Budget 2019 boosts aged care and mental health, and modernises Medicare: health experts respond



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The budget provides some short-term boosts for aged care and mental health but little opportunity for much-needed structural reform.
Shutterstock

Stephen Duckett, Grattan Institute; Hal Swerissen, Grattan Institute; Ian Hickie, University of Sydney; Lesley Russell, University of Sydney; Peter Sivey, RMIT University, and Philip Clarke, University of Melbourne

This year’s budget includes $448.5 to modernise Australia’s Medicare system, by encouraging people with diabetes to sign up to a GP clinic for their care. The clinic will receive a lump sum payment to care for the person over time, rather than a fee each time they see their GP.

The indexation freeze on all GP services on the Medicare Benefits Schedule (MBS) will lift from July 1, 2019, at a cost of $187.2 million. The freeze will be lifted on various X-ray and ultrasound MBS rebates from July 1, 2020.




Read more:
What is the Medicare rebate freeze and what does it mean for you?


The budget announces $461 million for youth mental health, including 30 new headspace centres, some of which will be in regional areas. But it does little to address the underlying structural reforms that make it difficult for Australians to access quality and timely mental health care.

In aged care, the government will fund 10,000 home care packages, which have been previously announced, at a cost of $282 million over five years, and will allocate $84 million for carer respite. But long wait times for home care packages remain.

Other announcements include:

  • $62.2 million over five years to train new rural GPs
  • $309 million for diagnostic imaging services, including 23 new MRI licences
  • $331 million over five years for new pharmaceuticals, including high-cost cancer treatments
  • $107.8 million over seven years for hospitals and facilities including Redland Hospital, Bowen Hospital, Bass Coast Health and Ronald McDonald House
  • $70.8 million over seven years for regional cancer diagnosis, treatment and therapy centres
  • $114.5 million from 2020-21 to trial eight mental health facilities for adults
  • $43.9 million for mental health services for expectant and new parents
  • $35.7 million over five years for increased dementia and veterans’ home care supplements
  • $320 million this year as a one-off increase to the basic subsidy for residential aged-care recipients.

Here’s what our health policy experts thought of tonight’s budget announcements.


A hesitant step forward for Medicare

Stephen Duckett, Director, Health Program, Grattan Institute

Medicare funding is slowly creeping into the 21st century. The 19th-century model of individual fees for individual services – suitable for an era when medicine was essentially dealing with episodic conditions – is being supplemented with a new fee to better manage the care of people with diabetes.

The budget announcement, as part of the Strengthening primary care package, is for a new annual payment for each person with diabetes who signs up with a specific GP. Funding is provided for about 100,000 people to sign up – about 10% of all people with diabetes in Australia.

The new item number is consistent with the recent MBS review Report on General Practice, which recommended a move toward voluntary enrolment.

The precise details of the new fee – including the annual amount and any descriptors – have not yet been released. But it should encourage practices to move towards a more prevention-oriented approach to chronic disease management, including using practice nurses to call patients to check up on their condition, and using remote monitoring technology.

The budget announcement contained no evaluation strategy for the initiative. The government should produce such a strategy soon.


Support for aged and disability care

Hal Swerissen, Emeritus Professor, La Trobe University, and Fellow, Health Program, Grattan Institute

The budget has short-term measures to address major issues in aged care and disability while we wait for the royal commissions to fix the long-term problems.

The National Disability Insurance Agency (NDIA) is struggling with the huge task of putting the National Disability Insurance Scheme (NDIS) in place.

There has been a major under-spend on the on the scheme. Price caps for services such as therapy and personal care are too low and nearly one-third of services are operating at a loss. The under-spend would have been more if there hadn’t been a last-minute budget decision to significantly increase service caps, at a cost of $850 million.

$528 million dollars has also been announced for a royal commission to look at violence, neglect and abuse of people with disabilities – the most expensive royal commission to date.




Read more:
Finally, people with disabilities will have a chance to tell their stories – and be believed


There is more funding for aged care. Currently, 130,000 older people are waiting for home care packages – often for a year or more. Nearly half of residential care services are losing money and there are major concerns about quality of care.

The short-term fix is to give residential care $320 million to try to prevent services going under. The budget includes 10,000 previously announced home care packages, at a cost of $282 million, but that still leaves more than 100,000 people waiting.

There’s still a massive shortfall in home care places.
eggeegg/Shutterstock

Little for prevention, Indigenous health and to address disparities

Lesley Russell, Adjunct Associate Professor, Menzies Centre for Health Policy, University of Sydney

Prevention

Preventable diseases and conditions are a key factor in health inequalities and rising health-care costs. The two issues looming large are obesity and its consequences, and the health impacts of climate change.

There is $5.5 million for 2018-19 and 2019-20 for mental health services in areas affected by natural disasters, and $1.1 million over two years for the Health Star rating system – otherwise nothing for primary prevention.

Indigenous health

The Treasurer did not mention Closing the Gap in his budget speech, and there is little in the budget for Indigenous health.

Just $5 million over four years is provided in the budget for suicide-prevention initiatives. And the Lowitja Institute receives $10 million for health and medical research.




Read more:
Why are we losing so many Indigenous children to suicide?


Some announcements in March contribute a little more:

Inequalities and disparities

Disadvantaged rural and remote communities will (ultimately) benefit from efforts to boost National Rural Generalist Training Pathway, with $62.2 million provided over four years. This was a 2016 election commitment.

The announcement of $200 million over three years to index Medicare payments for ultrasound and diagnostic radiology services (beginning from July 1, 2020) came with claims this will help reduce out-of-pocket costs. But given that these payments have not been indexed in 20 years, will the money go to providers or patients?

Hospitals and private health insurance

Peter Sivey, Associate Professor, School of Economics, Finance and Marketing, RMIT University

There are no major changes to public hospital funding arrangements in this year’s budget.

It’s business as usual for hospital funding, aside from funding injections for a handful of hospital sites.
By VILevi

Funding for public hospitals is predicted to increase at between 3.7% and 5.6% over the forward estimates. However, these figures are contingent on the new COAG agreement on health funding between the Commonwealth and states, which is due to be finalised before the end of 2019.

The states will be hoping to wring some more dollars from the federal government given their soaring public hospital admissions and pressure on waiting times.

There is no change to the government’s private health insurance policy which has just come into force.




Read more:
Premiums up, rebates down, and a new tiered system – what the private health insurance changes mean


Government spending on the private health insurance rebate is projected to increase more slowly than premiums at between 1.8% and 3.2% because of indexation arrangements which are gradually reducing the rebate over time.


Smaller targets for mental health

Ian Hickie, Co-Director, Brain and Mind Institute, University of Sydney

Numerous reports and accounts from within the community have noted the flaws in Australia’s mental health system: poor access to quality services, the uneven roll-out of the NDIS, and the lack of accountability for reforming the system.

The next federal government faces major structural challenges in mental health and suicide prevention.

