The Medicare Safety Net (MSN) was introduced in March 2004 to provide financial relief for those who incur high out-of-pocket costs from medical services. The policy has the potential to improve equity. This study examines: (i) how the health and income profiles of small areas influence MSN expenditure; and (ii) the distribution of expenditure by medical service type. The results indicate that MSN expenditure is positively related to income and that patients who use private obstetricians and assisted reproductive services are the greatest beneficiaries. The MSN has possibly created greater inequities in Australia's health-care financing arrangements.