To help pay for the National Disability Insurance Scheme (NDIS) the government will scrap the carbon tax compensation to new recipients of government welfare benefits. This will save the government A$1.4 billion over five years.
The government is putting A$2.1 billion towards the NDIS in this year’s budget. This money will also this come from savings by cutting the NDIS advertising campaign, ceasing to back-date Carer Allowance claims and the reviewing of people’s eligibility for the Disability Support Pension.
There’s A$1.7 billion in funding for the Child and Adult Public Dental Scheme leaked before the budget and the agreement made at the Council of Australian Governments for A$2.9 billion funding for public hospitals, with reforms to reduce hospital admissions, improve patient safety and boost quality of services.
Read more: PolicyCheck: the Coalition’s dental health care policy
This budget also marks the start of the Healthier Medicare package announced earlier this year. This includes funding of A$21.3 million for a trial of “Health Care Homes”, designed for people with chronic diseases and complex conditions. The trial will go for two years and will aim to keep these people out of hospitals. The package will also create bundled payments and incentives for GPs treating the chronically ill.
Read more about Health Care Homes trial
The Healthier Medicare package also aims to save A$66.2 million over four years by targeting providers who make Medicare claims that are inconsistent with existing rules. The government will also implement the recommendations of the Medicare Benefits Schedule (MBS) Review to remove or amend clinically obsolete items from the MBS.
Read more on the Medicare Benefit Schedule Review
New and amended listings on the Pharmaceutical Benefits Scheme (PBS) and the Repatriation Pharmaceutical Benefits Scheme will receive A$45.2 million in funding over five years, these include for new treatments for hepatitis C, asthma and cancer.
The 2016 budget health facts sheets are available here.
Public hospitals and private health insurance
Mike Woods, Professor of Health Economics, University of Technology Sydney
As expected, the Commonwealth’s contribution to public hospital funding reflects the agreement negotiated at the April COAG meeting that restored A$2.9 billion in federal funding over three years. The states will receive an estimated A$17.9 billion in 2016-17. Expenditure is then expected to increase by 9.9% in real terms over the period 2016-17 to 2019-20, with growth in total Commonwealth funding capped at 6.5% a year from 2017-18 for the following three years.
This is very much a stop-gap measure to get the federal government through the upcoming election. The underlying problem for the states is the escalating cost of delivering public hospital care. The issue may have been deferred, but it hasn’t gone away. Health is the single largest expenditure item in all of their budgets. And expenditure has been growing at around 5% in real terms over the past decade. This isn’t sustainable.
Over the next three years the incoming federal government, of whatever political persuasion, will need to sit down with the states and territories and agree on reforms to reduce the rate of growth of health expenditure.
Private insurance rebates are budgeted to cost A$6.5 billion in 2016-17. In October last year, the federal minister for health launched a series of national consultations focused on the consumer value of private health insurance and the long-term sustainability of current arrangements. A Department of Health online survey elicited over 40,000 responses. In something of an understatement, the minister reported that, “… consumers are frustrated with their Private Health.”
The immediate response was to set up a working party on the cost of prostheses. The budget is also funding a private health sector committee to provide advice on private health insurance reforms – an issue for sometime after the election. In the meantime, the government is making more savings by continuing to “pause” the indexation of the private health insurance income tiers.
Primary care, Primary Health Networks, mental health
Jim Gillespie, Deputy Director, Menzies Centre for Health Policy and Associate Professor in Health Policy, University of Sydney
The budget gives a few more details for changes to primary care that had already been announced.
The main innovation is a trial of “Health Care Homes”, a tiny budgetary item ($21.3 million) which could have major implications for the way general practitioners are paid, and how they deliver care to the growing population of chronically ill.
The trial will be run in seven Primary Health Networks. GP practices choosing to join will move away from fee for service: payment for each individual service provided. Instead, they will get a “bundled” sum to cover all the services, medical and allied health, that the patient needs.
This trial was announced in March, following the report of the Primary Health Care Advisory Group. It is a significant attempt to move beyond the fee-for-service system that has made it difficult for Australian primary care to adapt to the new burdens of chronic illness.
The budget’s other major item affecting general practitioners is a continuation of the freeze on increases in Medicare Benefits Schedule (MBS) item payments started by the Gillard government. The savings are significant – more than A$900 million over the next two years. It will also put pressure on the fee-for-service model.
The Health Care Home, with its experiments in alternative modes of payment, will look more attractive to GPs squeezed by the MBS freeze.
Aged care, disability
Helen Dickinson, Associate Professor, Public Governance, University of Melbourne
The budget will be of little comfort to those in receipt of disability or aged care services. Both are areas targeted for making unrealistic projected savings and the identified reinvestment areas are unlikely to deliver the magnitude of changes needed in these service areas.
An NDIS savings fund will be established to help fund the scheme, with initial deposits being made through projected savings of A$2.1 billion from the welfare budget. This will be achieved by preventing new recipients of government welfare payments from receiving carbon tax compensation, worth A$14 per fortnight for pensioners.
Those in receipt of the Disability Support Pension will face their eligibility reviewed in order to assess their capacity to work that is expected to save A$62 million. The UK’s recent experience in these processes has shown these to be highly unfair, with individuals having their welfare payments suspended when they are far from being able to work. Such moves rarely save the levels of money intended and sanction individuals with disabilities, doing little to move them closer to the workforce.
In aged care, A$1.2 billion will be saved through the “better use of funding”. Some of the A$249 million reinvestments will be welcomed, including A$102 million to improve services for those living in rural and remote areas, A$10 million for unannounced compliance site visits of aged care providers and A$136 million for My Aged Care, a contact point for older people seeking to explore their aged care options.
Yet it is difficult to see how these relatively small investments will meet the intended aims of “preventing a spending blowout” in coming years and are likely to shift increasing costs of aged care to future governments.
Helen Dickinson receives funding from Federal Department of Health.
Jim Gillespie has received funding from the NHMRC and from WentWest/Western Sydney PHN/ New Horizons Inner West Sydney Partners in recovery.
Michael Woods does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.