Not surprisingly, this pre-election budget does not directly address these issues. Instead, it focuses on less challenging but worthy targets such as:

  • continued support for expansion of headspace services for young people ($263m over the next seven years) and additional support for early psychosis services ($110m over four years)
  • support for workplace-based mental health programs ($15m)
  • support for new residential care centres for eating disorders ($63m).

A more challenging experiment is the $114.5 committed to eight new walk-in community mental health centres, recognising that access to coordinated, high-quality care that delivers better outcomes remains a national challenge.

Despite the commitment of health minister Greg Hunt to enhanced mental health investments, the total increased spend on these initiatives ($736.6m) is dwarfed by the big new expenditures in Medicare ($6b), improved access to medicines ($40b), public hospitals ($5b) and aged care ($7b).

It will be interesting to see whether mental health reform now receives greater attention during the election campaign. At this stage, neither of the major parties has made it clear that it is ready to deal directly with the complex challenges in mental health and suicide prevention that are unresolved.


New funding for research, but who decides the priorities?

Philip Clarke, Professor of Health Economics, University of Melbourne

The budget contains several funding announcements for research.

The government will establish a Health and Medical Research Office, to help allocate money from the Medical Research Future Fund (MRFF). This will be needed, as the budget papers commit to a further $931 million from the MRFF for:

  • Clinical trials for rare cancers and rare diseases
  • Emerging priorities and consumer-driven research
  • Global health research to tackle antimicrobial resistance and drug-resistant tuberculosis.
The budget includes funding for consumer-driven research and drug-resistant tuberculosis.
i viewfinder/Shutterstock

In addition, the budget includes:

  • $70 million for research into type 1 diabetes
  • a large investment for genomics (although that is a re-announcement of $500 million promised in last year’s budget)
  • a series of infrastructure grants to individual universities and institutions, such as $10 million to establish the Curtin University Dementia Centre of Excellence.



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The government appears to be moving away from allocating medical research funding through existing funding bodies, such as the National Health and Medical Research Council (NHMRC), towards allocating research funds to specific disease areas, and even to individual institutions.

This is a much more direct approach to research funding, but it raises a few important questions. On what basis are these funding decisions being made? And why are some diseases considered priorities to receive funding? There is very little detail to answer these questions.

Australia’s allocation of research funding through the MRFF is diverging from long-held traditions in other countries, such as the United Kingdom, which apply the “Haldane principle”. This involves researchers deciding where research funding is spent, rather than politicians.

* This article has been updated since publication to clarify the 10,000 home care packages have been previously announced.The Conversation

Stephen Duckett, Director, Health Program, Grattan Institute; Hal Swerissen, Emeritus Professor, La Trobe University, and Fellow, Health Program, Grattan Institute; Ian Hickie, Professor of Psychiatry, University of Sydney; Lesley Russell, Adjunct Associate Professor, Menzies Centre for Health Policy, University of Sydney; Peter Sivey, Associate Professor, School of Economics, Finance and Marketing, RMIT University, and Philip Clarke, Professor of Health Economics, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Election campaign lesson #1: don’t mess with Medicare


Jim Gillespie, University of Sydney

Labor’s 2016 “Mediscare” has entered political memory as a campaign tactic that almost changed the game in that election. Using robocalls and text messages purporting to come from Medicare, government proposals to outsource management of back-office business became inflated into an all-out “privatisation” of Medicare.

The hyperbole cut through because of a long history of Coalition hostility to Medicare as a universal health scheme. The then Turnbull government didn’t lose the election, but it became accepted wisdom that the Mediscare campaign contributed to the loss of some seats.

Health has taken centre stage once again this election, with both sides trying to use “Mediscare” tactics to drive fear about cuts or shortfalls in the health system.




Read more:
As Mediscare 2.0 takes centre stage, here’s what you need to know about hospital ‘cuts’ and cancer funding


Coalition hostility

Both the Whitlam government’s Medibank and Hawke’s Medicare faced withering hostility from Australian conservatives.

Australia became one of the only nations to introduce universal health coverage in 1975. This aimed to ensure all Australians had access to a wide range of health services at little or no cost, no matter where you lived or how much money you earned.

But the Fraser Coalition government abolished the system in 1981.

After three years of debate about the role of private health insurance, and indivuals’ responsibility to pay for their own health care, universal health care was re-established in 1984 by the Hawke Labor government, under the new name: Medicare.

In 1987, then opposition leader John Howard promised to return to a user-pays system based on private health insurance. He wanted to “take a scalpel, without punning too much, to Medicare”.

But rather than backing Howard’s plan, voters delivered a string of Coalition electoral losses. In 1990, the Liberal shadow minister for health confessed to the press, just before resigning:

I want to say with all the frankness I can muster, the Liberal and National Parties do not have a particularly good track record in health, and you don’t need me to remind you of our last period in government.




Read more:
Labor’s ‘Mediscare’ campaign capitalised on Coalition history of hostility towards Medicare


Howard’s 1996 electoral success relied on defusing the Medicare issue. He assured voters that “Medicare will remain totally in place under a Coalition government”.

However, he retained some of his ambivalence. Howard supported Medicare’s role as a “safety net” to support people with few financial resources. But the Coalition believed those who could afford it should pay their own way, through private health insurance.

The Abbott government’s 2014 Commission of Audit report restated this call for a two-tier health system:

Higher-income earners should be required to insure for basic health services in place of Medicare.

The incoming Turnbull government rejected this advice. But the debate reinforced an image of a reluctant and half-hearted convert.

When the Coalition extended the Medicare benefit freeze, which was originally introduced by Gillard’s Labor government, the extension hurt the Coalition far more than it had Labor.




Read more:
What is the Medicare rebate freeze and what does it mean for you?


Embracing Medicare or avoiding a Mediscare?

The Coalition has been determined to avoid this trap again. The Turnbull and Morrison governments have underlined support for Medicare. The 2019-20 Budget documents are punctuated with statements about “guaranteeing” and “strengthening” Medicare. It also declares: “The government’s commitment to Medicare is rock solid.”

The Medicare Guarantee Fund was established in 2017 to emphasise this commitment. Tax dollars generated by the Medicare levy (minus the portion set aside for the National Disability Insurance Scheme), go into the fund. These are topped up with enough personal income tax receipts to meet the combined cost of the Medicare Benefits Schedule (MBS) and Pharmaceutical Benefits Scheme (PBS).

But the fund has been criticised as mere rebadging and an “accounting trick”. It offered no new funding or new policies; it simply changed the name of existing policies, and extended the definition of “Medicare” from payments of medical benefits to include pharmaceuticals.

But the “Medicare guarantee” wasn’t extended to guarantee adequate federal funding for public hospitals, which remains a problem.




Read more:
Don’t be fooled, the Medicare Guarantee Fund provides no real guarantee


When it comes to embracing Medicare and health funding, Labor has been called out for some of its own lapses.

In 2011 the Gillard government, during its struggles for control of spending, delayed implementation of some expensive pharmaceuticals, causing outrage among health provider and patient groups.

