Appendix 2 - Mental health expenditure

Appendix 2 - Mental health expenditure


2.1       In any examination of the cost of service provision it is important to differentiate health funding and health expenditure. The Australian Institute of Health and Welfare (AIHW) defines health spending as follows:

Health funding is reported on the basis of who provides funds that are used to pay for health expenditure. In the case of public hospital care, for example, although the states and territories incur the related expenditure, the Australian Government and the states and territories together provide over 90 per cent of the funding. Some other funding comes from private health insurers (for insured patients) and from individuals who choose to be treated as private patients and pay any fees charged.[2017]

2.2       Health expenditure is defined:

Health expenditure is reported in terms of who incurs the expenditure, rather than who ultimately pays for that expenditure. In our example of public hospital care, all the related expenditures (that is, expenditure on medical and surgical supplies, drugs, salaries of doctors and nurses, etc.) are incurred by the states and territories although a considerable proportion of those expenditures is funded by transfers from the Australian Government.[2018]

2.3       Accordingly, an important distinction must be made when considering what the Australian Government provides, in terms of funding, and what the state and territory governments provide.

Government spending

2.4       As has been mentioned previously, the Australian government provides direct and indirect expenditure for mental health. Direct expenditure during 2001-02, relating to 'expenditure dedicated to the provision of specialised mental health services and related activates', totalled $1 145.8 million and included the following expenditure items:

2.5       During 2001-02 the state and territory governments provided $1 797.6 million in direct expenditure on mental health. Direct and indirect expenditure by the Commonwealth, combined with direct expenditure by the states and territories, totalled $6 592.6 million.[2020]

Australian government—direct expenditure

2.6       During the period 2001-02 the Australian government contributed $94.2 million to the National Mental Health Strategy (NMHS) . Under the National Mental Health Plan 2003-2008 the Australian government will spend, on current National Mental Health Strategy Initiatives: $6 million, annually recurrent, on the National Mental Health Program; $66 million, in total over the life of the plan, on Australian Health Care Agreements—Commonwealth Own Purpose Outlays; and, $331 million, in total over the life of the plan, on Australian Health Care Agreements—Mental Health to states and territories.[2021] The Australian government advised that the funding of $331 million is specifically for states and territories to address public sector health reform, and the $66 million is for national reform activities. The $6 million recurrent funding is available for national strategic mental health projects.[2022]

2.7       Given the implementation of the National Mental Health Plan 2003-2008 (the Plan) and the subsequent realignment of priorities under the new plan, it is difficult to compare and make comment upon the current expenditure on the NMHS to that for 2001-02, listed as $94.2 million.

2.8       The Medicare Benefits Schedule, essentially Medicare, provides general benefits to all Australians through free treatment as a public patient at a public hospital, and with the Medicare rebate which covers 100 per cent of the schedule fee for a general practitioner and 85 per cent of the schedule fee for attendances by a consultant psychiatrist. The Schedule also provides specific benefits to persons suffering poor mental health in rural and remote locations, including:

2.9       The Australian government expenditure on the Medicare items attributable to mental health service delivery in 2001–02 was $196.9 million to psychiatrists and $167.3 to general practitioners.[2024] During 2003-04 government expenditure had risen to $201.3 million for consultant psychiatrists and $175.6 million for general practitioners, however, the government did point out that due to MBS item structure developments since 2001-02 the data was not strictly comparable, but there was close correlation.[2025]

2.10      The Pharmaceutical Benefits Scheme 'aims to provide all Medicare eligible persons with access to a comprehensive range of cost-effective prescription medications that are affordable both to the individual and the community'.[2026] During 2001-02 the Australian government contributed $497.8 million to this scheme specifically for drugs relating to mental health, including antipsychotics, anxiolytics, hypnotics and sedatives, and antidepressants. This figure increased to $591.472 million during 2003-04.[2027]

2.11      In January 1999 the Australian government implemented legislation to provide for a rebate to private health insurance of some 30 per cent, replacing the private health insurance incentives scheme. The premise of this rebate was to encourage more people to obtain private health insurance and therefore assist in the private provision of health services including mental health services. Issues surrounding private health insurance are covered in more depth in chapter 12. Private health insurance rebates provided by the government during 2001-02 amounted to $37.7 million.[2028] More recent figures are not yet available for the committee.

