After the drama of last year’s ‘slash and burn’ Budget, the Abbott Government’s second Federal Budget was designed to underwhelm the health sector and in this respect at least it delivered.  In fact, the lack of organisation at the Department of Health lock-up appeared to bother some groups more than the $2 billion of cuts to the health portfolio announced by the Treasurer last night.

This is partly because there were few surprises left for the Treasurer to reveal last night, with most of the measures either announced or leaked prior to Budget day.  In fact, health scored barely a mention in the Treasurer’s speech, with only a brief outline of new funding for PBS drugs, coming after a long list of announcements on small business, farmers and regional communities, families and childcare, retirees, job seekers and Northern Australia.

This was no accident.  With the Government still scarred from the damage it received last year through opposition to proposed Budget measures, including the proposed GP co-payment, it was in no mood for risk-taking.

The biggest surprise of the night was the lack of any announcement on structural changes to the Pharmaceutical Benefits Scheme (PBS), as had been reported in the media.  Only the new funding for new medicines was announced, despite media reports of large savings being delivered via changes to pricing arrangements.  In fact, the three biggest areas of spending in the health portfolio (public hospitals, Medicare and the PBS) were effectively been kept out of this Budget by being deferred to other negotiation and review processes.

Public hospital funding is to be discussed at a “retreat” hosted by the Prime Minister for State/Territory leaders in July. Medicare funding is subject to an expert review, in which the Government is working closely with the “medical profession and the AMA” via a “clinician-led taskforce” and Medicare funding for primary health care will be reviewed by a new Primary Health Care Advisory Group, which will include “primary health care professionals, health economists and health academics”. The mooted changes to pricing arrangements under the PBS are now the subject of negotiations between the pharmaceutical industry and Government “on reforms to pricing and remuneration across the supply chain to underpin the future sustainability of the PBS.”

None of these processes are transparent and none explicitly invite the consumer and community input necessary to combat the vested interest groups involved.  Joe Hockey may have started his Budget Speech by claiming he was “speaking directly to you, the people of Australia” but it seems that when the big ticket items of health spending are on the agenda, the people of Australia are ignored in favour of a closed door dialogue with the pharmaceutical industry and the medical profession.

Without addressing these three main areas of expenditure, the Budget cannot be seen as a comprehensive account of health spending.  However, it did provide some additional funding in areas that have been welcomed by the sector.

The Medical Research Future Fund, which was first announced in last year’s budget, has been reinstated despite the fact that its main funding source – the GP co-payment – has been scrapped. It will be established by August and will distribute $10 million from the fund in 2015-16 and more than $400 million to projects over the next four years. Other new spending initiatives include a $26 million package to support immunisation, $485 million funding to promote electronic health records (via an ‘opt-out’ system) and $963 million for ‘rationalising and streaming’ health programs.

There were also cuts made across the portfolio spread out across a large number of programmes (death by 1000 cuts according to Michael Moore and the Public Health Association).  These include programs focussed on rural, regional and remote Australia, Indigenous health, communicable diseases, substance use treatment services, health assessments for children; the Child Dental Benefits Schedule and scholarship programs.  The Department of Health will also have its budget reduced and may have to lose more staff, further reducing its capacity to support existing programs and initiatives.

Some non-health initiatives that may impact upon the health sectors were also announced, including small business tax incentives, which could benefit GPs, private allied health providers and other health services.  The restrictions on salary packaging may negatively impact on the non-for-profit and charitable sectors which rely on salary packaging provisions to compete with the private sector for staff.  

Overall, this Budget has managed to escape the political and policy disasters of last year but in avoiding the need for major changes in the big spending areas of Medicare, public hospitals and the PBS, the Government has merely deferred the need to make some tough decisions and take on the powerful interest groups whose dominance of the health system so often obstructs sensible and consumer-focused reforms. 

