Waving placards that read "hands off Medicare" and "stop the cuts", the demonstrators marched from the State Library down Swanston Street to Federation Square, briefly disrupting city traffic.
The rally included many young families and pensioners and heard from doctors, midwives and Opposition health spokeswoman Catherine King.
"Every time the Liberals get into office, they try to destroy Medicare and this is the latest attack from Tony Abbott," Ms King told the crowd.
Changes to Medicare are among the most controversial in the budget and are yet to pass the Senate.
However, a Department of Health phone line is telling callers that the new $7 co-payment will apply from July this year.
Greens Senator Dr Richard Di Natale was also among those to address the crowd.
"Whether you come from Broadmeadows or Brighton, you deserve access to decent health cover," Dr Di Natale said.
Dr Tim Woodruff from the Doctors Reform Society said the Budget was forcing society's most vulnerable to do all the heavy lifting.
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