2.12      Department of Veteran's Affairs expenditure, totalling $133.8 million during 2001-02, included the provision of services to veterans as follows:

2.13      Other expenditure listed by the Australian government during 2001-02 on mental health service delivery included funding the establishment of the Divisions of General Practice, the OATSIH Emotional and Social Wellbeing Action Plan, Medical Specialists Outreach and Assistance program and the Rural Health Support, Education and Training Grants.

Australian government—indirect expenditure

2.14      The Australian government advised the committee, through their submission, of a range of areas where they provided funding in the area of mental health through a number of their departments. The government provided estimates of the cost burden through the provision of these services for mental health as a percentage of their overall cost burden. The primary figures provided by the government relate to the year 2001-02 as reported in the National Mental Health Report 2004 and accordingly very little detail was obtained in regard to current levels of spending and the potential impact of current legislative change in the areas of welfare payments.

2.15      The National Suicide Prevention Strategy (NSPS) began in 1999 and aims to build upon the strengths of the previous National Youth Suicide Prevention Strategy (1995-1999) by increasing the focus across the lifespan.[2030] 'The Living Is For Everyone (LIFE) A Framework for Prevention of Suicide and Self-Harm in Australia'[2031] was developed to guide action under the NSPS. The government advised that 'some 170 community-based suicide prevention programs have been funded in all states and territories and 25 national projects have also been developed' in line with the LIFE Framework.[2032] During 2001-02 the government provided $9.8 million in funding to the NSPS.

2.16      Income support payments are indirect expenditure items provided through a number of Australian government departments including, DEWR, FaCS and the DVA. In determining the expenditure the Australian government estimated the mental health burden as a percentage of the overall expenditure burden.

2.17      During 2001-02 DEWR provided $1 693.6 million in income support to persons apparently affected with poor mental health amongst other disabilities through the following programs:

2.18      During 2001-02 FaCS provided $179.7 million in income support to persons apparently affected with poor mental health amongst other disabilities through the following programs:

2.19      During 2001-02 DVA provided $95.0 million in income support to persons apparently affected by poor mental health, among other disabilities, through the invalidity service pension.[2035]

2.20      Workforce participation program expenditure for persons with poor mental health, like the income support payment figures provided by the Australian government, relate to an estimate of expenditure based upon a proportion of total outlays. Indirect expenditure for workforce participation programs are provided by both DEWR and FaCS.

2.21      During 2001-02 DEWR provided $56.8 million in workforce participation programs in the following areas:

2.22      During 2001-02 FaCS provided $13.7 million in workforce participation programs in the following areas:

2.23      The Australian Government estimates that during 2001-02 approximately $180.0 million of indirect government expenditure was provided to DVA disability compensation programs for people with accepted mental health conditions.[2038]

2.24      The Department of Families, Community Services and Indigenous Affairs (FaCSIA) administers the housing and accommodation programs. During 2001-02 FaCSIA provided $108.9 million to persons with poor mental health through the following programs:

2.25      Disability services are administered by FaCS and during 2001-02 FaCS provided approximately $42.6 million (8.5 per cent of total expenditure) under the Commonwealth State Territory Disability Agreement for mental health.[2040]

2.26      DoHA provides resources for aged care residential and community services. During 2001-02 DoHA provided $1 258.5 million in indirect expenditure to person suffering poor mental health in the following areas:

2.27      DoHA also provided $10.0 million (1.62 per cent of total expenditure) in indirect expenditure on mental health through the Home and Community Care Program.[2042]

State and territory government spending

2.28      The National Mental Health Report 2005 provides a breakdown of each state and territory government's spending on mental health and the relative expenditure on different types of services across these jurisdictions.[2043] Interested readers are referred to that report for a detailed review of state and territory spending. In addition, every state and territory government provided written submissions to the inquiry and details of their mental health programs and budget initiatives were generally included.

