Introduction by Croakey: All eyes will be on Treasurer Jim Chalmers next week as he brings down the Government’s first “real” budget since its election last year. While some health measures have already been flagged, health groups will be anxiously scanning budget documents for additional measures in their key areas of interest.
On Budget night, the Croakey team will be compiling analysis and reaction to the Government’s announcements – please send us your statements and comments, and on Twitter use the hashtag, #HealthBudget2023.
To set the scene for Budget night, former senior public servant Charles Maskell-Knight provides an overview below of the current state of play in the health budget and highlights some priorities for spending the estimated $3.3 billion that will be raised through increasing the tobacco excise.
These include three areas that never seem to attract the level of funding they deserve: Closing the Gap, public dental services and preventive health. Croakey is hopeful this Budget will provide significant additional funding for these critically under-funded areas, bucking the trend described by Peter Breadon for preventive health funding to be cut when economic times are tough.
Charles Maskell-Knight writes:
For the last few years I have written a pre-budget article for Croakey, setting out the baseline health and aged care estimates against which the budget should be assessed.
Health spending in the 2020, 2021, and the two 2022 budgets has been subject to considerable upheaval due to the COVID-19 pandemic.
While the virus is an ongoing health problem, dedicated health programs to address it have now come to an end. The health and aged care spending estimates included in the last budget for the years following 2022-23 thus reflect “business as usual”.
The following table shows the estimates for major health and aged care programs or functions drawn from Budget Statement 6.
Points to note
There are several points to note about these figures.
The first is the magnitude of total Commonwealth expenditure on health. Following the most recent National Cabinet, the Government revealed the outline of a set of measures to strengthen Medicare, with a cost across the next four years of $2.2 billion.
This sounds impressive, but it will increase total health spending by about half a per cent – or $20 per person per year.
The second striking point is that expenditure on the PBS is estimated to decline in 2023-24, and then remain essentially static for the next several years. This reflects the fact that new PBS listings are regarded as new policy decisions, and no allowance is made for them in the forward estimates – even though everybody expects that new drugs will be listed.
The third point is that expenditure on health services, including vaccination services, is expected to decline sharply in 2023-24 as COVID-19 measures are wound back. It is not clear what – if any – allowance for the impacts of long COVID has been included in other programs.
Fourthly, expenditure on Aboriginal and Torres Strait Islander health is essentially flat across the budget and forward estimates.
How can we make progress on Closing the Gap by spending the same amount of money every year? (Between 2013-14 and 2025-26 spending on these programs will have increased by an average 3.75 percent per year, compared with 7.25 percent for public hospitals).
Looking at growth
Despite these issues, and ignoring the impact of the end of COVD-19 measures, total health expenditure is forecast to grow steadily over the forward estimates.
Given the major health programs – MBS, PBS, and public hospitals – are universal, one would expect continued growth in line with price movements and population growth. Indeed, given the ageing demographic profile of the population and its effect on health service utilisation, growth on top of prices and population would be reasonable.
The next table shows percentage real growth in the major programs and functions after adjusting for price movements.
Leaving aside the fall in 2023-24 (again an artefact of the ending of COVID-19 specific measures), total health expenditure in the last two years of the forward estimates is forecast to grow at about one percent – not enough to keep up with population growth.
The rate of growth in aged care services is a little higher, but 3.2 percent in 2025-26 is probably only just keeping up with growth in the target population, meaning no further improvements in quality of care can be expected.
The budget figures will clearly need to reflect the additional costs of the National Cabinet package and the impacts of the extended prescribing and anti-vaping measures, as well as the cost of new PBS listings such as Opdivo® (nivolumab) and Yervoy® (ipilimumab) (announced in March).
Worthwhile spending options
Health Minister Mark Butler told the National Press Club on 2 May that most of the additional $3.3 billion to be raised by increasing tobacco excise will be allocated to health.
There is no shortage of worthwhile spending options, such as the following (to choose only a few.):
- a substantial investment in Closing the Gap
- a significant increase in spending on preventive health
- spending to establish a robust Centre for Disease Control
- a long-term commitment to assisting the states with the costs of public dental services
- action on the Aged Care Royal Commission recommendations on improving access to health services for the 200,000 frail people in residential care.
Follow Croakey’s budget coverage using the hashtag #HealthBudget2023 from next Tuesday evening to see which, if any, of these are delivered.
See here for Croakey’s other stories on the 2023/24 Federal Budget
