The Prime Minister yesterday scrapped the unpopular $7 co-payment, which was to have been paid by patients, in favour of a $5 cut to doctors’ rebates for non-concessional patients.

Mr Abbott this morning defended the shift on the unpopular policy as “Australian democracy at work”, as Labor insisted Medicare would be “sustainable, absolutely” if the Coalition continued diverting tax revenue from other areas of government.

Mr Abbott said this morning: “Why should people like Bill Shorten and myself expect to go to the doctor and not pay a cent? Why should we? We earn good money … Why shouldn’t we face a modest $5 co-payment?

“Now this will be an option which is available to doctors. It’s not mandatory, but it is an option. Co-payments, bulk billing, these are all at the doctors’ discretion, they have always been at the doctors’ discretion, they will continue to be at the doctors’ discretion.”

The AMA’s vice-president Stephen Parnis said there had been nowhere near enough consultation with doctors on the government’s co-payment proposals.

“We weren’t consulted before the budget,” Dr Parnis told Sky News.

“A phone call from the minister half an hour before yesterday’s press conference, that’s the sort of consultation we’ve had.”

Mr Abbott noted the AMA had been in negotiations with Health Minister Peter Dutton for months before yesterday’s policy change.

“The AMA is both claiming credit for the changes, and suggesting that there hasn’t been consultation. Well, you can’t have it both ways,” he said.

The government needs the support of five of the eight Senate crossbenchers to protect its regulations from being struck out next February.

Opposition Leader Bill Shorten said Labor was “open to considering” Mr Abbott’s proposal to cut down on “six-minute, sausage machine medicine” by requiring Medicare-funded consultations to last a minimum 10 minutes. However he would not be moved on the co-payment.

Labor health spokeswoman Catherine King said: “Is healthcare important in this country? Yes it is. Who pays for it? We think it is perfectly possible … for the government to continue to contribute alongside our taxpayers as they do both through the Medicare levy, Medicare levy surcharge and of course through general taxation to continue to have a sustainable Medicare system.”

Coalition MPs greeted the changes with relief after hearing increasing complaints from voters on the original upfront fee for bulk-billed GP visits, which applied to all patients ­including pensioners. The new approach will have no impact on eight million patients including pensioners, under-16s, veterans and others with concession cards.