New and changed health measures

Budget Review 2012–13 Index

Amanda Biggs and Rebecca de Boer

In a post-Budget speech, the Minister for Health highlighted the ongoing challenge of ensuring the sustainability of the health care system.[1] The budget papers show Australian Government spending on health is forecast to grow at 2.7 per cent per year over the forward estimates. Some $61.0 billion is allocated for health spending in the 2012–13 financial year.[2]

Some significant spending cuts have been announced, including savings of $96.5 million over four years from increasing the number of Medicare procedures that are capped under the Medicare Safety Net. The Safety Net applies once out-of-pocket medical costs exceed an annual threshold.[3] Thereafter, the patient is reimbursed 80 per cent of any further costs incurred (out-of-hospital services only). Following significant growth in safety net expenditure, safety net benefits were 'capped' for a number of services including obstetrics, IVF, cataract and varicose vein procedures in January 2010.[4] From November 2013, more procedures will be subject to these capping arrangements, including those with high fees and some cosmetic procedures.[5]

Although not drawn from the health budget, savings of $370.0 million over four years will come from the means testing of the Medical Expenses Tax Offset. When net medical expenses exceed an annual amount, taxpayers can claim a partial reimbursement through the tax system. The means test would lower the amount that could be reimbursed from 20 cents in the dollar to 10 cents for individuals earning over $84 000 and families earning more than $168 000. The expenditure threshold would be raised to $5000 (up from $2060) for this income group.[6]

Other savings of note include: $83.5 million over four years from tightening incentives paid to GPs for undertaking a range of health activities including e health, cervical screening, treating diabetes and the removal of GP incentives for childhood immunisation—now that payments under Family Tax Benefit Part A are linked to immunisation; $67.9 million over three years from streamlining some health workforce programs; $60.7 million over five years from 2011–12 from replacing the proposed Local Lead Clinicians Group with a national Clinicians Network; $43.9 million over five years from amending items listed on the Medicare Benefits Schedule; $44.0 million over four years from streamlining the GP Super Clinics program; $14.4 million over four years from the removal of automatic indexation for subsidised products on the Stoma Appliance Scheme; $12.3 million in 2011–12 from the early cessation of diabetes grants available under a COAG program; and $5.8 million over four years from the removal of joint replacement prostheses with high revision rates from the prostheses list.[7] Details around e health changes are addressed elsewhere in the Budget Review.

Some of the expected savings will be used to fund other areas of the health portfolio and a number of programs will be expanded. These include $49.7 million over four years to expand the National Bowel Cancer Screening Program which currently screens those aged 50, 55 and 65 using a home-administered faecal occult blood test.[8] Screening for bowel cancer can reduce the risk of dying from the disease by 25 per cent.[9] From 2013, those turning 60 will be eligible for screening and from 2015 those turning 70 will also be eligible. From 2017–18, biennial screening will be available to those aged 72 with other age groups to follow. The program has had a chequered history, beginning with delays in implementation, slow-uptake among those eligible for the test and reports of faulty tests. There were also criticisms from some cancer experts that the targeted age groups were not in line with international practice.[10]

Although not in the magnitude of the previous budget, some additional funding for mental health is provided. The Mental Health Nurse Incentive Program will receive $17.6 million over two years to provide community-based clinical support for those with severe, persistent mental illness.[11] There will be $21.0 million in funding for an additional six allied mental health services a year for patients treated under the Better Access program.[12] This partially restores the number of Medicare funded services, but only until December 2012 when another program is expected to be operational. In the last budget, the number of services claimable under the Better Access program was cut from 18 to 10 a year.[13] Funding for this partial restoration will be drawn from other mental health programs.

Low income thresholds exempting low income earners from the Medicare levy and Medicare levy surcharge will be lifted at a cost to the budget of $85.0 million over the forward estimates.[14] These thresholds are typically adjusted annually in line with CPI increases via legislation.

