The bill contains four measures that relate to health expenditure:
a pause on indexing the income thresholds for the Medicare Levy
Surcharge (MLS) and private health insurance rebate for a further three years
the abolition of the National Health Performance Authority
a measure to improve compliance in aged-care providers, by enhancing
the Secretary's compliance powers and creating civil penalties for aged care
providers who engage in certain behaviours (schedule 8); and
the closure of the Child Dental Benefits Schedule (schedule 9).
This chapter provides an overview of the submitter views on these
Schedule 6: Indexation of the private health insurance thresholds
Schedule 6 to the bill pauses the income thresholds that determine the
tiers for the MLS and the Australian Government Rebate (the Rebate) on private
health insurance at the 2014–15 rates until 2020–21.
The MLS is levied on Australian taxpayers who do not have an appropriate
level of private hospital insurance and who earn above a certain income. The
base income threshold (under which you are not liable to pay the MLS) is
$90,000 for singles and $180,000 for families.
The private health insurance rebate is a means-tested contribution from
the Australian Government towards the cost of paying for private hospital
health insurance premiums.
The Explanatory Memorandum notes that individuals who do not currently
pay the MLS may become liable to as their income increases. The Australian Government
anticipates that more people will be encouraged to take up private hospital
insurance as their income increases.
Views on schedule 6
The Consumers Health Forum of Australia (CHF) and the Public Health
Association of Australia (PHAA) noted concerns that inflation-induced income
increases will push people into requiring private hospital insurance although
their capacity to pay has not increased.
The CHF and the Australian Healthcare and Hospitals Association (AHHA) also
expressed concerns about what they regarded as the regressive character of the
The committee was also reminded of general concerns among stakeholders
regarding the balance between public and private funding in healthcare. The
AHHA argued that pausing the indexation of income thresholds could have the
effect of increasing individuals' share of total health funding.
The PHAA reiterated its longstanding position that private health insurance
rebates are an inefficient means to deliver quality healthcare to the
population, and questioned the policy objective of pushing people into private
The Australian Council of Trade Unions, observing the above-inflation
increases in insurance policies, queried the value for money proposition of
private health insurance.
Schedule 7: Abolishing the National Health Performance Authority
Schedule 7 of the bill has the effect of transferring the
responsibilities of the National Health Performance Authority (NHPA) to the
Australian Institute of Health and Welfare (AIHW). The Explanatory Memorandum
outlines the rationale for this administrative change:
The responsibilities of the [NHPA] overlap with those of the
[AIHW] in terms of the collection and dissemination of accurate, relevant and
useful information on the performance of Australia's health system and
services. The overlap resulted in the duplication of functions and an
uncoordinated approach to reporting. The closure of the NHPA and the
rationalisation of functions across the two agencies will strengthen AIHW's
national leadership role in the collection and publication of health
information and statistics.
This measure is anticipated to save $88.6 million over the forward
Views on schedule 7
The Consumers Health Forum of Australia (CHF) noted general support for
the streamlining of the delivery of government services through reducing the
number of smaller, separate entities.
The Australian Healthcare and Hospitals Association (AHHA) pointed out that the
reporting activities and staff of the NHPA has moved to the AIHW in the first
half of 2016.
It was reported to the committee that the NHPA's work was of a very high
standard and could prove to be an asset to the AIHW if the two can successfully
integrate. The CHFA advised the committee:
[T]he NHPA established a high benchmark for both frequency
and standard of health system performance reporting, particularly with the work
it did at the regional level, including for Primary Health Networks and Local
The NHPA has an annual work program and was consultative in
its approach to what it should be reporting on and how and CHF believes that
the AIHW could benefit from taking on board more of this approach.
The AHHA noted the importance of the work done by the NHPA in developing
tools to 'increase transparency around variation in clinical care across local
communities', and emphasized the importance of continuing this work.
Catholic Health Australia similarly called for the work of NHPA to
Schedule 8: Aged care
Schedule 8 to the bill seeks to amend the Aged Care Act 1997 (the
Aged Care Act) to create civil penalties for approved providers of aged care
who engage in certain behaviours, and provides new powers for the Secretary of
the Department (currently, the Secretary of the Department of Health).
