8 HEALTH AND FAMILY SERVICES
8.1.1 Public Health Development and Programmes
8.2.1 Medicare Benefits
8.2.2 Pharmaceutical Benefits
8.2.3 Acute Care
8.4.1 Children's Services
8.4.2 Family Services
8.5 Aged and Community Care
8.6.3 Rehabilitation
This Sub-program has changed significantly since the 1994-95 Budget by combining several former Sub-programs in order to focus more clearly on public health. Particular measures in this Budget include a National Diabetes Action Plan with funding of $7.7 million over three years; the continuation of the National Childhood Immunisation Program; two initiatives in the area of maternal and child health including a $2.0 million Breast Feeding Awareness Campaign and a national folate community education program which will receive funding of $400 000 over 2 years. A Third National HIV/AIDS Strategy is to receive funding of some $148 million over three years and will have its focus broadened to include related communicable diseases such as Hepatitis C, which has become a major public health problem in Australia. Although its focus has been broadened, the Strategy will not receive an increase in funding over that available under the previous Strategy.
A single Public Health Agreement is to be negotiated between the Commonwealth and each State and Territory. The areas to be covered by the Agreement include the National Drug Strategy, the National Health Advancement Program, the Innovative Health Services for Homeless Youth Program and programs relating to HIV/AIDS and Childhood Immunisation. The Portfolio Budget Statement notes (p.66) that the context for these Public Health Agreements will be the development of a National Public Health Partnership between the Commonwealth and the States and Territories. This Partnership will clarify the roles and responsibilities of each tier of government in the area of public health. Expected outcomes from this measure include greater flexibility for the States and Territories in the way funds for public health are spent as well as the rationalisation of the many existing agreements between the Commonwealth and the States and Territories in the area of public health. These measures are a part of the wider structural reform of health and community services overseen by the Council of Australian Governments (COAG).
Withhold 1 November Medicare Fee Increase (excludes Pathology and Radiology)
Fees for items in the Medicare Benefits Schedule are usually adjusted annually on 1 November, however this will not occur in 1996. The Medicare Benefits Schedule (MBS) lists every medical and diagnostic procedure which is covered by Medicare and sets a fee for each procedure, commonly called the 'schedule fee'. Rebates for patients and payments for doctors who bulk-bill are calculated according to the MBS fee for the relevant procedure(s). The greatest impact of this measure is likely to fall on services provided by general practitioners (GPs), for two main reasons. Firstly, the majority of GP services are bulk-billed and doctors are unable to charge their patients for a procedure which is bulk-billed. Secondly, fee adjustments for GPs have been restrained since 1993, increasing by less than one per cent each year. GPs will thus be faced with considerable pressure to either cease bulk-billing at least some of their patients, see a greater number of patients, or relocate. This pressure will be felt most keenly by GPs in the larger cities, where there is acknowledged to be an oversupply and where competition for patients is most fierce. Services provided by optometrists will also be affected by this measure.
Limited Medicare Access for New Doctors Without Post-Graduate Qualifications
New doctors currently have unrestricted access into general practice and GPs are acknowledged to be in oversupply, particularly in the major cities. The Minister for Health and Family Services, Dr Wooldridge, estimated in Parliament recently that each additional doctor practicing under Medicare 'costs' the system between $170 000 to $200 000 each year. This measure addresses a key policy issue, the size of the medical workforce, by limiting the numbers of new doctors able to provide services under Medicare to those who have completed post-graduate training. In the case of GPs, this will be the traineeships offered by the Royal Australian College of General Practitioners (RACGP) which are limited to 400 places each year (a further 600 specialist traineeships are available each year through the various specialist colleges). Competing for these places each year will be the 1200 graduates of Australian medical schools and 200 overseas trained doctors. This measure will help to ensure that new doctors seeking to become GPs will receive training appropriate to general practice prior to beginning their careers. This measure is estimated to generate considerable savings, in excess of $500 million over 4 years.
Reforms to Pathology and Diagnostic Imaging
This measure is estimated to save more than $340 million over the next four years. However its significance does not lie in the savings alone, but rather in that it caps pathology expenditure over the next three financial years. Through an agreement with the relevant professional bodies, Medicare benefits for pathology items will be restricted to a growth rate of around 6 per cent over the years 1996-97 to 1998-99. This measure addresses one of the key policy issues for the long term future of Medicare, which is the continuing rate of increase in outlays. Currently, outlays for medical and diagnostic services are open-ended-if the service is provided, then expenditure is generated by the Commonwealth. If this initiative proves successful, it may well provide a model for the capping of expenditure for other services available under Medicare.
