Weeks before the 2019 election the Coalition Government delivered a ‘cash splash’ Budget with large tax breaks – and last Tuesday’s announcement was straight from the same playbook.
There are no big ticket reforms announced in the Health portfolio but lots of smaller funding allocations targeted at specific groups and programs.
Health portfolio funding will be reduced by $5.7 billion in 2022-23 compared to 2021-22, equating to a nominal 5.1 per cent cut. But this represents a real reduction of 7.5 per cent once health inflation and population growth are considered.
Funding will be tighter in 2023-24 – with a further $3.2 billion reduction.
Most of the savings in the next two years is from the ending of COVID-19 emergency measures. However, real funding in 2025-26 is also estimated to be 6 per cent lower than 2021-22.
Aged care needs another $5 billion annually to meet expected quality standards.
Aged care received more funding – mostly to battle COVID-19.
The largest item is $215 million over two years to provide bonuses to aged care workers – but the sector argues these one-off payments will not be enough to retain and attract workers.
While more funding will come online from last year’s $17.7 billion Budget announcement, aged care needs another $5 billion annually to meet expected quality standards.
That doesn’t all have to come from the Government but unsecured future aged care funding remains a perennial problem and many providers are still struggling financially.
Hospitals crisis deepens
Public hospitals are heading further into crisis with COVID-19 blowing out elective surgery waiting lists. Around 11 per cent of public patients in NSW waited more than 365 days in 2020-21.
Situation critical: Waiting lists for non-urgent elective surgery have blown out due to COVID-19.
Non-urgent elective surgery was again suspended during the Delta and Omicron waves, which will likely extend waiting times further.
The Government needs to lead on improving public hospital elective surgery waiting times through greater investment and public hospital reform.
The Budget increased mental health care spending but not enough to expand the mental health workforce or tackle the structural change needed.
The new health minister (regardless of political persuasion) must be strategic and considered.
The Treasurer had good news for the pharmaceutical sector with several medicines added to the Pharmaceutical Benefits Scheme.
Big consumers of prescription medicines will also benefit, with prescription cost savings expected from a reduction in the Safety Net threshold.
The Government will further embed pharmacists into the health and aged care sectors.
Pharmacies were allowed to vaccinate people for COVID-19 and will now help deliver flu vaccinations. The Budget also included $345 million to fund pharmacists dispensing medicines in residential aged care facilities.
The greatest recent upheaval in primary care business models has been the spread of telehealth, with more than 100 million services since it was introduced temporarily at the start of COVID-19.
Telehealth services have now become permanent – with some tweaks to limit telephone consults to minor consultations.
Urgent need for reform
The private health insurance rebate continues to drain the Health portfolio budget.
Time to act: Reform of the health system will be difficult, lengthy and expensive, but must occur, says Professor Cutler (pictured).
It cost nearly $7 billion this year and is forecast to cost a further $29 billion over the next four years. The Department of Health is reviewing the rebate and Medicare Levy Surcharge – although abolishing the rebate seems off the table. This is despite any evidence it provides a sufficient return on investment.
The Government will spend another $2.1 billion in the ongoing fight against COVID-19, to administer vaccines, supply more personal protective equipment in aged care and to continue the COVID-19 Rapid Antigen Test (RAT) Concessional Access Program.
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Our health system is still in urgent need to reform – and it will be difficult, lengthy and expensive. This must occur even as future Budgets groan under the weight of increased debt. It will require increased health system productivity and less waste.
The new health minister (regardless of political persuasion) must be strategic and considered.
Health system sustainability will only be achieved by understanding where investment will have most impact, not being persuaded by special interest groups, and relying on evidence when allocating resources.
Professor Henry Cutler is Director of the Centre for Health Economy at Macquarie Business School.