Labor has had to add its own guarantee this election campaign that all PBS drugs approved by the nation’s expert advisory panel will be approved immediately.

Mediscare 2.0

Labor’s new attempt at scare tactics over Medicare uses well established themes. It will test how far the Coalition has been able to inoculate itself.

The attack has again focused on the out-of-pocket costs from declining bulk-billing levels, especially in cancer treatment.

Despite the Gillard government’s Medicare rebate freeze, Labor has held the high ground in this cost debate. Its cancer package focuses on extending bulk billing to minimise out-of-pocket payments.

In the field of hospital funding, Labor’s “Mediscare 2.0” focuses on a A$2.8 billion “cut” in funding to the states to pay for public hospitals.

In 2011, the Rudd/Gillard government pledged to share the cost of public hospital funding growth with the states with a 50-50 split to end the “blame game”. The Abbott government abandoned this policy in the 2014 budget.




Read more:
Budget takes hospital funding arrangement back to the future


The Coalition, under Turnbull, offered to return to funding 45% of the cost of public hospitals. The Labor-held states rejected this, and Shorten has now promised to restore this to 50%. Labor has made traction with these attacks, though much of the detail has been lost or confused in media soundbites.

Election campaigning in health has forced the Coalition to accept how much Australians value Medicare and the principle of universal health coverage. As the common ground between Labor and the Coalition expands, we may be able to have a more rational debate over Medicare’s virtues and deficiencies. But not in the partisan heat of an election.The Conversation

Jim Gillespie, Deputy Director, Menzies Centre for Health Policy & Associate Professor in Health Policy, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Election stays on tax and health battlegrounds



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The Coalition has produced tables showing it would be offering bigger tax cuts in 2024.
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Michelle Grattan, University of Canberra

The election contest continues to focus on tax and health, with the government setting out the tax benefit people in particular occupations would get in the long term under its plan, and Labor announcing funding for pathology from its cancer package.

The government says teachers, nurses, police officers and tradesmen would pay significantly more income tax under Labor.

According to its figures a NSW nurse manager earning $199,029 in 2024-25 would pay $11,740 less tax than under Labor; a Queensland public school principal on $183,201 would pay $9049 less tax than under Labor, and a Victorian public school classroom teacher on $115,745 would be $3699 better off.

Labor has rejected the later stages of the government’s income tax plan, saying it is not fiscally responsible to produce details at this stage. It however has left the way open for a Shorten government to give tax cuts – beyond those promised to be delivered within weeks of the election – when budget circumstances allow.

Treasurer Josh Frydenberg said: “Anyone earning more than $40,000 will better off under our plan. It means school teachers, nurses, bus drivers and emergency service workers right across the country will have more money in their pocket.

“This is more money to spend as they see fit. Our plan provides greater reward for effort while ensuring top earners continue to pay their fair share.”

“Our tax system will maintain its progressive nature under our reforms, with the top 5% of the taxpayers paying around one third of all income tax.”


Source: Liberal Party of Australia

Tax and health have dominated the first days of the campaign, with the government using numbers from the Treasury to butress its argument about Labor as high taxers and figures from the Health department to claim Labor’s plan to slash costs for cancer sufferers was massively under-costed.

Both Treasury and the Health department distanced themselves from the exercises, saying they had responded to government requests rather than costed opposition policies.

In the case of the attack on the cancer package the government’s attack was based on a false assumption about rebates.

In its latest slicing and dicing of its $2.3 billion cancer package Labor says it would invest $200 million to keep pathology tests free for older people and people with cancer.

“Bulk billing for blood tests is at breaking point – cancer patients will either have to pay, or there will be a reducation in services,” Bill Shorten and health spokeswoman Catherine King say in a statement.

A Labor government would work with the sector and lift the bulk billing incentive. Older people will have about 20 million pathology tests a year; people with cancer have about three million.

The CEO of Australian Pathology, Leisel Well, said that “without adequate funding, pathology services will be forced to stop bulk billing.

“This will impact unfairly on poorer Australians, including pensioners. Many will simply not be able to afford tests, which means diseases will get diagnosed later at a greater cost to taxpayers, and most importantly with a greater impact on the health outcomes of Australians”.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

As Mediscare 2.0 takes centre stage, here’s what you need to know about hospital ‘cuts’ and cancer funding


Stephen Duckett, Grattan Institute

Health is proving a bone of contention in the 2019 election campaign. Labor has positioned health as a key point of difference, and the Coalition is arguing that Labor’s promises are untrue in one case and underfunded in another.

This cheat sheet will help you sort fact from fiction in two key health policy areas: public hospital funding and cancer care.

Public hospitals

In his budget reply, Opposition Leader Bill Shorten promised that Labor would restore every dollar the government had “cut” from public hospital funding.

The government counter-claimed that hospital funding has increased. So who is right?

The short answer is both.

In 2011, the then Labor government negotiated a funding agreement with the states for the Commonwealth to share 45% of the growth in the cost of public hospital care, funded at the “national efficient price”. This price is based on the average cost of the procedure, test or treatment.

The funding share was to increase to 50% of growth from July 1, 2017.




Read more:
Public hospital blame game – here’s how we got into this funding mess


At the 2013 election, the then Liberal opposition agreed to match that promise and, indeed, claimed they were the only ones who could be trusted to keep the promise:

A Coalition government will support the transition to the Commonwealth providing 50% growth funding of the efficient price are hospital services as proposed. But only the Coalition has the economic record to be able to deliver.

However, in the 2014 budget the Coalition scrapped its promise. The 2014 budget papers list the savings that were made by the decision. It was a clear and documented cut that the Coalition was proud to claim at the time.

The green line represents the Gillard hospital funding agreement; the blue line is the revised projection from the 2014 budget.
Budget 2014-15

Since then, the Turnbull government has backtracked on the 2014 cuts to health but only to restore sharing to 45% of the costs of growth.

Labor has estimated the impact of the gap between 45% and 50% on every public hospital in the country, and spruiks the difference at every opportunity.

Hospital costs increase faster than inflation because of growth and ageing population, the introduction of new technologies, and new approaches to treatment.

As a result, the Commonwealth’s existing 45% sharing policy drives increased spending, and so Commonwealth spending is now at record levels, albeit not at the even higher levels that Labor had promised.

Labor’s promise is, appropriately, phrased as an additional quantum of money to the states, sufficient to restore the 50% share in the cost of growth.

The public hospital funding gap comes down to how much of the growth in hospital funding each party has committed to.
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The details of how this funding should be operationalised to the states should be left to detailed negotiations after the election as it is not good practice for all the details of your negotiating position to be aired in the heat of a campaign.

So Labor is right to say hospital funding is lower than it would have been if the 50% growth share commitment had been maintained. But the Coalition is right to say the Commonwealth is spending more on hospital care than when it came to office.

Cancer care

The second major element of the Labor campaign was a high-profile A$2.3 billion package to address high out-of-pocket costs for Australians with cancer. The package has three key components:

  • additional public hospital outpatient funding to reduce waiting times
  • a new bulk-billing item for consultations
  • more funding for MRI machines for cancer diagnosis.