Diagnostic imaging services, which include x-rays and ultrasound as well as high technology services such as computerised tomography (CT) is another area of Medicare where expenditure has been increasing rapidly. This package of measures, which is estimated to save some $240 million over four years, has also been developed in consultation with the relevant professional bodies. Schedule fees for diagnostic imaging items will not be increased in 1996-97 and a number of other measures are to be introduced which are aimed at structural reform of radiology, nuclear medicine and other areas of diagnostic imaging. Although some measures in this package, such as the multiple services rules, will bring diagnostic imaging into line with other areas of the MBS it is difficult to estimate, with the available information, the extent to which patients may be affected by the package as a whole. The costs of implementing these reforms to pathology and diagnostic imaging will reduce savings by some $13 million.
Reduction in Medicare Benefits for Certain Psychiatry Consultations
This measure will effectively limit to 50 the number of occasions on which a patient may attend a psychiatrist in their consulting rooms in any one year. After this limit of 50 is reached, the MBS fees will be reduced by 50 per cent for each additional attendance. The Portfolio Budget Statement (p.107) notes that this measure is aimed at providing disincentives for providers and/or price signals for patients, however it is possible that any arbitrary limit on the number of consultations may compromise patient care in some cases. It is possible that discussion with the profession which focuses on gaining a greater understanding of the needs of certain patients for long-term intensive psychiatric therapy and the cost-effectiveness of such therapy may assist to inform alternative policy options.
Increased Patient Contributions
Patient contributions or co-payments have been increased for both the concessional category (cardholders) and the general category, to $3.20 and $20.00 respectively. This is the first occasion since the 1990-91 Budget that PBS co-payments have been increased by more than an annual CPI adjustment and represents an increase over 1995-96 of 18.5% for the concessional category and 14.9% for the general category. The safety net for the general category is unchanged at $600.00 per annum while the safety net for the concessional category increases to $166.40.
Contrary to its inaccurate portrayal by some commentators as an example of 'middle class welfare', subsidies under the PBS are biased very heavily in favour of the concessional category, which includes those patients who are ill and/or on low incomes (at June 1995, in excess of 6 million people were covered by the various concession cards). In 1995-96 for example, subsidies by the Commonwealth for the general category amounted to $461.7 million, while patients contributed a further $251.5 million. In the case of the concessional category, the Commonwealth subsidy was $1.7 billion, while patients contributed a further $226.6 million(1). The apparent lack of success of co-payments in containing the growth in outlays under the PBS provides an indication that co-payments are not the panacea they are often portrayed as for containing demand for health services over the longer term.
Remove PBS Eligibility for Certain Foreign Visitors
This measure is designed to bring the PBS into line with Medicare, to which foreign visitors have no access unless their home country has a reciprocal Health Care Agreement with Australia. Australia currently has Health Care Agreements with 7 countries: the United Kingdom, New Zealand, Sweden, Malta, Italy, the Netherlands and Finland. It is estimated that each year some 3.5 million foreign visitors arrive in Australia and stay on average one month. The Portfolio Budget Statement estimates that foreign visitors cost the Sub-program $10 million per year. The problem of ineligible foreign visitors using Australia's health system is not confined to the PBS, but is evident also in the hospital sector.
The Portfolio Budget Statement notes that the expected implementation strategy for this measure will centre on discussions with the Pharmacy Guild concerning the presentation and possible recording of Medicare Card numbers for PBS purposes. Given that ineligible foreign visitors do not (legally) possess Medicare Cards, this measure is likely to require all Australian residents to present their Medicare Card to the pharmacist together with their prescription. A similar measure, which sought to restrict eligibility for drugs under the PBS to Australian residents was proposed in the 1990-91 Budget and contained in the Health Legislation (Pharmaceutical Benefits) Amendment Bill 1991.
Although supported by the then Opposition, this proposal did not eventuate because it was linked to another measure which proposed to use a compulsory on-line connection between the pharmacist and the Health Insurance Commission to check the eligibility of patients for concessional entitlements. Concerns over privacy and disputation over likely revenue gains were raised during the Bill's passage through the Senate and the relevant sections did not come into operation. Given that the proposed implementation strategy for this measure includes a reference to 'related systems implications', privacy issues may again be of concern during the passage of any legislation required to implement this measure.
Review Certain High Cost Drugs
This measure addresses a key area of concern in the PBS: cost effectiveness. While new drugs are evaluated for their cost effectiveness prior to listing on the PBS, some older high cost/high use drugs have not been subjected to the same evaluation. The two types of drugs included in this evaluation are Calcium Channel Blockers and ACE Inhibitors, both of which are used in the treatment of hypertension (high blood pressure). Costs will be incurred during 1996-97 and 1997-98 while the evaluation is conducted but the Department of Health and Family Services estimates that the evaluation will result in savings of $98 million over 1998-99 and 1999-2000 due to a reduction in prices paid by the Commonwealth.
