Issue 17 / 9 May 2016

THE 2016-17 Budget is described by the Prime Minister as a national economic plan focused on the long term. That does not ring true for the health budget, which presents more as a statement of politics and short-term fixes.

The subtext is that there is no vision or commitment to necessary health care reforms in primary care, clinician payments, mental health and Closing the Gap on Indigenous disadvantage.

The big spending commitments were already known. The additional $2.9 billion over 3 years to public hospitals and the commitment to activity-based funding is welcome, although this represents less than half the funding cut in the 2014-15 Budget. There are references to associated initiatives to improve quality and safety and to tackle avoidable hospital admissions and readmissions, but there is no further information in either the Council of Australian Governments communiqué or the Budget papers.

Much has been made of the accompanying announcement of a trial of Health Care Homes. This is a progressive move, but hardly the biggest reform to Medicare since its inception, as touted by the Prime Minister. There are some concerns about the ability of this initiative to deliver as it is clearly under-resourced, there are workforce implications and the timeframe for evaluation is too short. It was disconcerting to find that the funding for this initiative ($21 million over 3 years) comes from changes made to the Practice Incentives Program.

The robbing-Peter-to-pay-Paul principle is found elsewhere in the Budget.

The new Child and Adult Public Dental Scheme is funded ($1.7 billion over 4 years) by abolishing two current public dental programs, which were cut by more than $500 million in previous budgets.

The Budget papers are difficult to interpret, but aside from the obvious requirement to do more with less, it seems that there have been substantial savings.

This sleight of hand exemplifies the problems with this Budget: there is no coherent policy underpinning the measures and no effort to align the interfaces between health, aged care and disability services to help coordinate patients’ care. So we see cuts of $1.2 billion in aged care on the basis that the growth in claims for complex care are unsustainable. 

A raft of measures in this Budget add to the so-called “zombie measures”, which are still on the books from previous budgets, to push an increasing cost burden on patients, which will severely impact their ability to afford the services they need. This sets up a vicious cycle with accumulating costs in acute care.

Doctors now find themselves trapped by the government into a situation where they must weigh decisions about the financial viability of their practices against the ability of their most needy patients to pay. 

While GPs and specialists are entitled to feel aggrieved at the extension of the Medicare rebate freeze, which contributes a further $925 million to the Treasury coffers, the real burden falls to their patients who already face substantial out-of-pocket costs.

The combined impact of a continuing Medicare Benefits Schedule (MBS) freeze, an additional $5 co-payment for prescription drugs, the removal of bulk-billing incentives for pathology and diagnostic imaging, and changes to the Medicare safety nets will be substantial. On top of this, private health insurance (PHI) premiums rose an average of 5.6% this year, and the Budget takes savings of $744 million by ensuring that more people without cover will be penalised via the Medicare levy surcharge and that the means-tested PHI rebate will apply to fewer people.

Government policies such as these are undermining the universality of Medicare and opening up even greater health disparities. We all pay the price for this. 

A key criticism of the government’s approach to the funding and delivery of health care services is that the focus is on illness treatment – the ambulance at the bottom of the cliff, when what is also needed is a fence at the top. It’s hard to claim that an increase in the tobacco excise rates is a health prevention measure when the $4.7 billion over 4 years it raises goes to deliver tax breaks. There is nothing in the Budget to tackle obesity or the health consequences of climate change. Those cans and costs are simply kicked down the road.

Implicit in the Budget is an unwillingness to take an agile and flexible approach to modernising Medicare. That responsibility has been hived off to the Primary Health Networks, which must commission and coordinate services, deliver mental health reforms, and tackle the ice epidemic and suicide rates. 

In Canberra, recommendations from expert groups, such as the National Health and Hospitals Reform Commission and the National Mental Health Commission, languish or are reinvented by more advisory groups.

The valuable consultative work of the MBS review continues slowly, alongside that of the Medical Services Advisory Committee and Choosing Wisely Australia. But it is galling to see that the savings achieved (a total of $71.3 million over 4 years in this Budget) are not further invested in the MBS.

The 2016-17 Budget has been designed to ameliorate the patent unfairness of previous budgets and to take the Turnbull government into an election. Clearly we must look elsewhere for a health care vision, needed reforms and policies. 

The election awaits!

Dr Lesley Russell is an Adjunct Associate Professor at the Menzies Centre for Health Policy at the University of Sydney.


Are you happy with the health provisions in the 2016-2017 Budget?
  • No, the healthcare system is being neglected (80%, 109 Votes)
  • Maybe, but there is much more to be done (13%, 18 Votes)
  • Yes, there are some good measures in there (7%, 10 Votes)

Total Voters: 137

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5 thoughts on “Robbing sick Peter to pay healthy Paul

  1. Dr Louis Fenelon says:

    Health politics is not party specific! Both parties are going to screw health care, because both parties will have basically the same group of out of touch morons manipulating health bureacracy. 

    If you think Health Care Homes is not a gamechanger, then you will soon. When the public health system targets primary practice for failing to support the public system manage complex care you have some real issues on the table. When one of them is the compulsory use of (rebranded at our cost) MyHealth Record and another is redirection of chronic disease management funding in general practice (yes again) to lump-sum payments that may be under the practice incentive payment program, a disaster is looming.

    Forget forcing GPs to be responsible for medical records lacking history offensive to the patient. Forget big brother accumulating metadata (or more) and using it for future budgets or targeted practitioner investigations. Forget sharing that metadata with multiple community health agencies and all the big private players who onshare with their invested partner businesses. 

    What do you think will happen when every GP contracted to receive income generated from fee for service practice sees that income evaporate and the practice they work “for” receives a new “salaried” version via PIP payments instead? What percentage of GPs do you think receive PIP payments – 5%? What percentage of a GP’s income is generated out of chronic disease management – 30-40% including consultation fees, or more? Oh, that’s right, we don’t do that! Hospitals do!

    What you have is the collapse of primary health care in Australia…… Didn’t see that in the budget.

  2. Hall Apte says:

    Malcolm’s  virtual destruction of Medicare will not stand him in good stead in the upcomiig election..

    Labor will win.

  3. Ulf Steinvorth says:

    Barry, sick Paul probably was the tax-paying healthy Peter all his life until he became ill – and do not  forget that many adults who do the most important work of our society which is raising healthy kids and looking after the elderly get paid nothing for these services and thus are not able to pay taxes.

    Should they be exempt from medical care just because our society put more value on raising interest than raising kids?

  4. Malcolm Brown says:

    The entire health funding system continues to be a complete mess, with confusing and complex arrangements involving Commonwealth funding of Medicare, the States funding hospitals with a big chunk of Commonwealth money, a private system which appears to lack support from everybody including the AMA, and Australians having some of the highest out-of-pocket expenses in the developed world. The whole system needs to be completely reviewed with input from actuaries and other experts, together with a review of best practice around the world. Countries such as the Netherlands and Singapore have undertaken such exercises, and we need to get on with it as soon as possible.

  5. Martin Matthew Barry says:

    There is another way to look at the headline…

    It’s only healthy Paul who will end up paying the taxes to treat sick Peter.  Overwork and overtax Paul and he too will become ill… then who will pay?

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