Jennifer Phillips, Alex Grove and Lauren Cook
Key figures
- Total spending on health in 2019–20 is estimated to be $81.8 billion,
representing 16.3 per cent of the Australian Government’s total
expenditure (see Table 1).
- Medical services and benefits, comprised primarily of Medicare and Private
Health Insurance Rebate expenses, will account for $33.7 billion, or
41.2 per cent of total health funding in 2019–20. Growth in Medicare
expenses is the major driver of growth.
- Pharmaceutical benefits and services, comprised largely of
Australian Government subsidies for Pharmaceutical
Benefits Scheme (PBS) medicines, will account for $12.7 billion, or 15.5 per cent
of total health spending, in 2019–20.
- Assistance to the states for public hospitals, comprising
the Australian Government’s contribution to public hospital funding,
will account for $22.5 billion, or 27.5 per cent of total health
funding in
2019–20. In addition to $22.5 billion in National Health Reform Funding the
Government will provide $269.5 million in National
Partnership payments (p.17).
- Hospital services, comprised mainly of payments to the states and
territories to deliver veterans’ hospital services, will account for $1.3 billion,
or 1.6 per cent of total health funding in 2019–20.
- Health services, comprised of Australian Government expenses
associated with the delivery of population health, medical research, mental
health, blood and blood products, other allied health services, health
infrastructure and disbursement from the Medical
Research Future Fund (MRFF), will account
for $7.4 billion, or 9.0 per cent of total health funding in
2019–20.
- General administration, comprised of general administrative costs,
investment in health workforce measures and support for rural health
initiatives will account for $3.2 billion, or 4.0 per cent of
total health funding in 2019–20.
- Aboriginal and Torres Strait Islander health, Indigenous-specific
services under the Indigenous Australians Health Program, will account for $962.0 million,
or 1.2 per cent of total health funding in 2019–20.
Table 1: total health expenses, $ million
|
2018–19
(est.) |
2019–20
(est.) |
2020–21
(est.) |
2021–22
(proj.) |
2022–23
(proj.) |
| Medical services and benefits |
32
197 |
33
687 |
35
121 |
36
823 |
38
814 |
| Pharmaceutical benefits and
services |
13
457 |
12
688 |
10
877 |
10
862 |
11
085 |
| Assistance to the States for
public hospitals |
21
708 |
22
535 |
23
622 |
24
815 |
26
183 |
| Hospital services |
1
385 |
1
298 |
1
218 |
1
181 |
1
149 |
| Health services |
7
505 |
7
371 |
7
441 |
7
646 |
8
021 |
| General administration |
3
395 |
3
236 |
3
252 |
3
194 |
3
228 |
| Aboriginal and Torres Strait
Islander health |
922 |
962 |
998 |
1
031 |
1
065 |
| Total |
80
569 |
81
777 |
82
530 |
85
552 |
89
544 |
Note: totals may not sum due to rounding
Source: Australian Government, Budget strategy and outlook:
budget paper no.1: 2019–20,
pp. 5-19.
Figure 1: estimated Australian Government expenses on
health
Source: Australian Government, Budget strategy and outlook:
budget paper no.1: 2019–20,
p. 5-19.
Key trends
The following figures come from Budget
Paper no. 1 unless otherwise stated:
- Spending on health is expected to increase by 2.0 per cent
in real terms (accounting for inflation) from 2019–20 to 2022–23. The largest
drivers of this increase will be growth in assistance to the states for public
hospitals, and medical services and benefits.
- Real spending on medical benefits is expected to increase
by 9.8 per cent from 2019–20 to 2022–23. This is largely due to
ongoing growth in the use of medical services and the use of high value items
on the Medicare Benefits Schedule. Expenses for private health insurance are
expected to increase by 0.7 per cent in real terms over the period
2019–20 to 2022–23. Expenses for dental services are expected to decrease 2.0
per cent in real terms over the period 2019–20 to 2022–23.