Detailed responses from the health sector to the Budget can be found in Croakey’s Budget Wrap

A summary of health Budget measures is provided below– more detail available at www.budget.gov.au

Accelerating Growth in Organ and Tissue Donation for Transplantation

The Government will provide $10.2 million over two years from 2015‑16 to improve organ and tissue donation and transplantation rates.

Better Targeted Rural Financial Incentives for Doctors

The Government will reprioritise existing medical training programmes to better target assistance to rural areas with the highest level of health workforce need. Funding from the More Doctors for Outer Metropolitan Areas Relocation Incentive Grant and the Higher Education Contribution Scheme (HECS) Reimbursement Scheme will be redirected to the General Practice Rural Incentives Programme (GPRIP). The expanded GPRIP will be redesigned with a refined geographical classification system to increase the incentives for General Practitioners in smaller rural communities.

Bone Marrow Transplant and International Searches Programmes — consolidation

The Government will consolidate the Bone Marrow Transplant and the International Searches Programmes into a new streamlined Haematopoietic Progenitor Cells Programme. The cost of this measure will be met from within the existing resources of the Department of Health.

Ceasing the Alternative Arrangement Transfer to Pharmaceutical Benefits Programme — removal of anomaly

The Government will cease the Alternative Arrangement Transfer to Pharmaceutical Benefits Programme which funds Cohealth Ltd (Cohealth) to provide Pharmaceutical Benefits Scheme (PBS) medicines and pharmacy services to their clients in inner Melbourne.

Child Dental Benefits Schedule — consistent indexation

The Government will achieve savings of $125.6 million over four years from 2015‑16 by broadly aligning indexation arrangements for both the benefits payable and the benefits cap under the Child Dental Benefits Schedule with indexation arrangements for other health benefits programmes.

Developing Northern Australia — positioning the north as a leader in tropical health

The Government will provide $15.3 million over four years to invest in research into exotic disease threats to Australia and the region. The Government will also provide $8.5 million over four years to establish an Australian Tropical Medicine Commercialisation grants programme to support Australian medical researchers to commercialise therapeutics and diagnostics in tropical medicine and to attract foreign investment.

Improving Immunisation Coverage Rates

The Government will provide $26.4 million over four years for a range of activities designed to improve immunisation coverage and further reduce the incidence of vaccine preventable diseases in the Australian community.  Immunisation coverage rates will be increased by broadening immunisation data collection to record all school‑based adolescent vaccinations; introducing better targeted performance benchmarks for states and territories; providing incentives to health providers, including to General Practitioners, to provide catch up vaccinations to children who are overdue for immunisation; and providing a community awareness campaign to increase awareness of the National Immunisation Programme and dispel myths about immunisation.

Junior Medical Officer Programme — interagency transfer from the Department of Veterans’ Affairs

The Government will transfer responsibility for the Junior Medical Officer Programme from the Department of Veterans’ Affairs to the Department of Health, to align responsibility for health workforce programmes within a single portfolio.

Medicare Benefits Schedule — changes to GP rebates — reversal

The Government will not proceed with measures originally announced in the Mid‑Year Economic and Fiscal Outlook 2014‑15 to redefine the time requirements for Level A and B GP consultation items and to reduce rebates by $5 for common GP consultations and after hours services to non‑concessional patients aged 16 and over.

Medicare Benefits Schedule — health assessment items — modification

The Government will achieve savings of $144.6 million over four years by removing the current duplication between health assessments under the Medicare Benefits Schedule and the child health assessments already provided by the states and territories.

Medicare Benefits Schedule — new and amended listings

The Government will amend the Medicare Benefits Schedule (MBS) and Veterans’ Benefits for new and amended items listed since the Mid‑Year Economic and Fiscal Outlook 2014‑15, at a net cost of $39.8 million over four years.