There are several parts to this measure. As the subsidy the government
pays to approved providers will be affected by appraisals of care recipients'
care needs, the schedule introduces a civil penalty if approved providers give
false, misleading or inaccurate information in connection with an appraisal or
reappraisal on more than one occasion within a two year period.
The amendments will make it easier for the Secretary of the Department
of Health (Secretary) to require an approved provider to re-appraise its care
recipients or suspend it from making further appraisals if the provider gives
false, misleading or inaccurate information in connection with an appraisal or
reappraisal. Also, if the Secretary suspects on reasonable grounds that a care
recipient's care needs have decreased significantly, the Secretary has the
power to require the approved provider to re-appraise the care recipient.
The schedule changes the date that a change in classification is taken
to have effect. This will allow the Secretary to recover overpayments of
subsidy from the date the care recipient was originally classified. Currently,
the Secretary can only recover overpayments for a maximum of six months before
a change in classification.
The schedule also amends the Aged Care Act to allow for the charging of
a fee if an approved provider seeks reconsideration by the Secretary of a
Other amendments in the schedule allow the Secretary to take into
account the manner in which care is provided to a care recipient, the abolition
of adviser and administration boards so approved providers can choose their own
advisers and administrators, and for approved providers to notify the Secretary
of changes to any of its key personnel that do not materially affect the
provider's suitability as a provider of aged care.
Views on schedule 8
The committee received four submissions that addressed schedule 8.
Several submissions raised concerns about the measure enabling the
Secretary to require an approved provider to undertake a care recipient
reappraisal where the Secretary reasonably suspects that the care needs of the
recipient have decreased significantly. According to Catholic Health Australia
(CHA), this measure would be contrary to the policy objective of encouraging
providers to deliver programs that will assist in restoring function.
Both Leading Age Service Australia (LASA) and CHA reasoned that the inclusion
of this measure would be a retrograde action as it would be a 'disincentive to
encourage the care recipient (and staff) to improve the level of care needed
and does not recognise the support needed to maintain improvements.'
Another concern related to the application of a civil penalty to
'inaccurate' information arising from genuine mistakes. LASA proposed that the
adjective 'inaccurate' be removed from this part of the Bill.
According to the Salvation Army, the proposed amendments will place
further financial pressure on approved providers of aged care, particularly in
relation to the proposal to recover overpayments of subsidy from the date the
care recipient was originally classified, which may be backdated several years.
As noted by LASA, it does not acknowledge that care and services had already
been delivered to the care recipient.
Other concerns included the need for clarification concerning the
definition of 'significant decrease' in reference to subsection (3B)
and in relation to the application of a fee by the Department of Health for
reconsideration of a decision to downgrade a client's classification. COTA
noted that 'some providers may slip clauses into their client agreements
allowing them to on charge these fees onto clients without their consent to
each reconsideration request.'
COTA also noted that it may be 'necessary to assess whether the decreased care
needs [were] due to the intervention being provided, and not simply an
independent decrease in care needs'.
LASA and the Salvation Army added that this section of the bill would deny
natural justice for the provider, as the fee would also be a disincentive to
providers to question a downgrade.
Schedule 9: Dental services
Schedule 9 to the bill seeks to amend the Dental Benefits Act 2008 (the
Act) to close the Child Dental Benefits Schedule from 31 December 2016.
The Explanatory Memorandum notes that the current Australian Government
funding arrangements for dental services are provided for children through the Child
Dental Benefits Schedule (CDBS) and adults through the National Partnership
Agreement (NPA) on Adult Public Dental Services (APDS).
Under the current CDBS, eligible children can receive up to $1,000 worth
of dental treatment, capped over two calendar years. Under the APDS NPA,
$155.0 million is being provided to the states and territories during 2015–16
for the treatment of 178,000 additional public dental patients. Both adults on
concession cards and all children will be eligible to receive public dental
services under the new Child and Adult Public Dental Scheme (CaAPDS).
The measure's Regulatory Impact Statement notes that low participation
rates are a significant reason for the change to the Act. Presently around only
one third of eligible children utilise the CDBS, stating that 'the existing
Commonwealth funded Child Dental Benefits Schedule is poorly targeted as
children already had good visiting patterns prior to its commencement.'
Additionally, the number of private dentists accessing public dental services
is limited under existing arrangements.
As such, the government is proposing to improve access to public dental
services by establishing an ongoing capped special appropriation under the Dental
Benefits Act 2008. Funding grants would be made available to the states
and territories via NPAs for an initial five year period.
