Budget: The Longer View. The dust has begun to settle on Tuesday’s federal budget – and some key issues and themes are emerging. What are they? This long-read essay is part of a special package intended to answer that question.
People looking into the impact of this year’s federal budget on the health sector may well conclude the government has kept its promise to deliver a “dull and routine” budget.
Relatively few measures were announced (31 compared with 58 last year), many of the proposed (and leaked) changes to the pharmacy sector didn’t happen, and there were no measures announced in response to the Mental Health Commission’s recent reviewof programs and services.
After the controversy surrounding the GP co-payment last year, delivering a boring or “small-target” budget was clearly deliberate. But we shouldn’t gloss over it too quickly. As both the prime minister and health minister have pointed out, this budget is an important part of the government’s overall strategy for more responsible economic management, greater efficiency, and productivity.
It should be interpreted alongside last year’s budget, but also against the myriad funding decisions made throughout the year that never appear in budget papers.
On the same theme
When we look at it in the context of this government’s overall approach to health, it’s clear the same main objectives remain: constraining health-care expenditure by ensuring that Medicare is sustainable, and health services are cost-effective, and reducing duplication and waste.
Although this budget has a very different feel to last year’s, the methods the government has used to achieve its cost constraint objectives remain largely unchanged. While the balance between various such methods has altered a little from last year, the government has sought to find its savings by:
- using price signals (or co-payments) to reduce demand
- tightening up eligibility and funding rules for benefits
- cutting funding for health programs or agencies – or both
- re-negotiating agreements with service providers, including states and territories, non-government providers and the private sector.
The most controversial element of last year’s budget was the proposed A$7 co-payment for GP services; a price signal designed to reduce demand, and therefore the cost of health care. While the attempt to make general practitioners charge co-payments has gone, Medicare rebates (the payments made to general practitioners) remain frozen. And this squeeze on GP incomes will create new pressures to restrict bulk billing to low-income earners.
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And legislation to increase co-payments for prescriptions under the Pharmaceutical Benefits Scheme (PBS) is still before the Senate. Its fate is likely to become clearer once the government announces details of the Sixth Community Pharmacy Agreement, which is currently being negotiated with the Pharmacy Guild of Australia.
There’s no indication yet about the extent of savings it will secure, but leaks about the deal, along with the protracted negotiations, suggest it will go some way towards reaching the speculated savings figure of A$3 billion over the five-year agreement.
Whatever the outcome, co-payments for medicines and a range of other health services and products are likely to remain a staple for governments seeking to curb health-care costs.
The government is also continuing its push to tighten eligibility and funding rules as a way to reduce health-care expenditure. This year, it announced changes to the indexing arrangements for children’s dental care benefits, made eligibility for some childcare benefits contingent on compliance with vaccination schedules, and extended arrangements put in place last year that made it harder for people to qualify for the PBS safety net scheme.
Cuts everywhere
The large-scale, holus bolus cuts to commonwealth-funded programs and agencies in last year’s budget were not evident this year. Instead, the focus turned to the federal health department, with measures announced to find savings by making operational changes and reducing duplication across agencies.
No doubt many of those affected by last year’s cuts were pleased to see the Department of Health taking a closer look at its own internal affairs to secure savings.
The government’s enthusiasm for finding savings by re-negotiating contracts with providers, including the states and territories, non-government organisations (NGOs) and the private sector, has not waned either.