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

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.

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:

• an additional $12.4 million for the phase 3 response to the syphilis outbreak
• $21.9 million for the Connected Beginnings program to help Indigenous children in Tasmania make a positive transition to school
• $6.3 million to continue the development of the Health Data Portal for services funded under the Indigenous Australians Health Program.

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.

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.

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.

Read more: Boyer Lectures: gene therapy is still in its infancy but the future looks promising

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.

Stephen Duckett works at Grattan Institute which began with contributions to its endowment of $15 million from each of the Federal and Victorian Governments, $4 million from BHP Billiton, and $1 million from NAB. In order to safeguard its independence, Grattan Institute’s board controls this endowment. The funds are invested and contribute to funding Grattan Institute's activities. Grattan Institute also receives funding from corporates, foundations, and individuals to support its general activities as disclosed on its website.

Hal Swerissen is affiliated with Grattan Institute which began with contributions to its endowment of $15 million from each of the Federal and Victorian Governments, $4 million from BHP Billiton, and $1 million from NAB. In order to safeguard its independence, Grattan Institute’s board controls this endowment. The funds are invested and contribute to funding Grattan Institute's activities. Grattan Institute also receives funding from corporates, foundations, and individuals to support its general activities as disclosed on its website.

Ian Hickie holds a five per cent equity share holding in Innowell, a joint venture company of the University of Sydney and PWC. Innowell develops digital IT solutions to enhance mental health care. He is an NHMRC senior principal research fellow and co-director of health and policy at the Brain and Mind Centre of the University of Sydney. He is a member of the Ministerial Advisory Group for the Million Minds Mission of the Medical Research Future Fund.

Peter Sivey receives funding from the Australian Research Council.

Lesley Russell and Philip Clarke do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.