Read more:
Labor’s cancer package would cut the cost of care, but beware of unintended side effects


Labor did not promise to eliminate out-of-pocket costs for cancer, not even for consultations. It claimed bulk-billing would increase from 40% to 80% of consultations.

This promise has led to another showdown between Labor and the Coalition. Health Minister Greg Hunt claims to have found a A$6 billion black hole in Labor’s cancer policy.

The Coalition has produced a list of 421 Medicare items used for cancer treatment – including treatment in private hospitals – and noted Labor has not allocated funds to cover the fees specialists charge for these items.

But Labor rightly claims the 421-item list is not what it promised. Labor’s promise was about increasing the rate of bulk-billing for consultations and is based on a new item which is only available if the specialist bulk-bills.

Expect more claims and counter-claims in the weeks ahead.The Conversation

Stephen Duckett, Director, Health Program, Grattan Institute

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The Coalition’s report card on health includes some passes and quite a few fails


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The Coalition’s record on health is patchy, at best. Meanwhile, Labor is already campaigning hard on Medicare.
Shutterstock

Stephen Duckett, Grattan Institute

This article is part of a series examining the Coalition government’s record on key issues while in power and what Labor is promising if it wins the 2019 federal election.


The Turnbull/Morrison government has a mixed record, at best, on health.

The 2019 budget cash splash includes more promises on health but these will not come into effect until after the election. So they are just promises, not actions that have changed the health system.




Read more:
Budget 2019 boosts aged care and mental health, and modernises Medicare: health experts respond


In 2016-17, the Commonwealth government spent A$74.5 billion on health care, mostly on:

  • grants to the states for public hospitals (29% of total spending)
  • medical specialists and diagnostic tests (18%)
  • general practice (14%)
  • the Pharmaceutical Benefits Scheme (14%)
  • support for private health insurance (8%).

Here’s the report card on the Coalition’s performance since the 2016 election.

1. Grants to the states for public hospitals

Public hospital funding has been a failure for this government.

The Coalition’s 2013 election promise to keep the Labor policy on hospital funding growth was not repeated at the 2016 election. The Commonwealth now funds only 45% of the costs of growth, not 50% as previously promised.

This funding gap – Labor calls it a cut – left the government exposed during last year’s by-elections to charges that it was short-changing local hospitals.




Read more:
Public hospital blame game – here’s how we got into this funding mess


The claim appeared to gain traction with voters, so we should expect to see a re-run of this tactic in this election. This started with Bill Shorten highlighting the issue in his budget reply speech, promising to “put back every single dollar that the Liberals have cut from public schools and public hospitals”.

The Coalition now funds only 45% of hospital funding growth, down from 50%.
hxdbzxy/Shutterstock

Despite bribes and threats, the federal government has failed to negotiate hospital funding agreements with Victoria and Queensland, together covering 46% of the population. As a result, those states are at risk of being left in a funding limbo when the current arrangements expire on June 30, 2020.

2. Specialist medical services and diagnostics

A key challenge for policy on specialist medical services is out-of-pocket costs. General practitioner bulk-billing rates are good, but patients are angry about the out-of-pocket costs they face when they go to a specialist.

The government response has been a committee, a report, and a promise of transparency or, more accurately, a promise to encourage voluntary fee transparency.




Read more:
We need more than a website to stop Australians paying exorbitant out-of-pocket health costs


Increased transparency is all well and good, but it puts the burden of reducing out-of-pocket costs on consumers, who generally do not have enough information to make informed choices. The complication rates of different specialists, and other measures of quality, are not yet routinely available to patients, or even GPs.

This area should be marked as a policy fail.

Promises about diagnostic testing before the 2016 election were of two kinds: more reviews and more machines that go ping, the latter dropped into marginal electorates as part of the cargo cult which appears endemic during election campaigns.

Left unaddressed is the need to reform the pathology market to recognise that pathology provision (such as blood and tissue tests) is a big business and needs to be treated as such, by procuring via tenders rather than fee-for-service.

Blood testing is big business.
Romanets/Shutterstock

The government has also failed to end the over-use of diagnostic tests. This could have been done by reducing payments for tests which have been shown to add little value and encouraging more evidence-based diagnosis. Another fail.

A third key area of specialist provision, mental health, is a mess. Before the 2016 election, the Coalition promised to “strengthen mental health services”.

The latest Panglossian national status report on mental health gives no hint of the underlying problems of poor access, misdirected funding, lack of teamwork, and appalling rates of suicide in Indigenous communities. Yet another fail.




Read more:
Why are we losing so many Indigenous children to suicide?


3. General practice and primary care

The much-vaunted Turnbull-era Primary Health Care Homes Trial – once the vanguard of a primary care revolution and core to the government’s policy announcement’s before the 2016 election – has disappeared from the radar.

In its place, announced in this year’s budget, is a new capitation-type payment for general practitioners.

Although the details are still to be fleshed out, this will probably allow general practitioners to introduce remote consultations – such as advice by email for those who want it – and have practice staff reach out to people with chronic illness to track how they are going to reduce future problems.




Read more:
More visits to the doctor doesn’t mean better care – it’s time for a Medicare shake-up


This is a good move, and reflects recommendations from a review of general practice items as part of the broader Medicare Benefits Schedule Review.

Other important recommendations from the general practice review seem to be languishing, and there is no sense that overdue primary care reforms are being tackled in a serious and systematic way.

Overall, however, the government has been moving in the right direction in this area, albeit slowly and with false starts. A solid pass.

4. Pharmaceutical benefits

Before the 2016 election, federal health minister Greg Hunt signed agreements promising to talk to and work with all components of the pharmaceutical supply chain.

This has been a success story. New drugs are now listed in line with recommendations from the Pharmaceutical Benefits Advisory Committee, ending the delays and political interference of yesteryear.

Labor has promised to do the same.

Policy pass: drugs are now being listed without delay.
iviewfinder/Shutterstock

Pharmaceutical prices have come down, so the prices paid by Pharmaceutical Benefits Scheme (PBS) for drugs are now closer to international best practice. But anti-competitive restrictions on pharmacy location remain, to the benefit of pharmacy owners.

Nevertheless, a strong pass.

5. The private market

The private health market is supposed to be an area of strength for a Coalition government. On April 1 this year, this government introduced changes to private health insurance:

  • standardising product definitions
  • allowing deductions to encourage young people to take out insurance
  • removing many natural therapies (for which there is no evidence that they work) from the subsidised extras packages.



Read more:
Premiums up, rebates down, and a new tiered system – what the private health insurance changes mean


These changes are unlikely to have much impact on private health insurance coverage, which has been declining in recent years.

Overall, no harm has been done, but unfortunately most of the fundamental problems of the private markets have not been confronted. Borderline achievement.

6. Everything else

Barely a week goes by when Hunt is not announcing yet another funding initiative. He has two big slush funds from which to dispense goodies: the Medical Research Future Fund and the Community Health and Hospitals Fund.

