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How the “Prime Minister for Indigenous affairs” slashed health spending

For an update on this article, please see: “A challenge to Budget Estimates Hearing: give us some clarity on the extent of Indigenous health cuts”.

Spending on health services for Aboriginal and Torres Strait Island peoples has been slashed in the Federal Budget, according to a health policy analyst who writes under the pen name of “William Foggin”.

“William Foggin” writes:

Remember Tony Abbott’s pledge to be a Prime Minister for Indigenous affairs?

On the evidence of the budget changes to Indigenous health, he isn’t doing a good job.

Comments on the recent Closing the Gap report show how leadership and commitment is desperately needed in this area (see this recent Croakey blog, for example) – and the budget shows how they are lacking.

And now we have the Minister for Health downplaying the effects of the GP co-payment on Indigenous health by referring to other funding for Indigenous health services – which is also being cut.

The 2013-14 portfolio budget statements for the Department of Health included a 2013-14 budget figure of $847 million for the Indigenous affairs program, and $850 million for 2014‑15.

The 2014-15 version (where Indigenous affairs has now become a sub-program within primary healthcare) has an estimated outcome for 2013-14 of $813 million, and a budget for 2014-15 of $731 million.

The table below shows the changes over the forward estimates.

Over the four years the total reduction is $328 million, or 9 per cent.

It would have been worse but for the decision to extend by twelve months a program of payments to the states for services for teenage sexual and reproductive health and young parent support for Aboriginal and Torres Strait Islander people at a cost of $26 million in 2014-15.

But these cuts are only part of the story.  Subject to the Senate’s agreement, from 2015-16 the GP co-payment starts.

At present an urban AMS who bulk bills a concession card holder (or a child aged less than 16) for an item 23 receives $30.85 for the standard item 23 consultation, plus a $6 bulk billing incentive under item 10990.  (If it is a non-urban AMS the incentive is $9.00 under item 10991.)  So bulk billing a card holder in Penrith gets $36.85, while bulk billing a card holder at Yuendumu gets $39.85.

(If it is a non-urban AMS the incentive is $9.00 under item 10991.)  So bulk billing a card holder in Penrith gets $36.85, while bulk billing a card holder at Yuendumu gets $39.85.

Under the new world order, the rebate for item 23 will be reduced to $25.85.  If a GP charges $7 co-payment, they will receive the item 10990/10991 incentive payment as well (now renamed a low gap incentive).  So they will receive $25.85 plus $7 plus either $6 or $9 making $38.85 or $41.85.

But if the GP charges less than $7 they will only receive the reduced rebate of $25.85 – the low gap incentive will not be payable.  (The term “low gap incentive” is particularly Orwellian – a gap of zero is the lowest possible, but will not attract the low gap incentive.)

So non-urban AMSs will go from getting $39.85 per patient to $25.85 (a 35% reduction), unless they charge patients the $7 co-payment.

According to the AIHW total MBS expenditure in relation to Indigenous people in 2010-11 was $286 million.  Assume that:

  • by 2015-16 it has increased to $400 million; and
  • half of this is for services that will attract a co-payment; and
  • and half of these services are for concession cardholders or children; and
  • AMSs decide not to charge the co-payment

then MBS payments for Indigenous patients will drop by $35 million.

In Sarah Ferguson’s interview with Peter Dutton on the 7.30 Report on 21 May, she asked about the impact of the co-payment on Indigenous patients.

The Minister responded that:

“We provide millions and millions of dollars to Aboriginal health services so that Indigenous patients can be seen.”

Well yes Minister.  Except that the millions and millions of dollars will be about a hundred million dollars a year less.

• William Foggin is a health policy analyst who wishes to remain anonymous.

For an update on this article, please see: “A challenge to Budget Estimates Hearing: give us some clarity on the extent of Indigenous health cuts”. 

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