2 May, 2019
On 2 April 2019, Treasurer Josh Frydenberg delivered the Australian Federal Budget for 2019-20 (Budget). Below is a high level overview of the proposed changes (subject to legislation passing) announced in respect of the healthcare industry. All amounts are in AUD.
A Federal Election is planned for May 2019. Many of the proposed changes outlined below are unlikely to proceed if the Australian Labor Party wins government.
In what the Government described as "record health funding", with total spending expected to increase by more than 9% from $81.8 billion in 2019 20 to $89.5 billion in 2022 23, last night's Budget included $21.6 billion for aged care, $737 million for enhanced mental health services, $309 million to improve access to diagnostic imaging, and $448.5 million for GPs to better treat patients with chronic diseases.
As speculated in the media, the Treasurer also announced the indexation freeze on all GP services from July 1, 2019. However, the Treasurer did not make any mention of 'Closing the Gap' in his budget speech and there is very little in the budget specifically addressing Indigenous Health.
Proposed Changes
Aged Care
- The Government has allocated record funding of $21.6 billion in 2019 20 for aged care. This is an increase of more than 50% since 2013-14.
- With a view to developing an "end to end" compliance framework for homecare, the Government proposes to provide:
- $282.4 million for an additional 10,000 home care packages to support older Australians who wish to stay at home, taking the number of packages to 40,000;
- $5.9 billion over two years from 2020 21 to extend the Commonwealth Home Support Programme;
- $320 million general subsidy boost in 2019 20 for residential aged care and 13,500 new residential care places (which is the largest number ever in a single funding round); and
- an additional $84.3 million over four years will expand support for young carers, under the Integrated Carer Support Service.
- However, given Australia's aging population and the increased demand for home care packages, long lead times (often longer than 12 months) for securing such services will likely remain an ongoing issue. Nonetheless, in introducing these funding proposals, the Government proposes to take immediate action to improve the safety and quality standards across the Aged Care Industry (and is not waiting for the Royal Commission into Aged Care to deliver its Report).
Medical research
- The Government has affirmed its commitment to ensuring Australia is a leader in medical research, whereby the Budget outlines the Government's $5 billion Ten Year Investment Plan to the Medical Research Future Fund, which includes:
- $614 million for rare cancers and diseases;
- $220 million for cardiovascular health;
- $605 million for clinical infrastructure; and
- $150 million for stem cell research.
- The Medical Research Future Fund is one of the largest medical research funds in the world and provides support for world class medical research, an increased number of clinical trials and innovation in healthcare in Australia.
Medicare
- Medicare funding reform is long overdue and the Government proposes to take small but important steps forward (including by guaranteeing Medicare) to ensuring that Australians can access affordable and quality healthcare.
- As expected, the indexation freeze on all GP services on the Medicare Benefits Schedule (MBS) is planned to lift from July 1, 2019, at a cost of $187.2 million. The freeze will also be lifted on various x-ray and ultrasound MBS rebates from 1 July 2020.
- The Government proposes to deliver a $1.1 billion Strengthening Primary Care package that will include $448 million in increased funding to support GPs in their care of high-need patients and $187 million to increase the patient rebate for a further 19 GP items on the MBS from 1 July 2019.
- To improve access to diagnostic imaging services (especially in regional areas), the Government proposes to provide:
- $199 million to increase patient rebates for diagnostic imaging items on the MBS from 1 July 2020;
- $32.6 million to reduce the cost of MRI services for approximately 14,000 breast cancer patients each year; and
- $152 million to fund new MRI licences.
- Additionally, the Government proposes to introduce a new MBS item for heart health checks to help reduce the prevalence of heart disease, and provide funding for the Childhood Heart Disease National Action Plan.
Mental health
- As it is estimated that 1 in 5 people in Australian will experience a mental health disorder in any given year and with the goal of reducing youth suicide, the Government proposes to provide $737 million over seven years to deliver more mental health services for people living with mental illness, including:
- $461 million for youth mental health and suicide prevention;
- $111 million for 30 new headspace services by 2021 to support young people, some of which will be in regional areas;
- $152 million to reduce waiting lists for headspace;
- $110 million to extend the Early Psychosis Youth Services program for two years; and
- $115 million to trial eight adult mental health centres.
- The Government also proposes to provide $54 million over six years to establish four specialist residential facilities for eating disorders.
- Although the much needed proposed boost in funding for mental health is a positive development, the Budget does not comprehensively tackle the difficult issue of addressing the underlying structural impediments that make it difficult for many Australians to access quality and timely mental health treatment.
National Disability Insurance Scheme (NDIS) funding
- Despite there being a major underspend on the NDIS scheme, the Government announced a $1.6 billion reduction in NDIS payments for 2019-20.
- National Disability Insurance Scheme Agreements to commence the full scheme in the ACT and Northern Territory from July 1 this year.
- As the NDIS keeps expanding, its cost to the budget is forecast to grow from $44 billion in 2018-19 to $55 billion in 2022-23.
- The Government has also announced a Royal Commission to look at violence, neglect and abuse of people with disabilities, and an allocated funding of $528 million (making it the most expensive royal commission to date).
Pharmaceutical Benefits Scheme
- The Government states that there will be no reduction in the Government's overall investment in the PBS under its proposed changes.
- The Budget includes $331 million for new and amended listings on the PBS, including medicines to treat lung, bladder, kidney and skin cancer as well as leukaemia. Patients will be able to access these medicines for $40.30 per script, or $6.50 with a concession card.
Preventative health
- Through a proposed new $337 million Comprehensive Drug Strategy, the Government seeks to minimise the harmful effects of the illicit drug ice, alcohol, tobacco and other drugs, by increasing access to services outside metropolitan areas, funding local family drug support services and including measures to target opioid use.
- The Government also proposes to provide $386 million to build on Sports 2030 by encouraging Australians to increase their participation and upgrade sports infrastructure, including $41 million to grow the Sporting Schools Program to provide free sport based activities for students.
Public hospitals
- There are no significant proposed changes to the public hospital funding arrangements in the Budget.
- Commonwealth funding for public hospitals will exceed $97 billion over four years from 2019-20. Funding is estimated to exceed $130 billion over the life of the next health and hospitals agreement from 2020 21 to 2024 25.
- Cancer services will receive a proposed increase of $70.8 million over seven years from 2018/19, including $45.5 million to establish cancer treatment centres in regional Australia for radiation therapy.
- Aiming to improve health services nationally in the priority areas of hospital infrastructure, drug and alcohol treatments, preventative health, primary care and chronic disease management, the Government's proposed $1.3 billion Community Health and Hospitals Program will include:
- $60 million to support the James Cook University Tropical Enterprise Centre in Queensland;
- $100 million for a Comprehensive Children’s Cancer Centre in Sydney;
- $80 million to establish a Centre of Excellence in Cellular Immunotherapy in Victoria;
- $30 million for the construction of a new Brain and Spinal Ward in South Australia.
However, with soaring admissions and mounting pressure on waiting times, public hospital funding is likely to remain in the spotlight and be a hotly debated topic.
For further information, please contact:
Kate Jefferson, Partner, Baker McKenzie
kate.jefferson@bakermckenzie.com