2.29      Recurrent expenditure on mental health services by state and territory governments totalled 1 975.8 million in 2002-03.[2044] Just under half (49 per cent) of this expenditure went to hospitals and 51 per cent to community-based services,[2045] including ambulatory services, residential services and NGOs.

2.30      At an aggregate level, state and territory government spending on mental health increased (in constant prices) from $75.49 per capita in 1992-93 to $100.02 in 2002-03.[2046] Expenditure levels differ across the states and territories and over the 1993-2003 period the gap between the highest and lowest spending jurisdiction increased. The NMHR 2005 assessed that:

While some variation between state and territory expenditure can be expected due to the different needs of their populations, the variation was too large for this to be the full explanation.[2047]

2.31      In 2002-03, Western Australia had the highest per capita spending on mental health ($119.07) followed by Victoria ($106.57), the ACT ($103.06) and South Australia ($101.61). The Northern Territory ($85.76) had the lowest per capita spending, followed by Queensland ($87.58), while Tasmania ($93.99) and New South Wales ($97.07) also had below national average spending.[2048]

2.32      Over the ten years 1993 to 2003, the ACT's and Western Australia's per capita spending on mental health services increased the most (by 62 per cent and 58 per cent respectively). Queensland increased spending by 42 per cent, New South Wales by 35 per cent, Northern Territory by 32 per cent, South Australia by 28 per cent and Tasmania by 22 per cent. Victoria's expenditure increased the least (19 per cent), however Victoria had the highest per capita spending of all states and territories at the start of the period and remains the second highest.[2049]

2.33      There are differences across the states and territories in the priority given to different forms of mental health care. In 2003, per capita spending on community based services was considerably higher in the ACT ($76) and Victoria ($70) than the other states and territories (ranging from $56 in both Western Australia and Tasmania, down to $37 in Queensland).[2050]

2.34      Overall 6.2 per cent of state and territory mental health spending went to the NGO sector in 2003, an increase from 2 per cent in 1993. Victoria dedicated the highest proportion (11.5 per cent) of mental health spending to the NGO sector, followed by ACT (11.4 per cent). South Australia (2.1 per cent) followed by New South Wales (2.4 per cent) spent the lowest proportions on this sector.[2051]

New initiatives

2.35      Reform to mental health services by the States and Territories continues. Recent initiatives of governments were outlined in Chapter 2, however the Committee also heard about new initiatives planned for future implementation.

2.36      The Victorian Government has committed over $180 million in the next four years to expanding mental health services and improving facilities.[2052] This funding will deliver a range of initiatives:

2.37      The Queensland Government has committed funding to expand mental health services and facilities, including:

2.38      The Western Australian Government has allocated an additional $173.4 million over the next three years to implement further reform, as identified in the Mental Health Strategy 2004-2007.[2062] Funding will be used to expand mental health services and facilities, including:

2.39      The Northern Territory Government has allocated $12.7 million additional funding to mental health services over the period 2003-04 to 2005-06,[2073] with the budget estimated in 2005-06 to be $28.8 million.[2074] This will deliver enhanced clinical services and support to consumers and carers through a number of initiatives:

2.40      The ACT Government continues to progress the implementation of a number of other initiatives to enhance mental health care services, including:

2.41      An additional $241 million has been allocated to mental health care in NSW over the period 2004-05 to 2007-08.[2087] The NSW Government plans to deliver further reform through a range of initiatives:

2.42      The South Australian Government has allocated $110 million to capital works spending in mental health, and the following projects are planned for development by the end of the decade:[2095]

2.43      In Tasmania, the government is implementing initiatives across health care services, such as improving services for children and adolescents and adult aged care, and forensic mental health. This is being achieved through injection of more resources and legislative amendments, and very importantly, 'cultural and social service reform'.[2096] Through the 'Bridging The Gap' program launched by the Tasmanian Government in January 2005, $47 million over four years has been allocated to improving mental health services.

2.44      These initiatives included, as set out in Chapter 2;[2097]

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