The amendments to the MBS include:

  • introducing rebates for second expert opinions for diagnoses related to the testing of bone marrow specimens, tissue pathology and cytopathology;
  • new items for the treatment of early stage breast cancer using targeted intraoperative radiotherapy;
  • new items to enable routine monitoring of implanted cardiac devices to be provided remotely; and
  • extending eligibility for the use of telehealth services to optometrists, to support the use of video consultations with specialist ophthalmologists.

Medicare Benefits Schedule — review and reform

The Government will provide $34.3 million over two years from 2015‑16 to continue the Medical Services Advisory Committee’s activities and deliver an expanded process of MBS Review overseen by a clinician led Medicare Benefits Schedule Review Taskforce.  The Government will continue to consult with stakeholders on primary care through the establishment of a Primary Health Care Advisory Group, which will include primary health care professionals, health economists and health academics.

My Health Record — a new direction for electronic health records in Australia

The Government will provide $485.1 million over four years to continue the operation of the eHealth system, make key system and governance improvements and implement trials of opt‑out arrangements.  Personally Controlled Electronic Health Records (PCEHR) will be renamed as My Health Records and the Government will provide national coordination for eHealth by transitioning governance arrangements from the National E‑Health Transition Authority to the new Australian Commission for eHealth. Trials will be held in at least two regions in 2016 and will assess public and provider responses to revised participation arrangements, including to an opt‑out model.  The Department of Finance will undertake a Gateway review of the My Health Record system and will provide independent assurance to improve delivery and implementation.

National Cervical Screening Programme — reform

The Government will reform the National Cervical Screening Programme (NCSP), in line with recommendations from the Medical Services Advisory Committee, at a net cost of $13,000 over four years from 2015‑16. From 1 May 2017, the current two‑yearly Pap test will be replaced by a five‑yearly primary Human Papilloma Virus test for women aged from 25 to 74 years. This reform will reduce the number of screening tests over a woman’s lifetime and is expected to decrease the mortality and morbidity from cervical cancer by at least 15 per cent.  The Government is also committed to developing a National Cancer Screening Register to replace the current state and territory registers for the NCSP and the National Bowel Cancer Screening Register.

National Critical Care and Trauma Response Centre — continuation

The Government will provide $63.5 million over four years to enable the continued operation of the National Critical Care and Trauma Response Centre (NCCTRC) at the Royal Darwin Hospital. The NCCTRC enables the timely deployment of skilled medical personnel and supporting equipment in response to major incidents in Australia and South East Asia. Funds will be provided through a new National Partnership with the Northern Territory Government.  Funding for this measure has already been provided for by the Government.

National Drugs Campaign — renewal

The Government will provide $20.0 million over two years from 2015‑16 to renew the National Drugs Campaign, which is a national media campaign to promote the avoidance and cessation of illicit drug use. In 2015‑16 and 2016‑17 the campaign will focus on young people and their parents and seek to raise awareness of the harm caused by illicit drug use, in particular the form of methamphetamine known as ‘ice’.

National Immunisation Programme — new and amended listings

The Government will provide $161.8 million over five years from 2014‑15 for new and amended listings under the National Immunisation Programme (NIP). An adult vaccination register will be established to record all adult vaccines provided under the NIP from 1 September 2016. Establishing the adult register will assist with the monitoring of safety, quality and delivery of vaccinations to the adult population.

National Joint Replacement Levy — amendments

The Government will change the method for calculating the National Joint Replacement Registry (NJRR) levy so that it is proportionate to a company’s market share from 1 July 2015. The total levy will increase by $0.6 million over the four years from 2015‑16 to support the increased activity of the NJRR.

National Partnership Agreement on Adult Public Dental Services — one year funding

The Government will provide $155.0 million in 2015‑16 for a one year agreement to replace the existing National Partnership Agreement on Adult Public Dental Services. The agreement will support the provision of dental health services to adults who rely on the public dental system. Funding for this measure has already been provided for by the Government.

