Budget Review 2021–22 Index
Key figures and trends
Total spending on health in 2021–22 is estimated to be $98.3
billion, representing 16.7% of the Australian Government’s total expenditure (Budget
Strategy and Outlook: Budget Paper No. 1: 2021–22, pp. 161–162). Table
1 below shows expenses by sub-function as forecast in the Budget papers (nominal)
while Figure 1 shows this in constant 2021–22 dollars (real terms). Total
expenses are projected to increase by 2.0% in real terms between 2020–21 and
2021–22, before decreasing by 2.1% by 2024–25, largely due to the cessation of
COVID-19 emergency response measures.
Table 1: health function expenses,
2020–21 to 2024–25 (nominal)
services and benefits
the states for public hospitals
benefits and services
and Torres Strait Islander health
totals may vary due to rounding.
Source: Australian Government, Budget strategy and outlook: budget paper no. 1:
, p. 171.
Figure 1: health function
expenses, 2020–21 to 2024–25 (real, 2021–22 dollars)
The Parliamentary Library has estimated real expenses using 2021–21 dollars;
due to methodological differences, these estimates may produce growth rates
that differ slightly from those reported in Budget Paper No. 1.
Source: Parliamentary Library
estimates, adapted from Australian Government, Budget strategy and outlook: budget paper no. 1:
2021–22, p. 171.
Paper No. 1 details expenses by sub-function (pp. 171–173):
- Medical services and benefits, comprised largely of Medicare and
Private Health Insurance rebate expenses, will account for $37.6 billion, or
38.2% of total health expenses in 2021–22.
spending is expected to increase by 3.4% from 2021–22 to 2024–25, with the
largest driver of this increase being ongoing growth in the use of medical
services listed on the Medicare Benefits Schedule (MBS). Expenses for private
health insurance are expected to decrease in real terms over the period.
- Assistance to the states and territories, comprising the
Australian Government’s contribution to public hospital funding, will account
for $25.5 billion, or 25.9% of total health expenses in 2021–22 (excluding
National Partnership payments).
spending is expected to increase by 10.3% from 2020–21 to 2021–22, largely
reflecting higher than anticipated growth in the volume of services, and then
increase by 9.5% in real terms from 2021–22 to 2024–25.
breakdown of Commonwealth National Health Reform funding to each state and territory
in 2019–20 and estimates for 2020–21 to 2024–25 can be found in Federal
Financial Relations: Budget Paper No. 3: 2021–22 (pp. 19–21).
- Pharmaceutical benefits and services, comprised primarily of Australian
Government subsidies for Pharmaceutical Benefits Scheme (PBS) medicines, will
account for $15.2 billion, or 15.5% of total health spending in 2021–22.
are expected to be relatively steady over the forward estimates.
- 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 and health
infrastructure, will account for $13.7 billion, or 13.9% of total health
funding in 2021–22. The sub-function also includes expenses associated with
COVID-19 response measures.
are expected to decrease by 33.0% in real terms between 2021–22 and 2024–25 due
to the cessation of pandemic response measures.
- General administration, comprised of general administrative
costs, investment in health workforce measures and support for rural health
initiatives, will account for $4.2 billion, or 4.3% of total health funding in
to COVID-19 response measures, expenses are expected to increase by 2.9% in
real terms between 2020–21 and 2021–22, before decreasing by 25.0% between
2021–22 and 2024–25.
- Hospital services, comprised mainly of payments to the states and
territories to deliver veterans’ hospital services, will account for $1.2
billion, or 1.2% of total health funding in 2021–22.
are expected to decrease by 8.5% in real terms over the period 2021–22 to
2024–25, reflecting an expected reduction in the number of veterans requiring
treatment and efficiencies achieved in the pricing arrangements.
- Aboriginal and Torres Strait Islander health, reflecting health
portfolio Indigenous-specific services, will account for $980 million, or 1.0%
of total health funding in 2021–22.
expenses are expected to increase by 3.5% between 2021–22 and 2024–25, related
to utilisation of the Indigenous Australians’ Health Program.
Resourcing: Budget Paper No. 4: 2021–22 (p. 161) shows that a number of
agencies in the Health portfolio will increase staffing in 2021–22. Average staffing
levels will increase from 6,559 in 2020–21 to 7,534 in 2021–22, with notable
increases at the Department of Health (+498 to 4,634) and the Australian
Digital Health Agency (+82 to 335).
Significant policy measures
Selected Health portfolio measures from Budget
Measures: Budget Paper No. 2: 2021–22 are outlined below. Mental health
and the COVID-19 health response are addressed in separate briefs.
