3
May
2016

Federal budget 2016: health experts react

by Stephen Duckett


Published at The Conversation, Tuesday 3 May

See full article: Federal budget 2016: health experts react

For health care at least, this is a no surprises budget, albeit dressed up with some fancy announcements. The major positives have been pre-announced with confirmation now appearing in the budget papers.

Primary care

The primary care upside, “medical homes”, new arrangements which were said to “revolutionise” care for people with chronic conditions were announced on March 31. These are laudable changes but small; the total cost over the forward estimates is $21.3 million.

In what is surely not a coincidence, the budget announces almost the same amount ($21.2 million) in savings from primary medical care through tightening up grants under the Practice Incentives Program which provides payments to general practice including for asthma and diabetes care.

A recent Grattan Institute report recommended these incentive payments could be used as a funding source for redesigning care for people with chronic conditions but it is probably not wise to reduce the funding before the new scheme has been designed.

Medicare Benefits Schedule

The biggest savings item in health comes from the continued pause on indexation for Medicare rebates, estimated to save $925 million over the four-year forward estimates. This continues the fee freeze until 2019-20. Although there has been no impact on bulk billing rates from the fee freeze so far, whether that will continue into the future depends on inflation, and whether doctors are feeling the squeeze from the freeze over the past few years.

The budget makes no attempt to kill off some zombie policies – initiatives from previous budgets that are stuck in the Senate. The budget thus assumes the tightening up of the Medicare Safety Net, which was supposed to save $64 million in 2016-17 and twice that the next year, is going to proceed.

Hospitals

The most significant apparent budget spend is on public hospitals. The deal reached with the Premiers on April Fool’s day is costed at almost $2.9 billion.

This can be spun two ways: that it is almost a $3 billion injection into the public hospital system or that it is still an effective cut on what was promised by both Labor and Liberal prior to the 2013 election.

The table shows the impact of the 2014-15 budget (big savings) and the partial restoration in the 2016-17 budget.

Dental care

Another pre-budget announcement was a new Child and Adult Public Dental Scheme. This provides additional funding to states for dental care for both adults and children. The details are still not clear but it appears states will be asked to contribute to funding this policy. The Commonwealth funding comes from chopping the Child Dental Benefits Scheme so in fact this is a savings initiative over the forward estimates to the tune of $17 million.

Pharmaceuticals

New listings on the Pharmaceutical Benefits Scheme are scheduled to cost $57.6 million over the forward estimates.

Another zombie policy, increasing co-payments for the Pharmaceutical Benefits Scheme is still retained.

Screening and public health

The budget also makes provision to rationalise administration of cancer screening registers, combining nine separate cancer registers into a single National Cancer Screening Register and providing for ongoing funding of the registers. The estimated cost is about $30 million over the forward estimates.

Overview

This is a steady-as-she goes budget, mostly just confirming pre-announcements with only the expected unpleasant decisions, such as the continuation of the Medicare rebate freeze.

It is to some extent a pea-and-thimble budget, most obviously seen in the primary care switcheroo where the positives about new funding to improve care for people with chronic conditions through “medical homes” is offset, almost to the dollar, by savings in other funding for care of people with chronic conditions.

The pea and thimble also makes an appearance in public hospital funding with the 2016 positives hoping to erase the 2014 negatives from people’s minds.

The Conversation