Conclusion
Although the measures above will help to restrain growth in PBS outlays through 1996-97 and 1997-98, it is estimated that growth will again return to high levels from 1998-99. This seemingly intractable problem has a number of causes, principal among which is a continuing shift to newer and often more expensive drugs. There are no simple policy prescriptions which can address this problem and arrest, let alone reverse, the continuing high rate of increase in PBS outlays, but a continuing emphasis on the cost-effectiveness of treatments as well as measures which focus on the behaviour and expectations of both patients and doctors would seem to have the greatest chance of success.
Private Health Insurance Initiative
This initiative will not take effect until 1 July 1997, but will require significant outlays of $1.5 billion over the forward years (the total cost of the package increases to $1.7 billion when the administrative costs and revenue foregone are included). For the first time since Medicare began in 1984, incentives will be offered to people who have private health insurance. This package targets individuals and families with taxable incomes below $35,000 and $70,000 (threshold increases by $3000 for each child after the first) respectively and is intended to arrest the continual fall in the numbers of people covered by private health insurance.
The payments are likely to provide an incentive for people to retain their private health insurance and may even attract other people to join a health insurance fund. The attractiveness of the package is enhanced by the flexible methods of payment and the fact that the Minister (as announced in his Budget Media Release) has instructed his Department not to approve increases in premiums for private health insurance 'if this is merely being used to increase the reserves of funds beyond what is required for prudent management'. Although the recent premium increases by several of the larger health funds are likely to be the result of their deteriorating membership base rather than an attempt to capitalise on the Budget incentive, it does indicate that the Government may need to be particularly vigilant. The political importance of this issue has been highlighted by reports that further premium increases will require approval by a panel comprising the Prime Minister, the Treasurer and the Minister for Health and Family Services (SMH, 30 August 1996).
Reduction in Hospital Funding Grants to the States to Offset Cost-Shifting of Public Hospital Related Services
Cost shifting is a major policy concern in the Australian health system, principally because of the split in roles and responsibilities between the Commonwealth and the States and Territories. Medical and pharmaceutical services (out-of-hospital) are funded by the Commonwealth, while public hospital services are the responsibility of the States and Territories (although the Commonwealth does provide substantial funding to the States and Territories). Costs are shifted at all levels, from the Commonwealth to the States, from the States to the Commonwealth and from both the Commonwealth and the States to individual patients. This measure addresses cost shifting from the States to the Commonwealth and is estimated to save in excess of $300 million over 4 years. Penalty provisions already exist under the Medicare Agreements between the Commonwealth and each State and Territory, but the difficulty to date has been in identifying actual instances of cost shifting.
Cessation of the Commonwealth Dental Program
The Commonwealth Dental Health Program for cardholders was announced in the 1993-94 Budget and was introduced in 1994. Although the funding of public dental programs is a State and Territory responsibility, the numbers of people waiting for treatment was such that the Commonwealth announced a four year program of funding in order to supplement the funding provided by the States and Territories. Total outlays by the Commonwealth were estimated at $278 million over the four years from 1993-94. The approximate funding breakdown was: 1993-94 $18 million; 1994-95 $60 million; 1995-96 $100 million; 1996-97 $100 million. This measure will halve the funding for the Program's final year, 1996-97, yielding a saving of $55.6 million. Given that funding by the Commonwealth under the Program was due to cease in 1996-97 and there appears to have been no public commitment to continue the Program beyond this time, the projected savings of some $343 million over the years 1997-88 to 1999-2000 can be questioned.
Establishment of Six University Departments of Rural Health
Rural and remote Australia is underserved by Australia's health system. This is particularly evident in the unequal access of people in rural and remote areas to medical services because of the maldistribution of doctors in Australia. Estimates put the oversupply of GPs in urban areas as high as 5000 and the undersupply in rural Australia at about 500 GPs. This measure will establish six University Departments of Rural Health (Mt Isa and Broken Hill identified to date) with the aim of providing practical training for rural health care providers and eventually increasing the number of health care providers working in rural and remote Australia. This measure provides some $27 million over 4 years to fund the initiative. The Budget also contains several other measures in this and other sub-programs directed at improving access to health services in rural and remote Australia. These include: $1 million over three years for nurse practitioners to gain access to training and support infrastructure; $1 million over four years for improved availability of locum services in rural areas; $3.8 million over four years to provide up to 150 John Flynn Medical Student Vacation Scholarships per year; and $20 million per year for rural hospitals and medical schools to fund projects to provide opportunities for medical graduates and undergraduates to train and work in rural areas (Budget Fact Sheet).