Another major expenditure item announced in the Budget was the final instalment of the regional priority round of the Health and Hospital Fund, part of the Government’s agreement with the Member for Lyne and the Member for New England. The total value of the regional priority round was $1.8 billion and this budget allocated $475.0 million over six years to 76 projects in rural, regional and remote areas.[15] The $5 billion Health and Hospitals Fund announced by the Rudd Government in 2008–09 has now been fully committed.[16] It will take some time for it to be spent as expenditure on many of these projects is over six years.


Many Australians with chronic illness and disability already face serious economic hardship.[17] A number of the savings measures announced in the Budget, including the means testing of the Medical Expenses Tax Offset, are likely to result in some facing higher out-of-pocket costs, which are high by international standards.[18] While the Government will offer some relief to low income earners by lifting the low income thresholds for the Medicare levy and the Medicare levy surcharge, the overall equity of the health care system must be considered, as the onset of chronic illness or catastrophic health events cannot be predicted.

Simply requiring individuals to pay more for their health care costs can pose a serious burden and stop people getting the health care they need.[19] The World Health Organization considers this to be a blunt and inequitable approach to funding health care.[20] How the health budget should be allocated still remains a compelling question. The Minister for Health wants ‘maximum bang for the health buck’[21] but arguably, this should not come at the expense of access and affordability to health care for all Australians.

[1].       T Plibersek (Minister for Health), Australian Institute of Policy and Science Post Budget Health Briefing, media release, 10 May 2012, viewed 11 May 2012.

[2].       Australian Government, Budget strategy and outlook: budget paper no. 1: 2012–13, Commonwealth of Australia, Canberra, 2012, p. 6–21, viewed 11 May 2012.

[3].       The expenditure threshold for concession card holders and Family Tax Benefits (Part A) beneficiaries is $598.80. For all others it is $1198. Department of Health and Ageing, ‘Extended Medicare Safety Net’, viewed 14 May 2012.

[4].       Expenditure growth was three times the rate of Medicare. Department of Health and Ageing (DoHA), Extended Medicare safety net review of capping arrangements report 2011: contextual overview, DoHA, June 2011, viewed 10 May 2012.

[5].       Australian Government, Budget measures: budget paper no. 2: 2012–13, Commonwealth of Australia, Canberra, 2012, p. 176, viewed 11 May 2012.

[6].       Ibid., p. 34. Net medical expenses are those incurred less any Medicare or health insurance benefits paid/payable.

[7].       Ibid., pp. 172, 177–178, 191–192, 201–204.

[8].       Ibid., p. 193.

[9].       K L Flitcroft, G P Salkeld, J A Gillespie, L T Trevena, L M Irwig, 'Fifteen years of bowel cancer screening policy in Australia: putting evidence into practice', Medical Journal of Australia, vol. 193, no. 1, 2010, p. 37, viewed 10 May 2012.

[10].     Ibid.

[11].     Australian Government, Budget measures: budget paper no. 2: 2012–13, op. cit., p. 193.

[12].     Ibid., p. 197.

[13].     Australian Government, Budget measures: budget paper no. 2: 2011–12, Commonwealth of Australia, Canberra, 2011, p. 229, viewed 11 May 2012.

[14].     Australian Government, Budget measures: budget paper no. 2: 2012–13, op. cit., p. 37.

[15].     Ibid., p. 177.

[16].     Plibersek, op. cit.

[17].     S Jan, B Essue and S Leeder, 'Falling through the cracks: the hidden economic burden of chronic illness and disability on Australian households', Medical Journal of Australia, vol. 196, no. 1, 2012, pp. 29–31.

[18].     Ibid.

[19].     A Boxall, 'Paying for health care: how can we sustain it?', FlagPost, Parliamentary Library, 5 May 2011, viewed 13 May 2012.

[20].     World Health Organization, The world health report – Health systems financing: the path to universal coverage, World Health Report 2011, World Health Organization, Geneva, viewed 13 May 2012.

[21].     Plibersek, op. cit.

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