Budget 2014: the good, the bad and the ugly (but mostly the ugly….)

With the bulk of the Health Budget already in the public domain, last night’s Budget speech was less about new announcements and more about selling the already unpopular measures to the Australian public.  Attempting to convince consumers to cough up more for their health care is not an easy task and in spinning the new payments as “opportunity not austerity”, Joe Hockey brought political performance art to a new level.  Indeed, with his love of a clichéd image (“we all need to share the heavy lifting”), the smoke and mirrors acts (pay more for GPs but get a cure for cancer!) and a show stopper of a stunt (the world’s biggest medical research fund!), the Treasurer seemed at times only one bearded transvestite away from a winning Eurovision entry.

The much debated GP co-payment, along with an additional $5 for non-concessional PBS prescriptions, were predictably the focus of much media and stakeholder attention. The net impact of these additional co-payments will be to increase the cost burden on people who are poor, sick and vulnerable, creating additional access barriers to cost-effective preventive care and potentially increasing downstream health care costs.  The small reduction in the Medicare safety-net thresholds, to start in 2016, is woefully inadequate to support the increased numbers of people who will have difficulty meeting their health care expenses.

So unpopular are these measures that they have united in opposition consumers, academics, health economists, peak health bodies and (incredibly) both the conservative (AMA) and the left-wing (Doctors’ Reform Society) arms of the medical profession.  In fact, regardless of where they sit on the political spectrum, it appears that doctors (not unreasonably) object to becoming de facto tax collectors for the Government – particularly not for a government that has the chutzpah to trumpet its commitment to ‘lower, simpler, fairer taxes’ and administrative simplicity, while simultaneously asking GPs to collect $3.5b of additional revenue on its behalf, in $5 increments.

Linking the co-payments to the creation of a new medical research fund makes no economic or policy sense.  While clearly there are some benefits from increased medical research activity, all the evidence suggests that the biggest return on our investment in health is in prevention, public health and primary care, precisely those areas which have been most savagely cut in this Budget.  Perhaps less significantly, given the number of other ‘non-core’ promises the Government has abandoned, the funnelling of co-payment dollars to medical research also undermines the Prime Minister’s pre-election commitment to direct money from ‘the back office to frontline services’.

However, politically this move is masterful.  It creates an association in the community between co-payments and medical research (we’re not just paying a GP tax, we’re funding a cure for dementia!), thus reducing the inevitable backlash from hitting up the sick and the poor. It also puts more pressure on the Opposition, Greens and cross-benchers to pass the relevant legislation as by opposing it the Government can argue they will be obstructing the progress of medical research.

As predicted, the long list of health agencies being abolished, merged or somehow ‘rationalised’ includes Health Workforce Australia, the Australian National Preventive Health Agency and the Australian Institute of Health and Welfare.  It’s difficult to assess the impact of these changes as insufficient detail has been provided about which programs and functions of these organisations will continue.  While there may be some savings in administration of combining several organisations, there are also risks that some valuable and cost-effective activities being undertaken by these agencies will cease.  In particular, there is a risk that preventive health activities will lose out to those more attractive to a politically-driven, short-term funding cycle.

The changes announced to Medicare Locals (MLs), which will morph into Primary Health Networks, were also expected in response to recommendations of the Horvath Review, released earlier this week.  These new Networks will differ from MLs in that they will be established via tender and encouraged to partner with private health insurers. In an echo of MLs’ previous incarnation as Divisions of General Practice, the Government has stated that these new organisations will be more GP-centric, establishing Clinical Councils, with ‘a significant GP presence’, along with local Consumer Advisory Committees.  The Budget Papers state that their role will be to ‘ensure primary health care and acute care sectors work together to improve patient care’, leaving open questions about their role in health promotion and disease prevention.  In response to another recommendation from the Review, funding for the peak ML body, the Australian Medicare Locals Alliance will cease from June 2014.

A slightly more positive response to the Budget came from the National Aboriginal Community Controlled Health Organisation (NACCHO), perhaps relieved to be spared the brutal cuts experienced by other health sectors.  NACCHO welcomed continued funding for the 150 Aboriginal Community Controlled Health Services around Australia with Justin Mohamed, Chair of the National Aboriginal Community Controlled Health Organisation, saying “The 2014 Budget funding means we can continue to provide high quality, culturally appropriate health care to our people for another year,”.  However, the NACCHO Chair also noted that the introduction of co-payments for GP visits will hit Aboriginal and Torres Strait Islander Australians hard as they are “low income earners and suffer the highest level of chronic disease, requiring regular GP visits.” Uncertainty about broader Indigenous programs was expressed by some stakeholders with Reconciliation Australia stating “There is no mention of funding for a further national partnership agreement on Indigenous health or investment for the National Aboriginal and Torres Strait Islander Health Plan.”

The National Rural Health Alliance also welcomed some rural health initiatives, including ‘the modest commitments made on rural health in the 2013 Election campaign’ such as funding for additional GP consultation rooms for supervising registrars and medical students in rural and remote locations, and a small investment in scholarships for nursing and allied health.  However, the Alliance did not comment on the decision to scrap the rural dental infrastructure scheme and how this will impact on rural Australians who already have problems accessing dentists.   The NHRA was also less than positive about the new primary care co-payments, “It is hard to see how the increase in patient contributions will assist in improving access to primary care for people in rural and remote communities” said NRHA Chairperson Tim Kelly.

Sending a clear signal to the States that the previous Government’s cooperative agenda on health is over, the Treasurer announced that the Commonwealth will walk away from its commitment to share equally in growth hospital funding, indexing funding to a combination of growth in the consumer price index and population, from 2017-18.  This has been seen by some political commentators as part of a broader strategy to put pressure on State Governments to agree to an increase in the GST.   By reducing hospital funding and potentially increasing demand for Emergency Department services (due to the GP co-payment) this Budget hands the States both the incentive and the justification to use every opportunity they can find to shift health costs back to the Commonwealth.

Other non-health measures in this Budget are likely to also have profound negative impacts on health, as noted by Professor Sharon Friel who stated “… the health and health equity effects of this budget go way beyond the health sector. Health and wellbeing is also strongly influenced by other policy areas such as education, employment, social protection, taxation and transport”. In particular, a number of commentators expressed concern about the mental health implications of the social welfare cuts for the under-30s and pensioners, including John Mendoza who predicted a rise in suicide rates among young people, resulting from the cumulative impact of a range of measures that ‘lock out young people’.

Overall, this Budget was never going to be an easy sell for the Government. Despite its efforts in talking up the ‘Budget crisis’, it’s hard to convince the community that making the poorest pay more for basic health care stacks up with removing politicians’ lifetime gold pass entitlements as a fair share of the ‘heavy lifting’.  However, whether or not, as some commentators forecast, the Budget measures spell the death of Medicare and universal health care remains to be seen. While the public health system has clearly taken some heavy hits in this Budget, Medicare has previously proved more resilient than many have predicted, outlasting much longer acrimonious political environments including eleven years under John Howard’s Prime Ministership. Tony Abbott and Joe Hockey are not the first politicians to think that with a few budgetary gambits they can turn Medicare into a safety-net system for the disadvantaged, and given the response to their first Budget from the health sector and the community, they may not be the last.