The Children's Services Sub-program aims to assist families with dependent children to participate in the workforce and in the community generally, by ensuring equitable access to affordable child care. It also aims to promote an adequate supply of acceptable quality child care.
The Budget announcements are consistent with some of the recommendations outlined in the interim report of the EPAC Child Care Task Force, in directing financial support at low and middle income families, in abolishing operational subsidies and in maintaining the capacity of working families to receive assistance for the first 50 hours of weekly child care.
The abolition of operational subsidies has been discussed with industry bodies for some time. Some additional capital and equipment subsidies have already been provided in anticipation of the abolition of operational subsidies. This measure is a step towards self funding of child care facilities, as financial assistance is provided more directly to families accessing these services. It was also a recommendation of the National Commission of Audit, as a means of furthering competitive neutrality in the sector.
The abolition of additional income allowed for additional dependent children when assessing eligibility for child care assistance, is again in line with EPAC recommendations to target financial assistance to those who can least afford to purchase child care.
Capping of child care assistance to a maximum of 50 hours per child per week is designed to alter centre charging policies and to ensure that assistance is work related. Special exemption will be available where additional work related care is required.
Freezing of cash rebate ceilings and reduction of the child care cash rebate for families with income above the family tax initiative ceiling will allow better targeting of assistance to lower and middle income families.
Cessation of the new growth strategy in long day care centres will allow private sector expansion in the provision of centre based child care. $10.9 million will be retained over the next four years to be used in rural and remote areas.
Overall the children's services Budget initiatives will encourage private sector involvement in the industry, particularly in States other than New South Wales, Victoria and Queensland, where private sector take-up is already running at reasonable levels.
The measures should continue to encourage dual family participation in the workforce where existing family income levels are below the $70 000 pa. threshold. However higher income families may well re-think their family work patterns as a result of the Budget measures.
There may be some increases in child care provider charges as a result of the changes. The EPAC recommendations of a single benefit and of assistance for non work related care have not been picked up in the Budget.
The services provided through the Family Services measures provide additional assistance to support families and people in crisis. There is a particular emphasis on the young and homeless.
The youth homelessness pilot aims to use the expertise of the community to assist young homeless people, or those at risk of becoming homeless, to reconcile with their families or to access education or training.
It places an emphasis on early intervention, mediation and family reconciliation.
Some concern has been expressed about the willingness of some young people to be party to mediation. This issue will be reviewed during the pilot.
Additional funding will allow emergency relief services to be provided to more people experiencing financial hardship. This assistance is used primarily to overcome crisis situations and to facilitate access to targeted community support.
Demand for Emergency Relief may well increase due to increased penalty waiting periods imposed on unemployment payment recipients.
The major change affecting aged and community care is the unifying of the nursing homes and hostels systems into a single residential care system. Under these changes, there will be a single resident classification used for assessing dependency. There will also be income testing of recurrent subsidies at 25% of income above the pension 'free area'. The changes are scheduled to take effect from 1 July 1997.
The long term effect of the changes, will be to have a simpler system operating than the current one, with residents assuming greater financial responsibility for care. Organisations will receive decreased recurrent return from ex-hostel residents, but will be able to charge a negotiated entry contribution. The Government will receive a new recurrent return from those residents with non pension income of over $49 per week.
There will be considerable work required prior to introduction of the new system, to sort out applicable income and asset inclusions; the type of care to be provided to residents; acceptable physical accommodation standards to be applied; and priority of resident entry (for example, financial hardship versus degree of frailty).
A lot of these decisions may rest with the organisations providing the care in the new non-acquittal arrangements proposed.
The industrial demarcation issues between the Australian Nurses' Federation (ANF) and the Australian Services Union (ASU), which presently have coverage of nursing homes and hostels respectively, could also slow the process.
User charging increases in the Home and Community Care Program (HACC) will have the effect of redirecting financial responsibility for paying for HACC services to their users. State and Territory charges for HACC services will be increased progressively over the next four years. This policy should allow HACC services to increase by about 6% pa. over the next four years.
Replacement of rental assistance with higher residential aged care subsidies involves a transfer of direct income maintenance from the Social Security and Veterans' Affairs systems to the aged care system. The net result of this transfer will be a small saving, deriving from different indexation treatment of the rental subsidy. The measure will result in greater transparency of aged care funding.
The Budget measure seeks to enable the Commonwealth Rehabilitation Service (CRS) to operate on a more commercial basis, by its corporatisation and by separating funder and provider functions. The measure attempts to provide competitive neutrality within the rehabilitation industry while reducing the level of the Commonwealth's financial involvement.
The measure is designed to enhance the employment related outcomes achieved by the service.
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