The criteria for distributing money from these funds is opaque; it is difficult to discern any strategic vision informing the way the largesse is being spread.

Health minister Greg Hunt makes frequent health funding announcements.
AAP/Penny Stephens

There was a veritable cornucopia of policies announced before the last election, from glucose monitoring to treatment of rare teen cancers.

All were worthy, and most were designed to placate vocal sectoral interests. Most have been implemented, but few will change the fundamentals of the health system or improve integration of the system’s many disparate elements.

Scattered like programmatic confetti, each of these funding dollops will yield a minor benefit, but together they will lead to more funding silos, less policy integration, and more confusion about the roles of the Commonwealth government and the states.

What’s more, they will give more heart to vested interests, and undermine rational national health policy.

What Labor has promised so far?

Health is an area of comparative advantage for Labor – voters tend to trust Labor more than the Coalition on Medicare.

Not surprisingly, Labor capitalises on that, and opposition leader Bill Shorten made health policy a key element of his budget reply speech.

Last month Labor promised to lift the freeze on Medicare rebates for general practice consultations, a promise matched by the Coalition in the Budget.

Labor has also set out a longer-term vision for reform of the health system, including a proposal for an ongoing “reform commission”.

The centrepiece and most expensive was a massive “cancer plan” commitment to address out-of-pocket costs for people with cancer. This includes expanded Medicare rebates for MRI scans for cancer patients, a new rebate for bulk-billed visits to oncologists, and a guarantee that all new drugs recommended for listing on the PBS will be listed.




Read more:
Labor’s cancer package would cut the cost of care, but beware of unintended side effects


The Conversation


Stephen Duckett, Director, Health Program, Grattan Institute

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Labor’s cancer package would cut the cost of care, but beware of unintended side effects



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The median out-of-pocket expenses for breast cancer treatment is A$4,192.
ESB Professional/Shutterstock

Kees Van Gool, University of Technology Sydney and Jane Hall, University of Technology Sydney

Labor’s big-ticket election promise is a A$2.3 billion package to provide free medical scans and specialist consultations for cancer patients, plus automatic listing of new cancer therapies on the Pharmaceutical Benefits Scheme (PBS) once they’re recommended by the nation’s expert advisory panel.

One in two Australians will be diagnosed with cancer by the age of 85, and around 145,000 new diagnoses are made each year. So most of us have a close relative or friend who will be affected by the policy.

But there are some important policy considerations a Shorten government would need to plan for to ensure the package provides optimal care, improves patient outcomes, and does actually reduce out-of-pocket costs.




Read more:
Shorten promises $2.3 billion package to relieve costs for cancer patients


What’s the problem with cancer care?

New therapies for cancer are rapidly evolving, and are often extremely expensive. Seeking treatment involves navigating a complex array of public and private providers across multiple health care sectors, often leaving patients with high out-of-pocket costs.

These costs are highly dependent on which providers the patients choose (and the fees they charge), the level of private insurance cover, and the volume of services used.

A recent Queensland study found the median out-of-pocket expenses for a breast cancer patient, for example, was A$4,192.

It’s possible but very time-consuming for patients to “shop around” to reduce costs. But this is an unreasonable burden to place on patients.

The Labor proposal provides an opportunity to develop a comprehensive cancer control program that encompasses prevention, early diagnosis, treatment and follow-up – at a reasonable cost.




Read more:
Cutting cancer costs is a worthy policy, but we need to try to prevent it too


Better care for cancer patients

Cancer treatment is well researched; there are clear evidence-based guidelines that establish clinical pathways for the best treatment.

Nevertheless, there is substantial variation in treatments given to cancer patients. This difference cannot always be explained by their clinical conditions, and sometimes the care is not evidence-based.

It’s important that the proposed reforms do not just fund more care, but support more of the best care.

The approach that has shown promise in other countries is known as “bundled payments”.

Under bundled payments, a series of health care services – that can span over time and across multiple health care sectors and providers – are bundled together for funding purposes. This gives providers or institutions greater flexibility in how they spend money delivering care to the patient.

There is a danger that bundling can provide incentives to skimp on care, because the provider receives the same amount of funding no matter how much care is provided. But this can be addressed by monitoring the quality of care and the patients’ outcomes.

Ensuring the financial benefits flow to patients

Australian governments have made several attempts to provide better safety nets that cushion patients from extra charges.

Study after study shows that, in these circumstances, providers are likely to raise their fees. So while patients get some financial benefit, the doctors benefit also.

Under current Medicare rules, the Australian government does not and cannot determine doctors’ fees. It can only determine the amount of the Medicare benefit.

In general practice, most consultations are bulk-billed implying that the fee the doctor charges is equivalent to the Medicare benefit.

Only 31% of specialist consultations are bulk-billed, leaving more patients with an out-of-pocket payment.




Read more:
Specialists are free to set their fees, but there are ways to ensure patients don’t get ripped off


What can government do to encourage cancer care providers to bulk-bill?

Labor has announced they will add a bulk-billing incentive payment, as occurs in primary care. Specialists will receive an additional payment if they bulk-bill a cancer-related service.

This will not guarantee that every patient will not incur any out-of-pocket costs – although it should increase the likelihood that they will. Indeed, the Labor target is that 80% of patients will be bulk-billed.

However, previous research has shown that while the GP bulk-billing incentive led to a reduction in costs for those eligible (concession card holders), it also increased costs for those not eligible.

Careful monitoring is required to ensure the volume of services – and their fees for non-cancer patients – do not go up.

Not all cancer care is based on the best available evidence.
Napocska/Shutterstock

A further unprecedented complication is that for some services, it will be necessary to differentiate Medicare payments on the basis of the patient’s cancer status.

To guarantee patients face no out-of-pocket costs would require more radical reform. Again, the bundled payment system could be a vehicle for such reforms whereby payments are conditional on all the patient’s service providers agreeing to deliver care with no additional fee to the patient.

Depending on whether a patient is privately insured, the bundled payment could be financed by private health funds and Medicare.

Of course, it’s not yet clear that bundled payment schemes can be directly applied to the Australian setting.

The Labor cancer package requires careful and rigorous research effort to inform and guide the policy development.

A new vision for Medicare

Medicare is now 35 years old. It was built on fee-for-service payment, and focused on short, acute episodes of illness.

Now it’s time to move to new funding mechanisms that provide better care for complex, ongoing conditions, at a cost patients and the country can be sure represent efficient use of resources.




Read more:
More visits to the doctor doesn’t mean better care – it’s time for a Medicare shake-up


Cancer is a good place to start and it could indeed be the most significant reform of Medicare so far.

