Ongoing issues for the health and aged care budget

Budget Review 2011-12 Index

Budget 2011–12: Ongoing issues for the health and aged care budget

Private health insurance rebate—the ongoing debate

Amanda Biggs

This Budget confirms that means-testing the private health insurance rebate, as announced in 2009, remains a key government savings priority and will be pursued.[1] In the 2009–10 Budget, the Government announced it would introduce three new income tiers so that the amount of the rebate would proportionally reduce as personal income increases. The rebate reimburses 30 per cent of the cost of purchasing private hospital cover for those under 65, with higher rebates for older people. Under the proposed system of means testing, individuals in the highest, or income tier 3, with incomes over $120 000 per annum (or $240 000 for families) would receive no rebate; those in tier 2, earning over $90 000 (or $180 000 for families) would receive a 10 per cent rebate; those in tier 1, earning over $75 000 (or $150 000 for families) would receive a 20 per cent rebate. Those on incomes below $75 000 (or $150 000 for families) who purchased private cover would continue to receive the full rebate. The initiative also included a proposal to proportionally increase the 1 per cent Medicare levy surcharge applied to high income earners who decline to purchase health insurance. Those in income tier 3 (as above) without private cover would pay a higher 1.5 per cent levy; those in tier 2 would pay 1.25 per cent. Overall, these measures were expected to realise savings of $1.9 billion over four years.[2]

Efforts to implement this measure have so far failed with the federal Opposition, the Greens and key independent senators voting against legislation in 2009. Concerns have been expressed that means testing the rebate would lead many higher income earners to drop or downgrade their private cover. This could push up premium prices for those who retain their private insurance and add more pressure onto the public health system as those leaving private cover seek medical care in public hospitals.[3] One recent private health industry estimate claimed that up to 1.6 million people would drop their cover, premiums would rise by ten per cent and an additional 845 000 public hospital admissions would be required to deal with increased demand.[4]

The Government has dismissed these claims. It considers that just 25 000 people would drop their cover with the vast majority retaining their membership.[5] Others have argued that as the rebate is inefficient and expensive it should be means tested.[6] In particular, some have pointed to the lack of value for money for those in rural and regional areas, where access to private health services is limited and most have to rely on the public health system.[7]

It remains to be seen whether the Greens, who will hold the balance of power in the Senate after July, will support re-introduced legislation. Although they have repeatedly stated they do not support the private health insurance rebate, preferring that it be scrapped and the money redirected to support the public health sector, the Greens voted against the legislation to means test the rebate. This was because they opposed the legislation to increase the Medicare levy surcharge, which was introduced at the same time.[8] If the increase to the surcharge—which in any case will contribute only a small proportion to the overall savings for the measure—were dropped, the Greens may well support legislation to means test the rebate.[9]

But even if Greens support can be won, the Government will still need to persuade the country independents in the House of Representatives to support means testing the rebate. The argument that the rebate represents poor value for money for people in rural areas, where there is limited access to private health services, may resonate for some.[10] However, concerns that means testing the rebate might add further pressure on the public health system may also need to be addressed.

Bowel cancer screening

Dr Anne-marie Boxall

Another potentially contentious issue in this year’s Budget is the way the national bowel cancer screening program will be implemented.

There has been much speculation about the future of the program since funding lapsed in December 2010, with many calling for funding to be re-instated.

In this Budget, the Government has provided funding of $138.7 million over four years to test men and women aged 50, 55 and 65 for signs of bowel cancer, Australia’s second most common form of cancer.[11] Although many may welcome the renewed funding, public health experts point out that, according to international evidence, the best way to save lives from bowel cancer screening is to test people every two years after the age of 50.[12] Because Australia’s bowel cancer screening program does not accord with the strong evidence base that exists, it has been labelled by some experts as a ‘pretend’ screening program and a disappointment.[13]


Dr Rhonda Jolly

Health workforce initiatives in this Budget are negligible. In effect, there are only two new workforce measures. One will provide funding ($52.6 million over four years) to develop a voluntary dental intern year, which the Government argues ‘will potentially help reduce waiting lists and preventable hospitalisations by increasing the capacity of dental services, particularly in the public sector’.[14] The other measure is obliquely referred to in the Department of Health Ageing Portfolio Budget Statements and involves the Department working with health stakeholders to increase the number of people trained to deliver radiation oncology services.[15] In addition, in 2011-12 the Government will provide part-funding for radiation therapists during an intern year or professional development year. It will also provide funding for radiation oncology medical physics registrars and radiation oncology medical physics preceptor (clinical tutor) positions. No details of this funding are given. 

