the overpaids to give to the underpaids."

Meanwhile patients such as Cosi Pupo, who has suffered arthritis for 25 years, are pumping money into tests and specialist consultations. She recently caught a virus, which resulted in two GP visits, two X-rays, a CT scan and two specialist consultations.

"It certainly leaves a big hole in your pocket," she says.