what the budget means for Australians’ health

Health was at the heart of last year’s budget. Last night, tax and housing took centre stage, and there were few surprises in health.

Most new health funding goes to previous commitments and continuing programs, including big spending on public hospitals, the Pharmaceutical Benefits Scheme (PBS) and urgent care centres.

The government says this budget is about cost of living, spending restraint, and inter-generational fairness. That is reflected in funding health services that are free for patients, cutting private health insurance subsidies for older people, and cracking down on fraud and waste in Medicare billing.

Although there’s less new reform, there is new spending on prevention, and big changes in Health Minister Mark Butler’s other portfolios of disability and aged care, with big NDIS cuts and moves to expand and improve aged care.

Sustaining public hospitals, the PBS and other programs

This budget was much more about funding existing health services than reform.

The biggest spend is A$25 billion on public hospital funding over five years. This was baked in earlier this year, when the federal government agreed to increase its share of funding in a new five-year deal with the states.

Read more: The government has promised a $25 billion boost to hospital funding – but only hints at real reform

Adding new medicines to the PBS will cost $5.9 billion, including for chronic diseases such as arthritis, multiple sclerosis and some cancers, as well as COVID medications.

The National Mental Health and Suicide Prevention Agreement will be extended for another year. Last year, the Productivity Commission found the agreement was ineffective, and recommended an extension to provide more time to plan for the next one.

Funding for state public dental services for adults has been made ongoing, rather than year-to-year, along with access to the Child Dental Benefits Schedule for state and territory services.

But once again the government has declined to make the major reform – putting dental into Medicare – that’s needed to address what might be the worst cost of living challenge in health care.

There is money for infrastructure and services for Aboriginal Community Controlled Health Services, and replacing two Headspace centres with First Nations youth mental health services.

But there are no big boosts in expenditure on Aboriginal and Torres Strait Islander health care overall.

Making urgent care centres permanent

We already knew about $1.8 billion over five years to make urgent care clinics permanent. The 135 clinic pilot has quickly become a recognisable part of the health system.

The clinics are designed to provide timely treatment for urgent but not life-threatening conditions and take pressure off emergency departments.

They are providing timely, safe and effective care, and are popular with patients.

Read more: Can Urgent Care Clinics actually take pressure off hospitals? Yes, but they’re not the only way

But the evaluation of the pilot is not finished, and there are worrying signs about cost-effectiveness.

The interim evaluation suggests clinics have reduced nearby emergency department visits. But there is no evidence that emergency department wait times are improving, and the full cost of each avoided visit won’t be known until a final evaluation later this year.

The new funding must improve the model, not just extend it, with better information-sharing with GPs, improving triage so more patients are really avoiding the emergency department, and more after-hours care.

The government will also set up six new bulk-billing clinics, but hasn’t made the big changes needed to make funding fairer and to get more care into GP deserts.

Prevention

The budget includes $449 million over five years to add the respiratory syncytial virus (RSV) vaccine to the National Immunisation Program for people aged over 75 and Aboriginal and Torres Strait Islander people from age 60.

There is funding to address the falling rates of childhood vaccination, including through a childhood immunisation campaign, SMS reminders and by allowing pharmacists to vaccinate children under five.

Read more: What is RSV? And why should older Australians have this free vaccine?

There is also spending to continue cancer screening and prevention programs.

While these are all welcome investments, Australia still has a long way to go to catch up with how much other wealthy countries spending on prevention.

Savings

In keeping with the themes of inter-generational equity and fiscal discipline, there are some cuts.

Older Australians will no longer get more generous private health insurance rebates than younger Australians, saving $3 billion over four years. While some older people might reduce their coverage, the impact on overall coverage, and demand for public hospital care, is likely to be small.

A recent review found Medicare fraud and non-compliance could be costing $1.5–$3 billion a year. There are measures to combat this and save $674 million over four years.

Improvements to My Health Record, at a cost of $598 million, will reduce duplication of pathology testing, saving $146 million over two years.

Changes to the Extended Medicare Safety Net are expected to save $43 million over four years. The Extended Medicare Safety Net covers 80% of fees once people reach a threshold well above where the standard safety net kicks in. The cost of the program has been growing explosively, it may be leading to increased fees, and the benefits mostly go to wealthier people. Like previous budgets, this one has introduced caps on payments for a small number of items.

Seeds of future reform

This year’s national hospital funding deal committed to developing new ways to fund and deliver care. That is essential to slow down cost growth and free up funding for other types of health spending. The budget includes $19 million over five years for health agencies to do this work.

There is also $2 million for external advice to help the health department on how to tackle surging specialist fees – a top priority for Health Minister Mark Butler.

While this budget had little structural reform in health, these small investments might set up bigger changes in the future.

Read more: Specialist doctors are charging too much. 4 options to rein in excessive fees