Pharmaceutical Benefits Scheme — increase in the safety net thresholds on 1 January 2019

The Government will achieve savings of $5.1 million in 2018‑19 by extending the increases to the Pharmaceutical Benefits Scheme (PBS) safety net thresholds by one additional year in 2019.  The savings from this measure will be redirected by the Government to fund other Health policy priorities or will be reinvested into the Medical Research Future Fund.

Pharmaceutical Benefits Scheme — new and amended listings

The Government will provide $1.6 billion over five years for a number of new and amended listings on the Pharmaceutical Benefits Scheme and the Repatriation Pharmaceutical Benefits Scheme.

Pharmaceutical Benefits Scheme — price changes

The Government will achieve savings of $252.2 million over five years for price amendments for certain medicines currently listed on the Pharmaceutical Benefits Scheme and the Repatriation Pharmaceutical Benefits Scheme. The savings from this measure will be redirected by the Government to fund other Health policy priorities or will be reinvested into the Medical Research Future Fund.

Practice Incentives Programme After Hours Payment

The Government will refocus after hours primary care funding by introducing a new Practice Incentives Programme (PIP) After Hours Payment from 1 July 2015. The PIP After Hours Payment will encourage eligible general practices to provide after hours care for their patients.  The cost of this measure will be met by redirecting funding from the After Hours GP Helpline and the Medicare Locals After Hours Programme.

Rationalising and streamlining Health programmes

The Government will achieve savings of $962.8 million over five years from 2014‑15 by rationalising and streamlining funding across a range of Health programmes, including by piloting competitive tendering for a subset of products in the Stoma Appliance Scheme.

Reducing the Burden of the Industrial Chemicals Regulatory Framework to Industry

The Government will provide $4.2 million over four years from 2015‑16 to amend the Industrial Chemicals (Notification and Assessment) Act 1989 to focus regulatory assessment on industrial chemicals that pose the greatest risk and to develop streamlined assessment processes for new and existing chemicals, including using existing international approvals where appropriate. This will reduce the regulatory burden of the industrial chemicals regulatory framework and remove unnecessary barriers to the entry to market of lower risk chemicals, while maintaining the protection of public health and the environment.  The cost of this measure will be fully funded by industry through increased industrial chemical levies between 2015‑16 and 2021‑22.

Smaller Government — Health Portfolio

The Government will achieve savings of $113.1 million over five years from 2014‑15 through a number of internal changes to the Department of Health and related agencies including creating operational efficiencies in the delivery of corporate services by amalgamating the corporate and legal services of the Therapeutic Goods Administration into the corporate functions of the Department.

Stoma Appliance Scheme — new and amended listings

The Government will achieve savings of $7.6 million over four years through the listing of two new items, amending the prices of 21 current items and deleting of one item on the Stoma Appliance Scheme from 1 July 2015 as recommended by the Stoma Product Assessment Panel.

Streamlining Health Workforce Scholarships

The Government will achieve $72.5 million in savings over four years by streamlining nine existing health workforce scholarships into a single Health Workforce Scholarship Programme that creates consistency in rules and obligations and provides greater flexibility to respond to health workforce priorities.

Supporting the Royal Flying Doctor Service

The Government will provide additional funding of $20.0 million over two years from 2015‑16 to support the Royal Flying Doctor Service to deliver emergency and primary health care services to people in rural and remote communities of Australia.

Tobacco Plain Packaging Litigation

The Government will provide funding to defend international legal challenges to the Tobacco Plain Packaging Act 2011, which is the subject of dispute settlement proceedings instituted by five countries in the World Trade Organisation.

Wimmera Health Care Group — Oncology, Dialysis and Community Palliative Care Centre

The Government will provide $1.0 million in 2014‑15 to the Wimmera Health Care Group to support the redevelopment of the Oncology, Dialysis and Community Palliative Care Centre in Horsham, Victoria.  This contribution will supplement the $1.0 million of privately‑raised money that will go towards making this a much better cancer centre for the people of this region. The cost of this measure will be met from within the existing resources of the Department of Infrastructure and Regional Development.

 

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