Sat May 18

Cheaper medicines and a new approach for mental health care. Will the budget make us healthier?

Written by Peter Breadon, Program Director, Health and Aged Care, Grattan Institute

Health was a centrepiece of last year’s budget, based on a new vision for Medicare. This year, there is less health reform, but the budget does set the foundation for a new approach to community-based mental health care.

The themes of reducing cost-of-living pressures, and expanding care in the community to keep people out of hospital, span several key initiatives. Here’s what the budget means for the health system and Australians’ access to care.

A new approach to mental health services

Many Australians are missing out on the mental health support they need, with the biggest problems in disadvantaged areas that have higher needs but far fewer services:

A 2022 evaluation of the Better Access initiative – which provides Medicare-subsidised mental health services – found it was not very well targeted to people with mild to moderate illness, was often ineffective, and often didn’t reach those on the lowest incomes. The government’s new approach appears more promising. It will spend A$361 million over four years to better target support to people’s level of need: for those with mild mental health concerns, from January 1 2026, there will be a new free digital health service which can be used without a referral for those with moderate-to-severe mental health needs, the government is beefing up and rebranding the Head to Health network, which will bring it up to 61 free walk-in community mental health services for those with more complex needs, Primary Health Networks (bodies responsible for improving primary care) will be funded to work with GPs to build a team of mental health nurses and other allied health professionals to provide free coordination and support. This more targeted approach is welcome, and could ensure fewer people fall through the cracks in the system. But getting the design and implementation of this new system right will be crucial. And given workforce constraints, including the short supply of psychiatrists, it may be a struggle to meet demand. New urgent care clinics Twenty-nine more urgent care clinics will be built, at a cost of $227 million, bringing the total to 87. These clinics provide relatively straightforward care for urgent problems, such as sprains or fevers, and are intended to keep people out of overflowing emergency departments. Shifting care out of hospitals is important because hospital demand and costs keep surging higher. But the way these new clinics are designed and run must be informed by evaluations of the ones that have already been built, to ensure they reduce pressure on hospitals and are good value for money. Supporting older people to get out – and stay out – of hospital Older people can get stuck in hospital for too long because they can’t get the support they need in the community. The federal government will work with the states to better tackle this issue in multiple ways, including more hospital outreach services and virtual care, adding up to $882 million over five years. If done well, this would not only improve quality of life for older people, but also help to free up hospital beds. Freezing medicine costs Patient medicine costs have already fallen because of previous cuts to patient fees and the introduction of 60-day dispensing. This budget does a bit more by freezing maximum prescription fees at $31.60 for non-concession card holders for one year, and at $7.70 for concession card holders for five years, at a total cost of $318 million over five years. The longer freeze for poorer patients makes sense, because they are about twice as likely as the wealthiest people to say that cost stops them getting prescribed medicines. And concession card holders didn’t get a fee cut when a $12.50 reduction was given to other Australians in the 2022–23 budget. This year’s budget also allocates $3.4 billion to adding new drugs to the Pharmaceutical Benefits Scheme, while pharmacists will be funded to provide free vaccinations to aged care residents in their homes. But one measure goes against the cost-of-living grain. The $1 discount that pharmacies can offer on prescriptions will gradually fall to zero, further dampening price competition, which is already limited in the highly regulated community pharmacy sector. Other investments As always, there are dozens of other health items. Some of the more notable ones include: more money for medical research, with $1.4 billion over 13 years, including spending on existing initiatives and two new focus areas from 2027–28: low-survival cancers and reducing health inequities $90 million over three years to help get overseas-trained doctors into Australia, in line with a review $70 million over four years to make MRI scans more accessible and affordable a focus on women’s health, including nearly $50 million over four years on gynaecology consultations for women with complex conditions, and more spending on women’s sexual and reproductive health services, including longer midwife consultations, and indemnity insurance cover for privately practising midwives supporting homebirths. What’s missing? There is some spending on prevention, including measures to prevent and treat HIV, new vaccine funding, expansion of bowel screening to people aged 45 to 50, and funding to continue a range existing programs. But the new investment is limited given how far Australia lags behind other wealthy countries in funding to keep people healthy, and there is no sign that Australia will be building the strong Centre for Disease Control we need. Some areas where costs are a barrier to care for many got little attention, including dental care and specialist care. And while there were measures to boost the health-care workforce, and improve rural health, new funding in these areas was limited. Perhaps the biggest black hole is public hospital funding. Last year, the federal government agreed to pay a bigger share under a new five-year deal, but the budget papers on health spending don’t take this into account. Even so, federal public hospital spending is predicted to grow by about $2 billion a year. This will be higher under the deal that the federal and state governments are close to finalising. When the deal is done, hopefully it will come with a new approach to national health reform that tackles some of the problems that weren’t addressed in this budget.

Authors: Peter Breadon, Program Director, Health and Aged Care, Grattan Institute

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