It could be argued that there is some justification that health measures in this Budget should focus on neglected areas, such as mental health, given that significant attention has been paid to workforce recruitment and retention initiatives in recent times. As the Department of Health and Ageing Portfolio Budget Statements point out, since 2007 workforce programs have included increases in the number of general practice medical training places available, extra funding for rural clinical schools, scaling initiatives to increase the attractiveness of working in rural and remote areas for overseas trained doctors and increased locum support.[16]

At the same time, there is a sense in this Budget that the process of health workforce reform may have stalled; that workforce reforms requiring fundamental and innovative change have given way to other health priorities. It appeared that the 2009–10 Budget was the beginning of a new approach, with nurse practitioners promised access to Medicare and the Pharmaceutical Benefits Scheme and, in last year’s Budget, a relatively small number of scholarships were offered to entice these practitioners into the difficult-to-fill aged care sector.[17] There have been no similar measures in this Budget.

This year would seem to be the right time to expand on the nurse practitioner initiative, with funding to complement mental health measures, for example. The Australian Nursing Federation has alluded to the issue in noting that there needs to be an integrated strategy to identify a new workforce to deliver on the mental health investment.[18] It would also seem to be the time to look more seriously at harnessing the potential of the allied health workforce by providing more support to attract and retain people and by introducing measures that could appropriately extend scopes of practice and responsibilities. These measures need not have been big ticket items; funding for a moderate allied health program in last year’s Budget, for example, was only $6.5 million over four years to provide 100 additional clinical placement scholarships per year for allied health students.[19] However, they may have better allowed the new cohort of medical practitioners who will graduate in the next few years to concentrate on diagnosis and complex management of patients, while handing over more mundane and repetitive medicine to other professionals. 

It is possible to concede that the Government has decided it is too early to embrace such momentous change. More work needs to be undertaken by its workforce agency, Health Workforce Australia, to consider what options will indeed work best in the Australian health system. There is, however, already considerable evidence available which supports the introduction of new types of health professionals and documents the success of enhancing the skills of existing health workers.[20]

Aged Care—the wait continues

Rebecca de Boer

In a post-Budget interview, the Minister for Mental Health and Ageing, Mark Butler, acknowledged that the Budget did not contain any significant funding or policy reform for aged care.[21] The Government is waiting for the Productivity Commission’s (PC) final report into aged care which will detail options to redesign the aged care system.[22] Yet this Budget is not without any additional expenditure on aged care or policy changes.


The majority of additional expenditure in the aged care portfolio is directed towards aged care providers. The viability supplement to assist aged care providers in rural and remote areas has been increased by 40 per cent ($16 million in 2011-12), and extended for another year to services providing care to people at risk of homelessness and/or Indigenous Australians, or operating in rural and remote areas. Another round of zero interest real loans (ZRIL) will be conducted and the time taken to repay the loan has been extended from 12 to 22 years.[23] The focus of this round will be aged care homes in the same priority areas outlined above with a specific emphasis on smaller aged care services. This ZRIL round is part of what was agreed between the Government and the states in the context of the health reform agreement.[24]

Funding for the Ambassador for Ageing has been extended and Noeline Brown will continue in her role.

Policy changes

One of the features of the Government’s health reform package was that the Commonwealth would take full funding and policy responsibility for aged care. A network of ‘one-stop shops’ across Australia was to be established at a cost of $37 million.[25] These were to be a single-entry point to the aged care system that would provide information and advice to older Australians about the aged care system and assistance with accessing aged care (including assessment services).[26] The network was due to commence from 1 July 2011 with a one-stop shop in every region supported by telephone and web-based systems.[27]

It appears that the network of one-stop shops will not be implemented as originally envisaged. Rather, the Government will first introduce a single phone number for consumers and carers and develop a new ‘front end’ for the aged care system.[28] This phone number will be used by consumers and carers seeking information about how to access and navigate the aged care system.[29] During 2011–12, the Government will consult with state and territory governments, aged care service providers, workforce and peak bodies about the core elements of the proposed front end.[30] It is envisaged that the new front end will have strong links with Local Hospital Networks and Medicare Locals and existing infrastructure, such as the Commonwealth Respite and Carelink Centres.[31] The Government will continue to support access to information through the Aged Care Information Line and the Aged Care Australia website.

