The Abbott government has outlined more than $1.8bn in health cuts, including “rationalising and streamlining” grant programs and preventative health research.
Budget papers published on Tuesday said the savings would be redirected to other health initiatives or channelled into the controversial Medical Research Future Fund that was one of the centrepieces of last year’s budget.
Big new spending measures in the health portfolio include $1.58bn for new and amended listings of medicines on the Pharmaceutical Benefits Scheme (PBS).
The budget confirms, however, that the government has lost $2.99bn by scrapping two previously budgeted policies that caused a considerable political backlash: the Medicare co-payment proposal and the cut to rebates for short consultations.
Big new savings measures, totalling $1.8bn, include:
· $963m from rationalising and streamlining health programs, including health portfolio flexible funds, dental workforce programs, preventative health research, and GP super clinics that have not yet started construction
· $252m from amending the prices of certain medicines currently listed on the PBS
· $214m from cuts to previously allocated funding for electronic health records, which the government labelled as “a new direction”
· $145m from removing duplication between health assessments under the Medicare benefits schedule (MBS) and child health assessments already provided by the states and territories
· $126m from changes to indexation under the child dental benefits schedule
· $113m from “smaller government” in the health portfolio
The budget papers said the “smaller government” plans include “rationalising” the Department of Health’s structure, reducing its property footprint, ending departmental work that mirrors the activities of specialist agencies, and absorbing the corporate and legal services of the Therapeutic Goods Administration.
Despite these savings, the government has delayed decisions on long-term health funding cuts until late 2015.
The health minister, Sussan Ley, last month launched three reviews to find efficiencies in MBS services and primary healthcare and to improve compliance.
In a sign that the government had learned some of the political lessons of the ill-fated co-payment, Ley appointed GPs and clinicians at the centre of those reviews.
The budget papers include an allocation of $34m to conduct these reviews, but the government has not locked in a savings target in the budget.
On Tuesday Ley said the government was “laying the foundations” for sensible long-term reform to build a patient-focused, evidence-based health system.
The search for savings in health comes amid an ongoing dispute about long-term cuts to hospital funding to the states and territories. Last year’s budget said the federal government would restrict increases to matching the consumer price index from July 2017, putting considerable strain on state and territory budgets.
Tony Abbott conceded after the Council of Australian Governments (Coag) meeting in Canberra last month that healthcare costs often rose at a faster pace than general inflation.
The prime minister agreed to consider health and education funding issues at a Coag “retreat” with state and territory leaders in July, although he emphasised the need to find efficiencies.
In his budget speech on Tuesday, treasurer Joe Hockey said the government was “building a stronger and more sustainable health system”.
“In this budget, the government continues its commitment to new listings on the Pharmaceutical Benefits Scheme, at a total cost of $1.6bn,” he said.
“To give you one example, around 1,000 people will now benefit each year from subsidised access to better treatments for certain types of melanoma. Some of these treatments have until now, cost up to $131,000 per course of therapy. Now they are accessible for all Australians.”
Ley said the government was listing new drugs on the PBS to help Australians beat breast cancer and blindness. The government would also extend free vaccinations for the shingles virus to older Australians aged 70 to 79 on the national immunisation program, she said.
Hockey insisted the government remained committed to the Medical Research Future Fund, which was expected to distribute $10m to researchers over the next 12 months with such payments set to increase over time.
“Starting this year, and over the next four years, the government will distribute $400m from the fund, to help our best and brightest medical researchers develop the drugs and cures for the future,” he said.
Other health spending includes $10.2m to improve organ and tissue donation and transplantation rates. The money will go into education for hospitals, development of an organ matching system, and continuation of a scheme paying a nine-week minimum wage to employers of people who have taken leave to donate organs.
The government has also earmarked $26.4m to improve immunisation coverage and $20m for a campaign against illicit drugs, particularly ice.
Other savings include $72.5m from the health workforce scholarship program, but the budget papers said the number of scholarships for Aboriginal and Torres Strait Islander people would not be reduced.