- Real spending on pharmaceutical benefits and services is
expected to decrease by 18.6 per cent from 2019–20 to 2022–23. This is largely
due to changes to PBS payment administration, announced
in the 2018–19 Budget, which have the effect of reducing both expenditure
and revenue (from confidential
rebates paid by pharmaceutical companies). Implementation
of these changes has been delayed, but it appears the Government still
intends to proceed with them. Overall
PBS investment (expenses less revenue) is expected to be relatively flat
over the forward estimates in nominal terms (p. 88).
- Real spending on assistance to the states for public hospitals
is expected to increase by 8.3 per cent over the period 2019–20 to 2022–23.
The current public hospital agreement between the Commonwealth and the states
and territories is due to expire in mid-2020. In the 2018–19 budget, the
Government committed to a new
health and hospitals agreement from 2020–21 to 2024–25. Consistent with
current arrangements, under this agreement the Commonwealth will fund 45.0 per
cent of the efficient growth of activity based services, capped at 6.5 per cent
per annum. Budget
paper no. 3 (p. 18) states that the new agreement is being developed
for approval by the Council of Australian Governments before the end of 2019.
Significant policy announcements
Table 2: significant policy announcements, $ million
| Budget measure |
2018–19
(est.) |
2019–20
(est.) |
2020–21
(est.) |
2021–22
(proj.) |
2022–23
(proj.) |
| Dental |
|
|
|
|
|
| Child Dental Benefits Schedule —
three year extension |
- |
- |
- |
- |
- |
| Medicare |
| Guaranteeing Medicare —
strengthening primary care |
46.7 |
147.1 |
142.0 |
268.8 |
449.5 |
| Guaranteeing Medicare — improved
access to diagnostic imaging |
8.0 |
35.9 |
52.2 |
89.9 |
126.5 |
| My Health Record |
| My Health Record — continuation |
- |
- |
- |
- |
- |
| Medical Research Future Fund |
| Investing in Health and Medical
Research — Medical Research Future Fund — Ten Year Investment Plan |
0.3 |
8.4 |
5.9 |
9.3 |
8.4 |
| Hospitals |
| Supporting Our Hospitals —
additional infrastructure and services |
16.2 |
5.1 |
7.6 |
19.6 |
29.6 |
| Supporting Our Hospitals —
Community Health and Hospitals Program |
- |
- |
- |
- |
- |
| Medicines |
| Improving Access to Medicines —
Life Saving Drugs Program |
nfp |
nfp |
nfp |
nfp |
nfp |
| Improving Access to Medicines —
Pharmaceutical Benefits Scheme — new and amended listings (expense) |
46.7 |
101.0 |
17.8 |
17.5 |
18.4 |
| (related revenue) |
nfp |
nfp |
nfp |
nfp |
nfp |
| Improving Access to Medicines —
supporting community pharmacy |
-85.0 |
-46.0 |
76.7 |
76.7 |
76.7 |
| Mental health |
| Prioritising Mental Health –
caring for our community |
8.6 |
12.9 |
39.3 |
40.0 |
48.6 |
| Prioritising Mental Health – national
headspace network |
13.9 |
16.7 |
34.3 |
42.6 |
45.9 |
| Prioritising Mental Health –
Early Psychosis Youth Services |
- |
- |
- |
- |
- |
Notes: ‘-‘ means zero; ‘nfp’ means for ‘not for publication’.
Source: Australian Government, Budget measures: budget paper
no. 2: 2019–20, pp. 84–108.
As outlined in table 2 above, the 2019–20 Budget includes a
number of proposed policy measures that relate to health. Further information
on these measures is provided below.
Dental
-
Over $1.0 billion for a three year extension of the Child
Dental Benefits Schedule (CDBS) from 1 January 2020. The CBDS provides
eligible children aged between 2 and 17 years access to $1,000 of dental
services over a two year period. Provision for this funding has already been
included in the forward estimates.