As has been noted elsewhere in the Budget Review, this Budget makes an attempt to move away from fee-for-service provision in mental health. This approach, in a limited context, has also been adopted in aged care. The incentives that have previously been paid to health professionals (general practice and allied health) to provide care in residential aged care facilities will be transferred to the Medicare Locals Fund.[32] It is not clear from the budget papers whether (or when) the financial incentives to health professionals will cease or how the funding will be allocated to Medicare Locals. It remains to be seen whether this approach will be more effective than previous incentives and programs to encourage improved access to primary care in aged care settings.[33] 

Consumer directed care (CDC) packages were first announced in the 2010–11 Budget with 500 packages to be allocated.[34] These packages allow consumers greater flexibility and choice about the type of aged care they access. A further 500 packages will be allocated in 2011–12 and will be classified as either ‘Low’, ‘High’ or ‘Dementia’. It is not yet possible to determine how many packages from the previous Budget have been allocated (and operational), or how successful they have been in promoting consumer choice.[35] There have long been calls to remove the distinction between high and low in aged care packages and the benefit of the proposed classification of packages in this context is not clear.[36] The introduction of CDC was a recommendation of the National Health and Hospitals Reform Commission. Extension of this approach has been canvassed in the PC’s draft report.

The Gillard Government has signalled that reform to aged care will be a feature of this term. Without pre-empting the recommendations of the PC report, this Budget maintains current policy settings with some attempts to move towards, in part, more flexible funding arrangements and greater consumer involvement in aged care. 

[1].       Australian Government, Portfolio budget statements 2011–12: budget related paper no. 1.10: Health and Ageing Portfolio, Commonwealth of Australia, Canberra, 2011, p. 263, viewed 19 May 2011,

[2].       N Roxon (Minister for Health and Ageing) and W Swan (Treasurer), Rebalancing support for private health insurance, media release, 9 May 2009, viewed 12 May 2011,

[3].       Australian Health Insurance Association (AHIA), Rudd abandons private health, media release, 12 May 2009, viewed 16 May 2011,
; and AHIA, Forcing more Australians onto public hospital waiting lists is not an ‘insignificant’ matter, media release, 27 May 2009, viewed 12 May 2011,

[4].       AHIA , Means-testing affects entire Australian health system¸ media release, 4 May 2011, viewed 12 May 2011, 20-%20Means%20testing%20affects%20entire%20Australian% 20Health%20System04May11.pdf

[5].       N Roxon (Minister for Health and Ageing), Speech: Australian Health Insurance Association conference, media release, 11 November 2009, viewed 19 May 2011, display.w3p;query=Id%3A%22media%2Fpressrel%2F76UV6%22

[6].       Australian Healthcare and Hospitals Association, Private health means-testing study misses the mark, media release, 5 May 2011, viewed 16 May 2011, documents/publications/360/110505%20AHHA.pdf

[7].       J Doggett, 'Why independents should support means testing the private health insurance rebate', Crikey website, viewed 12 May 2011,

[8].       R Siewert, 'Second reading speech: Fairer Private Health Insurance Incentives Bill 2009', Senate, Debates, 9 September 2009, p. 6159, viewed 12 May 2011,;query=Id%

[9].       It was originally estimated that means testing the rebate would achieve savings of around $1.8 billion, while increasing the surcharge would achieve additional revenue of $145 million. See, Australian Government, Budget measures: budget paper no. 2: 2009–10, Commonwealth of Australia, Canberra, 2009, p. 311.