Medicare and primary care
On 26 April 2021, the Minister for Health announced
$114 million to extend telehealth until the end of 2021. However, Budget
Paper No. 2 includes $204.6 million for the extension of temporary
telehealth MBS services (p. 105). While the increase is not explicitly explained,
there are changes to exempt certain patient cohorts from the requirement to
have a pre-existing relationship with a doctor to access telehealth for
certain consultations, including smoking cessation consultations, sexual and
reproductive health consultations and drug and alcohol counselling (see the Health
Portfolio 2021–22 Budget Stakeholder Pack, p. 79). In welcoming the
measure, the Royal
Australian College of General Practitioners indicated it had pushed hard
for the change.
Medical Association continues to call for permanent telehealth arrangements
to be settled as soon as possible.
The Budget provides $65.8 million to increase and better
target the Rural Bulk Billing Incentive (Budget
Paper No. 2, p. 111). This is
intended to encourage doctors to bulk bill vulnerable patients and help improve
the financial viability of practices in rural and remote areas. For the first
time, the size of the incentive payment increases the more rural the location,
based on the Modified Monash Model (see the Health
Portfolio 2021–22 Budget Stakeholder Pack, p. 67). From 1 January
2022, the incentive will increase from the current 150% of the incentive in
metropolitan areas to:
- 160% in large and medium rural towns (Modified Monash (MM)
- 170% in small rural towns (MM 5)
- 180% in remote areas (MM 6)
- 190% in very remote areas (MM 7), or up to $12.35 per consultation.
The Rural Doctors Association of Australia (RDAA) welcomed
this announcement as the first time in Medicare policy that there has been a
distinction between large regional cities and ‘real rural’ and remote settings.
The RDAA also welcomed an expansion of the John Flynn
Prevocational Doctor Program (which has been established by consolidating and
redirecting existing funding streams, Budget
Paper No. 2, p. 112), but said it fell short of the number of rural
training places for junior doctors it believes are required to address the
maldistribution of doctors across Australia.
Changes to the Medicare Benefits
The Budget includes several changes to the MBS across
multiple measures, with a total of $711.7 million for new and amended MBS items
Portfolio 2021–22 Budget Stakeholder Pack, p. 62).
The most expensive individual measure is $288.5 million to
provide access to Medicare subsidised repetitive Transcranial Magnetic
Stimulation for the treatment of medication-resistant major depressive disorder
Paper No. 2, p. 122), which has been welcomed
by the Royal Australian and New Zealand College of Psychiatrists.
There are measures involving both new investment and
efficiencies in response to MBS Review Taskforce recommendations to align the
MBS with contemporary practice, tighten clinical indicators, list new items,
remove obsolete items and restrict inappropriate co-claiming (Budget
Paper No. 2, pp. 109–110). Changes are being made to orthopaedic surgery
services, gynaecology services, plastic and reconstructive surgery and pain
management services, for a net investment of $33.5 million over four years from
There is also $3.2 million in 2021–22 to continue the review
of the MBS (p. 110).
Notable primary care initiatives in the Budget include:
There are no major new dental initiatives in 2021–22 Budget,
but there is additional funding for some existing programs:
- $107.9 million in 2021–22 to extend the National Partnership
Agreement on Public Dental Services to Adults for one year, to help states and
territories provide approximately 180,000 public dental services to adult
concession card holders (Budget
Paper No. 2, p. 110).
is the third one-year extension to the Agreement, which was initially established
from 1 January 2017 to 30 June 2019. The Australian
Dental Association welcomed the extension but called for a long-term
solution to public dental services.
- $7.3 million over four years from 2021–22 to expand eligibility
for the Child Dental Benefits Schedule (CDBS) to children under two years old
(p. 110). The Fourth
Review of the Dental Benefits Act 2008, tabled in 2019, had recommended
lowering CDBS eligibility to one year olds (p. 20).
Report of the Royal Commission into Aged Care Quality and Safety called for
the Australian Government to establish a new Senior Dental Benefits Scheme
commencing no later than 1 January 2023 (recommendation 60, p. 249). The
Australian Government response to
the report states this recommendation is subject to further consideration by
2023 (p. 42).
The Budget provides funding for several digital initiatives,
- $421.6 million over two years as part of the cross-portfolio ‘Digital
Economy Strategy’ measure (Budget
Paper No. 2, p. 75), comprising:
million for My Health Record
million for operational funding for the Australian Digital Health Agency
million for continued funding related to the 2018–2022 Intergovernmental
Agreement on National Digital Health (Health
Portfolio 2021–22 Budget Stakeholder Pack, p. 81).