Imagine a health system where every Australian was assured of optimal care, no matter what their illness or economic circumstances. That is a health system worth paying taxes for.The Conversation

Kees Van Gool, Health economist, University of Technology Sydney and Jane Hall, Professor of Health Economics and Director, Centre for Health Economics Research and Evaluation, University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

More visits to the doctor doesn’t mean better care – it’s time for a Medicare shake-up



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The number of Medicare claims Australians make in a year doubled between 1984 and 2018.
By Sopotnick

Jane Hall, University of Technology Sydney and Kees Van Gool, University of Technology Sydney

This is part of a major series called Advancing Australia, in which leading academics examine the key issues facing Australia in the lead-up to the 2019 federal election and beyond. Read the other pieces in the series here.


Over the last 35 years, Medicare has given Australians access to high-quality health care at a reasonable cost. But, despite our justifiable pride in Medicare, it’s time to reconsider the way we pay for health care.

Australia’s Medicare system is a A$20 billion-a-year program. It subsidises most of our out-of-hospital doctor consultations, blood tests, X-rays and scans, physio appointments, eye tests and many other health services. It’s based on a long list of items and each time an item is provided, Medicare pays a benefit.

But paying doctors and other health providers a set fee for each service they deliver is not delivering optimal value for the health dollar. There are two reasons for this.

First, it encourages a higher volume of services, but not necessarily better-value services.

Second, it constrains doctors into delivering the care based on the items in the schedule, which often don’t meet the needs of complex patients.




Read more:
Explainer: what is Medicare and how does it work?


One promising alternative is “bundled payments”. Rather than paying doctors a “fee for service”, they would be paid a prospective lump sum to care for the patient’s medical problem, over a specified period.

The lump sum would be a pooled payment for all services provided to treat the condition. The provider’s role would be to coordinate the patient’s care across different parts of the health system and work with a range of health professionals to deliver high-quality care.

This would give doctors greater flexibility to manage the care patients need. At the same time, doctors would be held accountable via measurements of the quality of their care.

Importantly, this would give patients greater access to a broader range of services and make it easier to navigate our complicated health system.

Why health costs are rising

Between 1984 and 2018, Australian government spending on services outside of hospitals has increased from A$426 to A$818 per person, after adjusting for inflation.

This increase is almost entirely due to service volume. Back in 1984, the average Australian made 7.25 out-of-hospital Medicare claims a year. By 2018, this had escalated to 15.34; a doubling in the average number of claims.

The biggest growth has been in the number of pathology claims for blood and tissue tests (1.4 in 1984 to 5.2 in 2018), followed by GP consultations (4.2 compared to 6.3) and diagnostic imaging, including X-rays and other types of scans (0.3 versus 1.0).

This is not just the result of population ageing. At every age, we are making more Medicare claims. In 1985, people aged between 75 and 84 made 16.1 Medicare claims per year. In 2018, this number had grown to 44.6 claims per person per year.

Medicare prices have been very steady. For GP consultations, for example, the benefit paid per service has increased by 72% over the 35-year period, and mostly as a direct result of policy initiatives such as the Strengthening Medicare reforms introduced in 2004-05.

In fact, since 2005, the benefit per service has declined by 6% in real terms. This is a result, in part, of the Medicare freeze imposed by government between 2012 and 2018.

So price control is only one part of constraining expenditure growth. The other is the volume of services.




Read more:
FactCheck: has Medicare spending more than doubled in the last decade?


The medical care market has undergone considerable corporatisation. Corporate entities now own around 10% to 15% of all GP practices in Australia.

Corporate entities can own and run primary care practices as well as pathology laboratories, diagnostic imaging services and even pharmacies. This creates more incentive to refer patients to their own businesses for blood tests and imaging to increase the volume of claims, and therefore increase profits.

Greater spending doesn’t mean better care

The second critique of Medicare is that current funding arrangements create disincentives for delivering optimum care over a longer period, particularly for complex patients who require multiple services from multiple providers. They might have cancer, for instance, or multiple chronic diseases such as heart disease and diabetes or dementia.

Currently, Medicare makes a payment for every claim made within what we call an “episode of care” – a set of services to treat a condition, or a procedure. Each provider in that episode has an incentive to increase their own volume of care, but there are virtually no incentives to coordinate or deliver an optimum pathway of care for the patient.

Further, there are too few opportunities and rewards in this system to give doctors flexibility to offer different types of care for patients. This includes care provided by nurses, physiotherapists or dietitians; email or telephone consultations; patient education; and coordination services.

Instead, pay doctors a lump sum

The main feature of a good payment system is that it creates the right incentives for providers and patients to use health care resources effectively, efficiently and equitably.

Bundling payment involves working out the best care pathways for each condition. Cancer, for example, is a complex disease that requires ongoing care from primary, specialist and hospital services.

Under a bundled payment, the patient’s GP clinic would be paid a lump sum to ensure the patient receives all the services they need. This includes consultations, health checks, blood tests, physiotherapy, dietetics, patient education, and so on. The GP would have more control over how each of those services is delivered.

Sometimes will be best cared for by a physiotherapist.
Africa Studio/Shutterstock

If viable, the GP could bring some of these services into their practice, or they could subcontract them to other organisations.

The practice would be held accountable for providing high-quality care through various performance measures. These could range from patient satisfaction measures to objective measures such as timeliness of care or fewer avoidable complications. Payments could, in part, be made conditional on meeting performance targets.

Ultimately, because we are giving the provider more say over how care is delivered, the model of care can be more easily adapted to the needs of the patient.

Health reform must be based on evidence

In the small number of countries where bundled payments have been piloted, they are associated with improved quality, financial savings and increased patient satisfaction.

A bundled payment for hip-fracture patients in England, for example, resulted in more patients receiving surgery within 48 hours after admission and lower death rates.




Read more:
Creating a better health system: lessons from England


Although these studies show promise, the evidence base is still in its infancy.

Successful reform in this area will require careful design of the bundles, the payment levels and patient selection process, as well as how best to monitor quality care. In particular it requires robust evidence to determine:

  • what constitutes an optimal bundle of care for a particular condition
  • the cost of delivering those services
  • how the payment should be adjusted for the specific characteristics of a patient
  • the role performance targets may play in motivating health providers to deliver high-quality care.



Read more:
Is it time to ditch the private health insurance rebate? It’s a question Labor can’t ignore


The Conversation


Jane Hall, Professor of Health Economics and Director, Centre for Health Economics Research and Evaluation, University of Technology Sydney and Kees Van Gool, Health economist, University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Don’t be fooled, the Medicare Guarantee Fund provides no real guarantee



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The Medicare Guarantee Fund appears to be no more than an accounting trick.
from shutterstock.com

Stephen Duckett, Grattan Institute

Treasurer Scott Morrison pulled a health-related rabbit out of his hat on budget night, announcing the government will “guarantee” the future of Medicare. The Conversation

It will do this by allocating revenue from the recently increased (from 2% to 2.5%) Medicare levy, after paying for the National Disability Insurance Scheme (NDIS), into a Medicare Guarantee Fund.

The government will then cover the shortfall to cover the costs of Medicare – defined in these budget announcements as a combination of expenditure from the Medicare Benefits Schedule (MBS) and Pharmaceutical Benefits Scheme (PBS). In Morrison’s words:

Proceeds from the Medicare levy will be paid into the fund. An additional contribution from income tax revenue will also be paid into the Medicare Guarantee Fund to make up the difference.

