Objective: To use patient-level data, clinical information and linked Medicare records to assess the distribution of benefits (rebates) across income groups, including benefits relating to chronic conditions such as the Chronic Disease Dental Scheme (CDDS). Design, setting and participants: Nationally representative, cluster-stratified survey (the Australian Hypertension and Absolute Risk Study) involving 322 general practitioners who each collected clinical data on 15–20 patients aged ≥55 years who presented between 1 April 2008 and 30 June 2008 and who consented to have their information linked with Medicare administrative records over 12 months. Main outcome measures: Distribution of total out-of-hospital Medicare expenditure quantified using concentration indices and determinants of use calculated by odds ratios. Results: There were 2862 patients in the study. After controlling for need, the concentration index for overall funding was slightly progressive (pro-poor) at - 0.008 (95% CI, - 0.009 to - 0.008). Medicare expenditure on chronic carerelated services consistently contributed to progressivity of the overall scheme, particularly services under the CDDS with a need-adjusted concentration index of - 0.205 (95% CI, - 0.208 to - 0.201). Uptake of chronic care items varied by locality and comorbid conditions (there was greater uptake by patients with one or more comorbid conditions). Conclusions: Chronic care items, particularly dental items, have primarily been used by individuals from lower income households. Uptake of chronic care items contributes to the overall progressivity of Medicare.