October 26, 2022

Labor’s first health budget in almost a decade has few surprises – and that is a good thing.

The budget foreshadows additional annual health and aged care spending of more than A$2.3 billion when initiatives are fully implemented in 2025–26, the end of the four-year forward estimates. The bulk of this is for policy initiatives foreshadowed in the election campaign.

It should not be a surprise that governments promise one thing before an election and stick to it after, but unfortunately, that has not been the case over the past decade.

There are four big spending commitments in this budget: aged care, Medicare reform, pharmaceuticals, and First Nations health.

Steps towards aged care reform

Aged care in Australia is a renovator’s opportunisty. The system is understaffed and poorly regulated, with policy-making often captured by providers.

The consequences were laid bare by the aged care royal commission, which reported in March 2021. The previous government made a down payment on reform, but left much undone.

As promised in the election campaign, the 2022-23 budget provides for a major uplift in spending, with the “fixing the aged care crisis” spending line adding $1.2 billion in a full year. But that will only be the start.

Key recommendations from the royal commission are being implemented, including funding the novel idea of requiring nursing homes to employ nurses. Funding is also provided for a specified minimum number of care minutes for each resident.

There is still much to do, especially in addressing the care workforce shortfall. The Fair Work Commission is currently reviewing minimum pay rates in the aged care industry, and the outcome will be a significant uplift. The question is, how significant? At present, a burger flipper gets paid more than the person who cares for our grandmothers; this will at last be reversed.

The cost of the Fair Work Commission case is as yet unknown.

Medicare reform underway, but no funds for hospitals

In response to health system pressures, Labor promised several reform initiatives before the election. One of these – the development of urgent care clinics – is slated for implementation starting in 2022-23, at a full-year cost of $37 million.

Although there has been some criticism that the policy initiative is still not finalised in every minute detail, Labor has only been in office for six months.

Broad system reform also awaits the conclusions of the Strengthening Medicare Taskforce (of which I am a member). This was established to provide advice on a further $250 million initiative that will be announced in the 2023-24 budget.

Dashing the aspirations of states, there is no provision in the budget for additional funding for state public hospitals, but of course there was no election commitment to do so.

Price of medicines to drop

In addition to the expected cost of new listings on the Pharmaceutical Benefits Scheme, the budget allocates $230 million in a full year to reduce the mandatory Pharmaceutical Benefits Scheme co-payment, from the current level of $42.50 per prescription for general beneficiaries to $30.

More than half a million Australians miss out on filling prescriptions each year because of cost, and hopefully this budget initiative will reduce that number. Other people, who might have had to make hard choices to fill prescriptions by foregoing buying new school clothes, will also benefit.

However, the reduction in the official co-payment will lead to reduced discounts from the low-cost pharmacy chains, so the net impact of the budget change is probably less of a benefit to patients than the headline $230 million cost to government.

Funds to expand First Nations health services

The disparity in health outcomes for First Nations Australians is a tragedy. Medicare is not delivering as it should, with First Nations people in the NT receiving just 16% of the Medicare funding of an average Australian, due to poor access to doctors.

It is pleasing to see an additional investment of $95 million in a full year to improve the health of First Nations Australians. The commitment appears well designed and includes improved infrastructure, expanded training and new health clinics.

A broader view of health and wellbeing

The budget signals the first steps towards adopting a new health and wellbeing framework for measuring societal progress, incorporating broader aspects of everyday life into budget reporting.

Although the media obsession with the budget deficit and gross domestic product as the only measures of note will probably continue, future budget documents will begin to take a more holistic view.

Original Post: What does the budget mean for Medicare, medicines, aged care and First Nations health?