The Illawarra would be among the regions hardest hit by a proposal to charge patients who presented at emergency departments with minor ailments, Throsby MP Stephen Jones said on Thursday.
The federal government is reportedly considering a plan to deter people from visiting EDs by charging them if they show up with minor complaints such as stubbed toes or common colds.
The proposal would come as part of the possible introduction of a $6 Medicare co-payment, which many believe would lead to hospital overcrowding.
However, Mr Jones said such a "patient penalty" or "hospital tax" would deter sick people from seeking medical help.
"This idea is madness," he said.
"What's worse is the burden falls most heavily on regional Australia. The reason that people from regional towns turn up to emergency wards is because they can't afford - or get access to - a GP, a nurse, an allied health professional, particularly after hours or on weekends."
Mr Jones said an Australian Bureau of Health Information report released on Thursday revealed that 15 per cent of patients in NSW already put off GP visits, filling prescriptions and getting basic medical tests because of out-of-pocket expenses.
"The real danger is that people who are genuinely sick won't see a doctor, won't go to hospital and won't get the healthcare they need because they think they can't afford it," he said.
"If these sorts of proposals get the green light, we will quickly be moving towards the US health system where you only get the best healthcare that you can afford."
Mr Jones said hospitals were set up to treat patients, not to be "debt collection agencies".
"I don't know anyone who likes the idea of sitting in an emergency ward for three or four hours. We do it because we're genuinely worried about our health or our child's health," he said.
"There are other more effective ways of dealing with the genuine hypochondriacs, and nurses and triage staff in emergency departments have been doing this for years."
However, Health Minister Peter Dutton said the federal opposition was preying on vulnerable Australians by "spreading rumours and untruths".
"Labor knows full well the administration of hospital emergency departments is a matter for the states and territories," Mr Dutton said. "We will not engage in unhelpful speculation on the budget."