Access Economics Report Backs AMA View on 'Missed Opportunity' Health Budget

AMA President, Dr Mukesh Haikerwal, said the Access Economics report endorses the AMA's Budget-night response to health spending - a missed opportunity at a time of huge Budget surplus.

Key observations of the Access Economics analysis include:

• In 2006-07, the Budget provides for health outlays to grow by 5.9% to be 18.1% of total budget spending (ie, health outlays grow more slowly than total outlays). In the forward estimates period, health spending is projected to grow by only 4.5% a year on average, implying a share of total outlays edging down to 18%. That will be a tough call given the ageing of the population and the high expectations of access to costly new health technologies. Growth of 4.5% will be barely enough to cover health inflation, thus implying a reduction in real health spending per capita (even more so when age adjusted). If it is achieved (somewhat doubtful), it will require a shifting of the burden of health spending off the Federal Budget and onto household budgets.

• Future governments will have a choice between spending more on health (and raising the ire of taxpayers) or lowering expectations of health care subsidies (and raising the ire of patients).

• The Government's current confidence is reflected in the inclusion of only four savings measures in the Health Budget. Of the four, three are trivial.

• A number of the measures in the Health Budget were announced in the weeks leading up to Budget night. The $1.8b mental health initiative, foreshadowed following the February 2006 COAG meeting, was announced early April. The health portfolio share of the new mental health program totals $875m over 4 years (the Budget year and the three forward estimate years) with the States' effort yet to be disclosed. The Federal program takes time to get up to speed and spending is back-loaded. This may allow space for the workforce measures to cut in so that the spending is effective.

• The body of this report addresses the other new health spending contained in the Budget. There is potential for good outcomes in health and medical research ($805m over 4 years) and some of the preventive health measures. New funding for aged care is minimal.

• At the same time, the Government has passed up opportunities to improve health outcomes and improve the functioning of the health system by ducking areas like obesity (a looming health prevention issue), nutrition, health effects of climate change, pressures on public hospitals and reform of the GP consultation item structure.

• The Government is very slow moving in areas like electronic billing under Medicare (a significant opportunity to reduce the cost of the health payments system), initiatives in post-graduate medical training (a looming puzzle when the extra graduates start emerging from the medical schools) and Aboriginal and Torres Strait Islander health. There is extra money for Indigenous health and it looks well targeted (eg, extending Opal) but the gap between funding and need is still a gaping one. Visionary national leadership is sorely needed in this area.

• In summary, functional areas of spending enjoy their time in the sun. The health portfolio had its last turn in 2003-04. In 2006-07, just two functional areas (defence, public order and safety) are marching off with half of the increase in total Budget outlays. That is the real story of the 2006-07 Health Budget.

Dr Haikerwal said that every new dollar that is put into health is welcome, and there is some new spending in the Health Budget.

But the substantial overall Budget surplus called for significant spending on health infrastructure and workforce to insulate the health system against possible less prosperous times ahead.

"In times like these, Governments should show leadership and provide for innovation in health care programs," Dr Haikerwal said.

"Today's Access report confirms the AMA's initial fears and concerns.

"Despite the big spending on mental health, key areas of need such as Indigenous Health, public hospitals, and combating obesity have not received the attention they need and deserve.

"Waiting another year for a funding boost in these areas means another year of hardship for the Australians in greatest need of help to lead healthy lives."

To view the complete Access Economics report see the pdf document below.