It is anticipated that after the fourth year a review of the program will occur
to inform the next NPA.
The Explanatory Memorandum notes that the Commonwealth contribution will
be set at 40 per cent of the 'efficient price' of provision of dental services
with the states and territories meeting the balance of the provision. The
states will also retain the ability to contract private providers to deliver
public dental services where required. It is also noted that through the
provision of long-term Australian Government funding, the states will
potentially put greater investment in infrastructure and general dental
Views on schedule 9
Equitable access and impact on
Equitable access to dental care, particularly in rural and regional
public dental services, was raised as a shortcoming of the measure in a number
of submissions. A number of submitters have stated that the amalgamation of
child dental in the measure will impact negatively on children and the
achievements gained in recent years.
For example, the NSW Council of Social Service submitted:
The proposed Child and Adult Public Dental Scheme (CaAPDS) is
not an equitable replacement for the Child Dental Benefit Scheme. The changes
not only represent an overall decrease in funding, but will make savings by
impacting most heavily on the low-income and vulnerable children who are most
in need of support. We are particularly concerned about the likely impact on
children and families in rural and regional areas, and Aboriginal and Torres
Strait Islander children.
Waiting times and overloading
The Australian Council of Social Service (ACOSS) and Consumer Health
Forum of Australia (CHFA) stated that there is a risk that the expanded
eligibility criteria will place further pressure on existing overloaded state
public dental systems, increasing waiting times and reducing services. In a
similar vein, the Australian Healthcare and Hospitals Association (AHHA)
suggested that the funding model should attempt to address long waiting times
in the public dental system.
National Partnership Agreements and
The major funding share in this measure rests with the state and
territories. The AHHA notes that the ability of the states and territories to
meet this share of the funding poses a potential risk to the successful establishment
of the new scheme:
The funding stream from the Commonwealth may contribute to
easing waiting times, but it will be dependent on the calculation methodology
for the efficient price the Commonwealth has indicated it will pay, and the
capacity of the states and territories to meet co-funding requirements. The
agreed upon funding model must reflect variable costs similar to the activity
based funding model for public hospital services (e.g. loadings for regional
and remote health consumers, Aboriginal and Torres Strait Islander health
consumers, etc.), and attention should be paid to the real risk of variation
across Australia in the availability of care.
A number of submitters raised questions related to the commencement of
the scheme and the introduction of the NPAs. Cohealth advocated for a delay to
the introduction of the scheme until such time as details of the proposed
CaAPDS replacement are finalised and can be assessed. The ADA considered that
the eligible population size needs to be identified with associated equitable
distribution of funding including the introduction of productivity targets.
COAG outcomes and health indicators
Both the AHHA and Australian Dental Association noted the need for
greater recognition of the COAG National oral health plan and the need to
ensure that the NPAs keep focus on outcomes and health indicators rather than
just people through. The AHHA submitted that, as a starting point:
...the Commonwealth, state and
territory governments could develop outcomes and indicators that reflect the
guiding principles of Australia’s National Oral Health Plan and its targeted
strategies in six Foundation Areas and across four Priority Populations.
In contrast to the Explanatory Memorandum's statements of possible
greater opportunities for private dentists in the state-run services, a number
of submitters raised concerns regarding the impact of this measure on private
The new public dental funding mechanism will have a
significant negative impact on private dental practitioners, as the changes
proposed in the Bill direct funding away from private sector providers, in
favour of public clinics. Given that all children would then be eligible for
the CaAPDS, more than 4.4 million children could be directed away from private
dentists annually, and funneled into an already strained public dental system,
where they will likely need to wait longer to receive the care that they need. Directing
all children away from private dental services would certainly have an impact
on private dentists.
The committee notes the need to restrain growth in Health expenditure,
so that it can ultimately be targeted to where it is needed most and can be
most effective. The committee considers the measures in the bill consistent
with this objective.
With regard to schedule 9 (dental services) specifically, the committee
is cognisant of the need to balance resources yet provide the widest possible
provision of dental services nationally. The committee further notes the
challenges that the new Child and Adult Public Dental Scheme's expanded
eligibility criteria may pose for state-based dental systems. Nevertheless,
with the certainty of ongoing funding, the committee has confidence in the
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