[10].     J Doggett, 'Why Independents should support means testing private health insurance rebate', Croakey, 16 September 2010, viewed 17 May 2011,; see also, A Biggs, 'Means testing the private health insurance rebate—one more attempt in a changed Parliamentary environment', Flagpost website, 6 May 2011, viewed 17 May 2011,

[11].     Australian Government, Budget measures: budget paper no. 2: 2011–12, Commonwealth of Australia, Canberra, 2011, p. 224; Australian Institute of Health and Welfare (AIHW), Australia’s health 2010, AIHW, Canberra, 2010, p. 135.

[12].    K Flitcroft, G Salkeld, J Gillespie, L Trevena, L Irwig, ‘Fifteen years of bowel cancer screening policy in Australia: putting evidence into practice’, Medical Journal of Australia, vol. 193, no. 1, 2010, pp. 37–42, viewed 12 May 2011,

[13].    See for example: K Flitcroft, ‘The “pretend” bowel cancer screening program is an opportunity lost’, Croakey, viewed 12 May 2011,
I Olver, ‘The good and bad news from the budget on bowel cancer screening’, Croakey, viewed 12 May 2011,
the-good-and-the- bad-news-from-the-budget-on-bowel-cancer-screening/

[14].     Portfolio budget statements, 2011–12: budget related paper no. 1.10: Health and Ageing Portfolio, op. cit, p. 329.  

[15].     Ibid., pp. 326–7.

[16].     Ibid., Outcome 12, Health Workforce Capacity section, pp. 321–337.

[17].     Australian Government, Budget measures: budget paper no. 2: 2009–10, Commonwealth of Australia, Canberra, 2009, viewed 12 May 2011, and Australian Government, Budget measures: budget paper no. 2: 2010–11, Commonwealth of Australia, Canberra, 2010, p. 239.

[18].     Australian Nursing Federation (ANF), ANF welcomes government’s mental health boost, media release, 11 May 2011, viewed 12 May 2011,

[19].     Budget measures: budget paper no. 2: 2010–11, op. cit. p. 240.

[20].     For example, the British National Health Service competencies scheme described in United Kingdom, Department of Health, The NHS Knowledge and Skills Framework (NHS KSF) and the development review process, October 2004, viewed 12 May 2011,
  and the work of health academics, such as Professor Rod Hooker, who writes extensively on physician assistants, for example, his paper ‘Physician assistants and nurse practitioners: the United States experience’, Medical Journal of Australia, vol. 185, no. 1, 2006, viewed 12 May 2011,

[21].     T Jones, ‘Youth services are essential: interview with Mark Butler’, Lateline, transcript, Australian Broadcasting Corporation (ABC), 11 May 2011, viewed 12 May 2011,

[22].     M Butler (Minister for Mental Health and Ageing), Building a sustainable national aged care system, media release, 10 May 2011, viewed 11 May 2011,

[23].     Portfolio budget statements 2011–12: budget related paper 1.10: Health and Ageing Portfolio, op. cit, p. 196.

[24].     Ibid.

[25].     Australian Government, Delivering better health and better hospitals, Commonwealth of Australia, 2010, p. 41, viewed 12 May 2011,

[26].     Australian Government, Portfolio budget statements 2010–11: budget related paper no 1.10: Health and Ageing Portfolio, Canberra, Commonwealth of Australia, 2010, p. 168.

[27].     Ibid.

[28].     Portfolio budget statements 2011–12: budget related paper 1.10: Health and Ageing Portfolio, op. cit, pp. 163, 180.

[29].     Ibid., p. 163.

[30].     Ibid., p. 180.

[31].     Ibid., p. 181.

[32].     Ibid., pp. 211–12, 822.

[33].     See, for example, the Aged Care Access Initiative, introduced as part of the 2008–09 Budget, viewed 12 May 2011,

[34].     Australia, Parliamentary Library, Budget review 2010–11, Research paper, no 17, 2010–11, Parliamentary Library, Canberra, 2010, viewed 13 May 2011,

[35].     There is often a delay between the ‘allocation’ and the ‘operation’ of aged care packages.

[36].     See, for example, ‘the Grand Plan’, a policy put forward by the Campaign for the Care of Older Australian, a coalition of around 95 per cent of aged care providers in Australia, viewed 13 May 2011,