Rebecca de Boer, from the Commonwealth Parliamentary Library, has been investigating the backdrop to tonight’s budget announcements.

Thanks to the Library’s FlagPost blog for allowing this republication.

Rebecca de Boer writes:

On Budget eve, the Government has already made several announcements about the contents of the 2011-12 health Budget. There have been some announcements regarding capital expenditures. These include $220 million to Tamworth Hospital, redevelopments to Mt Gambier and Port Lincoln Hospitals, regional cancer centres for Albury/Wodonga and Geelong, $57 million for regional Western Australia and a Youth Health Hub for Colac.

It has also said that a comprehensive dental plan will not be funded this year, although a ‘down-payment‘ will be made. It should be noted that all of the health infrastructure projects that have so far been announced are the result of successful applications to the regional priority round of the Health and Hospitals Fund which was allocated five billion dollars in the 2008-09 Budget.

In addition there has been the usual media pre-Budget speculation about possibly stimulated by some well-placed ‘leaks’ which can often serve to ‘soften up’ the electorate. However, this speculation can also serve as a rallying point. This year has seen protest marches about the proposed cuts to medical research, an alliance being formed of consumer groups, the pharmaceutical industry and doctors in protest about the Government’s changes to the PBS and an online advocacy campaign in support of the National Bowel Screening Program.

Speculation about the health budget includes:

  • that the National Health and Medical Research Council’s budget might be reduced by $400 million (or around 19 per cent). This prompted letters to both the Prime Minister and Minister Roxon asking for a two year moratorium. It has been argued that such a measure would adversely impact on the future academic and research workforce. Although research funding expenditure by the NHMRC has increased over the past ten years (see Figure 4, p. 32) Research Australia has argued that in real terms, health research funding in Australia is beginning to decline.
  • that mental health will be the ‘centre-piece’ of the 2011-12 Budget. Figures of $2 billion in additional funding over four years with a total spend of $3.5 billion over five years (it has been suggested that the majority of funding will be outside the Forward Estimates in 2014-15 and 2015-16) have been mooted. Both the Government and the opposition have responded to growing stakeholder and community support for increased spending on mental health. The Gillard Government had previously indicated that reforms to aged care, mental health and disability services would be a priority for the second term. In March this year, long term advocates for improved mental health services released a Blueprint to Transform Mental Health Services which detailed the ’30 best buys’ across the mental health sector. The total expenditure of the proposed package was estimated to be around $3.5 billion over five years. The Coalition also released a Mental Health Plan which reflected some of the elements of the blueprint, although its total proposed expenditure was around $1.5 billion. The Coalition announced an extra $430 million in April this year for employment services for people with a mental illness, a mental health research centre and the establishment of mental health commission to provide advice to government as well as improve accountability in the mental health sector.
  • that the Government may re-introduce a measure to means test the private health insurance rebate. Parliament failed to pass such a measure in the past. The Australian Health Insurance Association which represents the majority of private health insurers in Australia has been opposed to such a measure. Debate has continued about the likely impact of such a measure with an ANOP/Newspoll suggesting that around 175 000 consumers would withdraw from private health cover in the first year of implementation, and others such as Mark Fitzgibbon the head of nib (one of the major funds in Australia) disputing this. Further analysis can be found here.
  • that the Government will reveal how savings to Government of around $550 million over four years will be realised following the recent agreement with the pathology sector to deliver such savings. Growth in pathology funding is expected to be capped at five per cent per annum but no details have yet been announced. Minister Roxon has suggested that the Agreement will allow for greater transparency in the setting of fees and will ensure that only ‘clinically required’ tests are conducted. In previous years, details about specific Agreements have been made public in the Budget (most recently the Fifth Community Pharmacy Agreement and the Memorandum of Understanding between Medicines Australia and the Commonwealth)
  • that it is unlikely that any new medicines will be listed on the Pharmaceutical Benefits Scheme (PBS). Successive government have previously used the budget to detail new listings of medicines on the PBS. The Government appears to be standing firm in its decision to defer the listing of products on the PBS.
  • that funding of around $52.6 million on dental health is likely to be announced with additional funding in future years as circumstances allow. Measures such as bonuses of $15 000 to trainee dentists who complete their training in the public system and specific programs that target rural and regional areas have been mooted.

No pre-budget period is complete without calls for additional funding or suggestions for savings. Doctors groups have argued that additional payments are required to implement the Government’s e-health agenda. Other doctors groups have suggested that additional funding for Medicare Locals is required to achieve the Government’s primary care agenda.

On the other hand the president of the AMA has suggested the funding of Medicare Locals and GP Super clinics should not come at the expense of access to medicines or diagnostic services. Other stakeholders have put forward suggestions for a single national scheme for all sub-acute medical products (for example oxygen supplies, continence products) and health surveillance technologies (for example alert systems, self-monitoring devices), for funding for the nursing workforce and for a consumer education campaign prior to the roll-out of the personally controlled electronic health record.

In pre-Budget commentary Minister Roxon has promised that ‘every bit of health expenditure’ is being closely examined and that there is no magic pudding.

There have been some notable omissions from this public advocacy and speculation: no mention of possible additional funding for Aboriginal and Torres Strait Islander health, changes to the funding arrangements for aged care, health workforce (particularly in aged care) or what can be done to tackle the social determinants of health or improve access to medical services. A recent report by the Australian Bureau of Statistics highlighted that around one million Australians do not see a doctor because of cost and a similar number of people did not fill prescriptions for the same reason. Poor health outcomes and increased costs to the health care system in the future are the risks of failing to address this.

There are no easy solutions to these issues but as has been highlighted on FlagPost previously, a strategic plan for the financing of health could help with prioritisation.