Medicare
- A $1.1 billion commitment to strengthen
primary health care. This announcement builds on funding provided
for primary care in the Mid-Year
Economic and Fiscal Outlook (MYEFO) 2018–19 (pp. 183–184) and
includes:
- $448.5
million over three years from 2020–21 for a new chronic disease care funding
model. Under this model,
Australians over the age of 70 will be able to voluntarily enter into an
agreement with their general practitioner, and receive more personalised,
coordinated care. Patients will also be able to receive consultations,
referrals, scripts and test results remotely
- $201.5
million over five years for the Practice
Incentives Program Quality Improvement Initiative, including retention of
the Aged
Care Access Incentive
- $187.2
million over four years to re-introduce
indexation (p. 89) to all 176 remaining General Practitioner services on
the Medicare Benefits Schedule from 1 July 2019. The decision to re‑introduce
indexation matches a commitment
made by Labor in March 2019 to end the indexation pause on these services one
year ahead of schedule. The pause on Medicare indexation was first introduced
by Labor in the 2013–14
Budget (p. 177) as a temporary measure to July 2014. It was reimposed by
the Liberal National Government in MYEFO
2014–15 (p. 166) and extended in the 2016–17
Budget (p.108) to July 2020 and
- $62.2
million over five years to implement a new
medical training pathway for rural generalists and provide additional
training places for General Practitioners in rural, remote and regional
communities.
- $308.9 million over five years from 2018-19 for improved access
to diagnostic
imaging services (partial funding for this measure has already been
included in the forward estimates). This measure includes:
- provision
of an additional 23 Magnetic Resonance Imaging (MRI) licences to provide
Medicare subsidised access to imaging services. This takes the total number of
new licences announced
by the Government since 2018 to 53, with a cost of $379 million (p. 16)
- $198.6
million to increase the Medicare rebate for all diagnostic radiology and
ultrasounds on the Medicare Benefits Schedule (MBS) from 1 July 2020 and
- $32.6
million for two new Medicare items for MRI of the breast for the diagnosis of
breast cancer.
My Health Record
- $200.0 million in 2019–20 to continue the My Health Record system. Funding
for this measure has already been provided for by the Government.
Medical Research Future Fund
- A $5.0 billion, Ten
Year Investment Plan for the Medical
Research Future Fund (MRFF). The plan is underpinned by four themes—patients,
researchers, translation and missions. Provision for disbursements from the
MRFF has already been included in the forward estimates. Significant measures
under this plan include:
- a
further $931.0 million (total $1.3 billion) allocated to improve the health of
Australians through the development of new treatments and cures informed by the
latest research, such as $354.0 million for Clinical
Trials for Rare Cancers, Rare Diseases and Unmet Needs; and $554.0 million
for Emerging Priorities and Consumer Driven Research
- a
further $444.6 million (total $792.8 million) for health and medical research,
industry researcher exchange and training, and clinical researchers
- a
further $1.2 billion (total $1.4 billion) for research
missions—long-term investments in health and medical research to address
complex issues. This includes the Australian
Brain Cancer Mission, the Million
Minds Mental Health Research Mission and the Genomics Health Futures
Mission (announced
in the 2018–19 Budget), among others and
- a
further $1.2 billion (total $1.5 billion) for translation
projects in a range of areas, including: preventive and public health
research, primary health care research and medical research commercialisation.
Hospitals
- $1.3 billion over seven years from 2018-19 as part of the Community
Health and Hospitals Program. The program covers four priority areas:
hospital infrastructure; drug and alcohol treatment; preventive health, primary
care and chronic disease management; and mental health. Provision for this
funding has already been included in the forward estimates. Significant funding
under this measure so far includes:
Medicines
Mental health
- The 2019–20 Budget includes $736.6
million in funding over seven years for mental health, some of which has
already been provided for by the Government (p. 1-21). Significant measures
include:
- $114.5
million over five years from 2020–21 to fund a trial
of eight adult community mental health centres. It is intended that the
centres will provide people seeking help with on-the-spot treatment, advice and
support without needing a prior appointment
- $152.0
million over seven years from 2018–19 for additional
services across the headspace
youth mental health network to reduce waiting times and improve the quality of services
- $111.3
million over seven years from 2018–19 for an additional
30 headspace services across Australia. This includes 10 new headspace
centres and 20 new satellite services and
- $109.7
million from 2019–20 to extend the Early
Psychosis Youth Services program at 14 headspace centres for an
additional two years. Funding for this measure has already been provided for by
the Government.
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