This builds on the $200.0 million in
funding provided for these activities in each of the previous two financial
Measures: Budget Paper No. 2: 2019–20, p. 103 and Budget
Measures: Budget Paper No. 2: 2020–21, p. 248).
- $45.4 million as part of the Government response to
the Royal Commission into Aged Care Quality and Safety (recommendation 68, p.
46) to roll out electronic medication charts in residential aged care
facilities, drive use and integration of My Health Record and establish digital
support for transitions between aged care and hospital settings (Health
Portfolio 2021–22 Budget Stakeholder Pack, p. 81).
- $36.0 million over four years from 2021–22 (and $1.6 million per
year ongoing) as part of the Deregulation Agenda to expand the Health Products
Portal, providing a single digital channel for industry to manage applications
to the PBS, Medical Services Advisory Committee and the Prostheses List (Budget
Paper No. 2, p. 67).
Pharmaceutical Benefits Scheme
The Budget provides $878.7 million over five years from
2020–21 for new and amended listings on the PBS, the Repatriation
Pharmaceutical Benefits Scheme and the Stoma Appliance Scheme (Budget
Paper No. 2, p. 115). The only new PBS listing not previously
announced is galcanezumab (Emgality®), to be listed from 1 June 2021, for the
treatment of chronic migraines. Migraine
Australia welcomed the listing, noting it had been 692 days since the
Pharmaceutical Benefits Advisory Committee had recommended Emgality for listing.
Private health insurance
The Government will achieve savings of $303.9 million over
four years from 1 July 2021 by continuing the pause on indexation (first
introduced in 2014) of income thresholds for the Medicare Levy Surcharge (MLS) and
Private Health Insurance Rebate for a further two years from 1 July 2021,
whilst a review of the MLS policy settings is undertaken (Budget
Paper No. 2, p. 124). The MLS is a levy paid by taxpayers who do
not have private hospital cover and earn above a certain income, with the rate
increasing across three income tiers. The Australian Government provides a
means-tested rebate to many Australians with private health insurance to help
cover the cost of premiums. The base income threshold, under which a taxpayer
is not liable to pay the MLS and receives the highest rebate, will remain
$90,000 for singles and $180,000 for families. The Government has introduced
Health Insurance Amendment (Income Thresholds) Bill 2021 to implement this
The Budget also provides $23.1 million over four years (and
$2.1 million per year ongoing) to modernise and improve the administration of
the Prostheses List (Budget
Paper No. 2, p. 124). The private health insurance sector has
long raised concerns about the Prostheses List, which sets the benefits
insurers are required to pay for listed products (primarily medical devices),
on the basis that in many cases it far outweighs the costs of the same items in
the public system and other competitive markets. While the specific reforms to
be implemented are not yet detailed, both the medical
technology sector and private
health insurance industry welcomed the announcement, albeit for slightly
The Australian Government announced
a $353.9 million Women’s Health Package on 9 May 2021. Notable measures within
this package include:
- $107.5 million to include new genetic testing procedures on the
MBS, including $95.9 million for pre-implantation testing of embryos for specific
genetic conditions or chromosome variations
- $100.4 million for improvements to cervical and breast cancer
screening programs, including an extension for the BreastScreen Australian
Expansion National Partnership Agreement, which supports women aged 70 to 74 to
- $47.4 million to support the mental health and wellbeing of new
and expectant parents, including to develop a perinatal mental health minimum
data set and deliver universal perinatal mental health screening in conjunction
with states and territories (see separate Budget Review brief on mental health)
- $22 million to reform gynaecology services funded by Medicare,
including items related to assisted reproductive technology, intrauterine
insertions and diagnostic hysteroscopy
- $13.7 million for a national rollout of the Australian Preterm
Birth Prevention Alliance Program (Health
Portfolio 2021–22 Budget Stakeholder Pack, pp. 45–46).
Paper No. 2 sets out funding for medical research, including:
- $4.4 million over four years to introduce mitochondrial donation
into research settings in Australia and to help facilitate a clinical trial of
mitochondrial donation to support families that may be impacted by severe forms
of hereditary mitochondrial disease (p. 116). The Mitochondrial
Donation Law Reform (Maeve’s Law) Bill 2021 is currently before the
- $6.0 million over four years to continue the Encouraging More
Clinical Trials in Australia program under the National Partnership for
Streamlined Agreements (p. 116).
Budget Statements 2021–22: Budget Related Paper No. 1.7: Health Portfolio
affirms anticipated disbursements over the forward estimates of $2.6 billion
through the Medical Research Future Fund and $3.6 billion through the National
Health and Medical Research Council (p. 34 and p. 351).