Based on the sketchy information so far available, this fund appears to be no more than an accounting trick. The size of the fund will be determined each year based on projected MBS and PBS expenditure. The balancing item, which is the extra proportion of non-NDIS revenue, will also be adjusted each year in line with those expenditure projections.

The guarantee part is that only the MBS and PBS expenditures can be paid from the fund, “by law”. This might sound good, but don’t be fooled. The Medicare Guarantee Fund is nothing more than a rebadging exercise: it changes the badge on a policy in the hope people might think it is a new policy.

It merely provides an additional line in the budget papers, supplementing information that was already there for MBS and PBS expenditure, albeit separately. And by defining Medicare as MBS and PBS expenditure, the government has seamlessly airbrushed public hospitals out of the picture.

What is Medicare?

Until budget night this week, most people would have thought of Medicare as the medical services and public hospital scheme, and probably still do.

When Medicare was introduced in 1984, it changed funding arrangements for medical services and public hospitals, removing or reducing financial barriers to access to these services. It did not touch PBS arrangements.

It may now be appropriate to add the PBS as a third component of Medicare, as it is about access to health care. But the PBS should be an addition to how Medicare is defined. It shouldn’t be used to airbrush public hospital access out of any Commonwealth definition of Medicare.

To put it more simply, the Medicare Guarantee Fund does not include the Commonwealth’s contribution to public hospital funding. But it does include the PBS, adopting a unique and idiosyncratic definition of Medicare.

The Medicare Guarantee Fund is being created using a partial statement of Medicare spending: if the public were to assume the Medicare Guarantee Fund is purely about a public commitment to Medicare, they would be misled.

So despite Morrison’s claims the fund will provide “transparency about what it really costs to run Medicare”, Medicare funding will actually be less transparent.

What does the fund guarantee?

The government probably hopes the Medicare Guarantee Fund will be its armour against a revised Mediscare campaign, like the one Labor ran before the 2016 election. The word “guarantee” linked with “Medicare” sounds good, costs nothing and does not bind the government in any way. But it may be enough to ward off the Mediscare vampires.

Mediscare resonated in 2016 because of the 2014 budget decisions. These were seen as a breach of trust as they were policies that had been explicitly ruled out in the previous election campaign.

The controversial 2014 budget proposals aimed to reduce Commonwealth expenditure by shifting costs onto consumers and onto states. One way of doing this was through co-payments that required patients to make an out-of-pocket payment when they see a doctor.

Another cost-shifting policy was the Medicare rebate freeze, which froze MBS rebates for visits to doctors at 2013 levels, despite inflation since then which has been tracking at around 2% a year. Since rebates are also paid to consumers, this was another example of a consumer cost shift, although the burden of this strategy probably fell on providers, particularly general practitioners.

Some of the 2014 changes (like the co-payment) required legislation to implement, while others (like the rebate freeze) could be implemented by administrative action without requiring parliamentary approval.

Importantly, none of the changes that required legislation were successful. The only changes in the 2014 budget that were eventually implemented were the ones that didn’t require legislation, such as the rebate freeze and draconian public hospital budget cuts. These tore up a previous agreement under which the Commonwealth matched cost increases in public hospitals.

Even these two measures have now been partially wound back – the hospital cuts before the 2016 election, and the rebate freeze in the 2017 budget.

What should a Medicare guarantee look like?

A Medicare guarantee worth its salt would be one that protects the public from the administrative assaults of the 2014 budget. This would involve enshrining in legislation the Commonwealth-state health care agreements – as well as the “partnership” payments, which are other Commonwealth grants to the states for health care – and introducing automatic indexation of Medicare rebates.

The Medicare Guarantee Fund as proposed in the 2017 budget does not do this. It provides no guarantee of policy stability, no guarantee of additional funding, and no guarantee that a future budget will not tear into the Medicare fabric in the way that characterised the 2014 debacle.

Stephen Duckett, Director, Health Program, Grattan Institute

This article was originally published on The Conversation. Read the original article.

Labor to oppose Medicare levy for lower- and middle-income earners


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Bill Shorten arrives to deliver the budget reply speech.
Mick Tsikas/AAP

Michelle Grattan, University of Canberra

Opposition Leader Bill Shorten has said Labor will oppose the budget’s increase in the Medicare levy hitting taxpayers on incomes under A$87,000. The Conversation

And he has flagged a Labor government would reimpose the deficit levy on high-income earners, that automatically expires on June 30. “Labor will not support spending $19.4 billion on the wealthiest 2% of Australians,” he said in his budget reply on Thursday night.

Labor says that a combination of the pared back levy rise and the deficit levy would deliver an extra $4.5 billion over ten years “without putting the burden onto families earning modest incomes”.

The combination would mean that, under Labor’s proposal, those on incomes of more than $180,000 would pay a 49.5% marginal tax rate.

After the opposition hedged its position last week, Shorten has confirmed a Labor government would put an extra $22 billion into schools above the amount the government has pledged, going back to the original ALP plan.

In an extensive attack on key budget measures, Shorten said Labor will oppose the government’s cuts to universities, its proposed increase in student fees, and the change in the repayment threshold that “hits women, Indigenous Australians and low-income earnest the hardest”.

In power, it would reverse the government’s new cuts to TAFE.

Labor would also oppose the budget plan to give a tax break for people saving for their first home. Shorten said this was a “cruel hoax”, a joke and an insult, representing just $565 for each first home.

He said the 0.5% boost in the Medicare levy – imposed to fund the National Disability Insurance Scheme and to take effect from mid-2019 – would affect every Australian down to an income of $21,000.

It would mean a worker on $55,000 would pay $275 extra a year, while someone on $80,000 would face an extra $400.

“Labor cannot support making people on modest incomes give up even more of their pay packets,” he said. Labor would only support the levy rise for those in the top two tax brackets.

Shorten said the budget “fails the fairness test” and it “fails the generational test”.

It was a “budget of big government, higher tax and more debt” and “devoid of values altogether”.

He dismissed the government’s measures to protect Medicare, saying that Malcolm Turnbull “only discovers his heart when he feels fear in it”.

The opposition leader was at pains to counter the widespread observation in commentary that this was “a Labor budget”.

He confirmed Labor would not oppose the budget’s tax on big banks, which has sparked a furious reaction from the banking sector.

But it was worried that “the weakness of this government will turn $6 billion tax on the banks into a $6 billion charge on every Australian with a bank account or a mortgage”.

The banks knew they could run over the top of this weak prime minister, he said.

“He’s giving them a levy with one hand, a tax cut with the other and a free pass for bad behaviour. I’ll give them a royal commission.”

He said that “if the banks pass on a single dollar of this tax to Australian families then that should be the end of this treasurer, this prime minister and this government”.

Shorten said that since budget night Labor had identified $1 billion in measures it would not support, including the $170 million set aside for a marriage equality plebiscite to which the Senate has refused to agree.

Earlier, in Question Time, the opposition extracted from the government the fact that the cost of its ten-year corporate tax cut – the first part of which is already legislated – would be $65 billion over the upcoming decade, compared with nearly $50 billion over a decade when announced a year ago.

In his budget reply, Shorten said: “This is a recipe for fiscal recklessness on a grand scale. It is a threat to Australia’s triple A credit rating – and therefore a threat to every Australian mortgage holder”.

Labor’s plan to close tax loopholes that let big companies shuffle money internationally would deliver $5.4 billion over a decade.

Shorten announced that a Labor government would cap at $3,000 the amount people could deduct for the management of their tax affairs. Although affecting only one in 100 taxpayers, this would save $1.3 billion over the medium term.

Finance Minister Mathias Cormann called on Shorten to submit his speech to the Parliamentary Budget Office for costing.

“If Bill Shorten is serious he needs to come clean with the Australian people about how much bigger the deficit would be over the forward estimates period as a result of the announcements that he has made,” Cormann said.

He said Labor’s numbers did not add up and it would put the triple A credit rating at risk.

Social Services Minister Christian Porter said that Labor had not outlined enough to fund the NDIS.

https://www.podbean.com/media/player/55eic-6aa7da?from=yiiadmin

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Budget 2017: Medicare levy rise finances NDIS and banks hit for budget repair


Michelle Grattan, University of Canberra

Taxpayers will be hit with a rise in the Medicare levy and the big banks face a new tax in a budget that pitches to win back disillusioned voters and to reassure the rating agencies. The Conversation

The government will fully plug the funding hole in the National Disability Insurance Scheme (NDIS) with an increase of 0.5% in the Medicare levy from July 2019, taking it to 2.5%. The increase will raise A$8.2 billion over the budget period.

In the other major tax hike in the budget delivered by Treasurer Scott Morrison on Tuesday night, the five major banks will pay a levy raising $6.2 billion over the forward estimates “to support budget repair”.

Morrison cast the budget as based on the principles of “fairness, security, and opportunity”. It commits to more and better paying jobs, guaranteeing essential services, putting downward pressure on the cost of living, and Australia living within its means.

It is squarely directed at trying to undo continuing damage from the harsh Abbott government 2014 budget. Morrison confirmed a raft of so-called “zombie measures” that have failed to pass parliament have been dropped, at a cost of $13 billion. Morrison called the extra revenue raising needed to cover these measures “a Senate tax for things not going through”.

Among its initiatives directed to avoiding a future “Mediscare” campaign, the budget promises to “guarantee” Medicare, progressively unfreeze the Medicare rebate, and maintain the bulk-billing incentives for pathology and diagnostic imaging services.

A Medicare Guarantee Fund will be established to pay for all expenses of the Medicare Benefits Schedule and the Pharmaceutical Benefits Scheme (PBS). Revenue from the Medicare levy will be put into this fund plus the amount from general income tax that’s needed to cover the total cost. Morrison said this would “provide transparency about what it really costs to run Medicare and the PBS and a clear guarantee on how we pay for it”.

The government is also restoring the pensioner concession card to people that were hit by the pension assets test change this year.

A housing affordability package includes a “first home super savers scheme” that will provide a tax cut for those trying to get a deposit together. They will be able from July 1 to salary sacrifice into their superannuation account, separate from their compulsory superannuation contributions.

The contributions will receive the tax advantages of superannuation, with contributions and earnings taxed at 15% rather than marginal rates. Withdrawals will be taxed at the marginal rates, less 30 percentage points. Contributions will be limited to $30,000 per person and $15,000 per year.

Morrison said this plan would mean “most first-home savers would be able to accelerate their savings by at least 30%”.

Older Australians will be encouraged to downsize by being able to make a non-concessional contribution of up to $300,000 into their superannuation fund from the sale of their home.

While the general provisions of negative gearing are untouched, the government will disallow deductions for travel expenses related to the properties. For properties bought from now it will limit plant and equipment depreciation deductions.

There will be tougher rules for foreign investors in the housing market.

Morrison painted an optimistic picture of the economic outlook, while acknowledging the pain Australians have been feeling, saying that not all people had shared the country’s economic growth and “many remain frustrated at not getting ahead”.

He said there were signs of an improving global economy and “there is clearly the potential for better days ahead”.

The budget forecasts wages growth – which has been around 2% – will increase to as much as 3.75% by the end of the budget period. This is regarded by many economists as very optimistic.

For the coming 2017-18 year, growth is forecast at 2.75% and unemployment at 5.75%.

Morrison said the budget had a “fair and responsible path” back to balance, which is due to be reached in 2020-21, with a projected surplus of $7.4 billion, somewhat higher than previously estimated. The forecast deficit for 2017-18 is $29.4 billion.

The budget contains an extensive infrastructure program, pledging to deliver $75 billion in infrastructure funding and financing over a decade.

The government will inject up to $5.3 billion into the construction of the second Sydney airport. It will provide $8.4 billion in equity into the planned Melbourne-Brisbane inland rail project.

Morrison also said that as well as the intention to further develop the Snowy Hydro, “the Commonwealth is open to acquiring a larger share or outright ownership” of the scheme from the Victorian and New South Wales governments.

The levy on the banks will be 0.06% on their liabilities, starting on July 1. Morrison said it was similar to measures in other advanced countries and “will even up the playing field for smaller banks”.

He indicated that the banks should not pass the levy onto customers, said the Australian Competition and Consumer Commission would monitor the situation, and advised people to switch to one of the smaller banks if they thought they were being shortchanged.

A Financial Complaints Authority will be set up as a one-stop-shop to deal with grievances customers have with banks and other financial institutions.

The chief executive of the Australian Bankers’ Association, Anna Bligh, slammed the plan, saying it was policy on the run, and “reckless”. “They have done it because they think banks are an easy target,” she said.

Welfare recipients have again been in the government’s sights. There will be a drug testing trial for 5,000 new welfare recipients. JobSeeker recipients testing positive would be placed on the Cashless Debit Card.

“We will no longer accept, as an excuse from repeat offenders, that the reason they could not meet their mutual obligation requirements was because they were drunk or drug-affected,” Morrison said.

The disability support pension will be denied for a disability caused solely by a person’s substance abuse.

Shadow Treasurer Chris Bowen said the government had “tried to catch up with Labor but they have failed miserably”. But Labor signalled its agreement with the bank tax.

Business Council president Jennifer Westacott said it was a budget for “a reality world”. It was “practical and workable”.

“We welcome the government’s discipline in restricting real spending growth to 1.9% over the forward estimates,” she said.

But she said “the banking levy effectively represents double-taxation of some of Australia’s most successful companies, which already pay $11 billion in company tax each year”.

The Greens attacked the planned drug testing trial for some new welfare recipients was “a violation” and a “very dangerous precedent”. They would seek advice about its legality.

https://www.podbean.com/media/player/yahw4-6a9eae?from=yiiadmin

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.