Budget Review 2022–23 Index

Emma Vines

Key figures and trends

Total spending on health in 2022–23 is estimated at $105.8 billion, representing 16.8% of the Australian Government’s total expenditure (Budget strategy and outlook: budget paper no. 1: 2022–23, pp. 141–143). Table 1 below outlines health expenses by sub-function (nominal terms). In real terms, total expenses are expected to decrease by 8.3% between 2021–22 and 2022–23 and decrease by 4.4% between 2022–23 and 2025–26, primarily due to the cessation of COVID-19 related payments.

Table 1         Health function expenses, 2021–22 to 2025–26

	2021–22 $m	2022–23 $m	2023–24 $m	2024–25 $m	2025–26 $m
Medical services and benefits	38,980	39,471	40,317	42,115	43,998
Pharmaceutical benefits and services	16,443	17,229	17,101	17,226	17,281
Assistance to the states for public hospitals	25,013	27,333	28,717	30,659	32,653
Hospital services	1,105	1,062	1,058	1,055	1,059
Health services	24,133	15,290	10,552	10,403	10,244
General administration	4,801	4,227	3,684	3,595	3,560
Aboriginal and Torres Strait Islander health	992	1,142	1,145	1,172	1,137
Total	111,467	105,754	102,575	106,225	109,932

Note: totals may not sum due to rounding.

Source: Australian Government, Budget strategy and outlook: budget paper no. 1: 2022–23, (Canberra: Australian Government, 2022), 151.

Budget paper no. 1 details expenses by sub-function (pp. 151–154):

• Medical services and benefits, consisting primarily of Medicare and Private Health Insurance Rebate expenses, will account for $39.5 billion, or 37.3% of total health expenses in 2022–23.
  • Spending is expected to increase by 2.5% in real terms from 2022–23 to 2025–26, driven primarily by growing Medicare expenses.
• Pharmaceutical benefits and services, consisting largely of Australian Government subsidies for Pharmaceutical Benefits Scheme (PBS) medicines, will account for $17.2 billion, or 16.3% of total health expenses in 2022–23.
  • Expenses are expected to decrease slightly in real terms over the forward estimates, primarily due to the impact of existing pricing policies.
• Assistance to the states and territories, comprising the Australian Government’s contribution to public hospital funding, will account for $27.3 billion, or 25.8% of total health expenses in 2022–23 (excluding National Partnership payments).
  • In real terms spending is expected to increase by 5.6% from 2021–22 to 2022–23, largely due to an anticipated growth in the volume of services, then increase by 9.9% between 2022–23 and 2025–26.
  • A breakdown of Commonwealth National Health Reform funding to each state and territory can be found in Federal financial relations: budget paper no. 3: 2022–23 (pp. 19–21).
• Hospital services, consisting primarily of payments to the states and territories for veterans’ hospital services, will account for $1.1 billion, or 1.0% of total health expenses in 2022–23.
  • Expenses are projected to decrease by 7.1% in real terms between 2021–22 and 2022–23, then decrease by 8.2% between 2022–­23 and 2025­–26, reflecting a reduced number of older veterans.
• Health services, covering Australian Government expenses associated with the delivery of population health, medical research, mental health, blood and blood products, other allied health services, health infrastructure and disbursements from the Medical Research Future Fund (MRFF), account for $15.3 billion, or 14.5% of total health expenses in 2022–23.
  • Expenses are expected to decrease by 38.7% in real terms between 2021–22 and 2022–23, then decrease by 38.4% between 2022–23 and 2025–26, with the change attributed to reduced COVID-19 measures.
• General administration, consisting of administrative costs, investment in health workforce measures and support for rural health initiatives, will account for $4.2 billion, or 4.0% of total health expenses in 2022–23.
  • Expenses are expected to decrease by 14.9% in real terms between 2021–22 and 2022–23, then decrease by 22.5% between 2022–23 and 2025–26, largely due to the cessation of COVID-19 measures.
• Aboriginal and Torres Strait Islander health, reflecting health portfolio Indigenous-specific services, will account for $1.1 billion, or 1.1% of total health expenses in 2022–23.
  • Expenses are expected to increase by 11.3% in real terms from 2021–22 to 2022–23, due primarily to COVID-19 responses and utilisation of the Indigenous Australians Health Program. Expenditure is then expected to decrease by 8.4% in real terms between 2022–23 and 2025–26, due to the cessation of COVID-19 measures and reduced payments to states and territories for an expiring national partnership agreement.

Significant policy measures

Selected Health portfolio measures from Budget measures: budget paper no. 2: 2022–23 are outlined below. Measures related to mental health and public health are discussed in separate articles.

Medicare and medicines

Changes to the Medicare Benefits Schedule

The Budget includes $131.3 million over 5 years for new and amended Medicare Benefits Schedule (MBS) listings (Budget paper no. 2, p. 95). The Health portfolio 2022–23 budget stakeholder pack states that the Government is investing $170.6 million over 4 years on this measure (p. 68), and Budget paper no. 2 notes that partial funding for the measure has already been provided. The measure includes $81.2 million over 4 years from 2022–23 for newly subsidised genetic testing items for cystic fibrosis, spinal muscular atrophy and fragile X syndrome. It is unclear whether these new items will support counselling through genetic counsellors or health professionals. The inclusion of these items comes following an application by the Royal College of Pathologists and the Medical Services Advisory Committee recommendation in 2020 that they be funded.

There are also responses to the MBS Review Taskforce (Budget paper no. 2, pp. 95–96), with the Government’s implementation timeframe suggesting that all changes will be complete by 2023. Changes are being made to otolaryngology, head and neck surgery, paediatric surgery, thoracic surgery, acupuncture, and cleft and craniofacial services (Health portfolio budget stakeholder pack, pp. 69–70). In addition, $7.5 million in 2022–23 is provided for the MBS Continuous Review (Budget paper no. 2, p. 97).

Changes to the Pharmaceutical Benefits Scheme safety net

The Government has committed $525.3 million over 4 years from 1 July 2022 to lower the PBS safety net thresholds (Budget paper no. 2, p. 105). The thresholds will drop to $244.80 for concession card holders and $1,457.10 for general patients—a decrease of $81.60 for concessional patients and $85.00 for general patients. The thresholds are indexed on 1 January each year, as specified in the National Health Act 1953 (section 99G).

Stakeholder response has been mixed. The Pharmacy Guild of Australia said lowering the threshold would not mitigate rising prescription prices. The Consumers Health Forum of Australia welcomed the measure, despite disappointment that a national social prescribing scheme was not announced.

Primary health

The Australian Government recently released Australia’s Primary Health Care 10 Year Plan 2022–2032, committing $632.8 million over 4 years (Portfolio budget statements 2022–23, budget related paper no. 1.7: health portfolio, p. 16).

The Royal Australian College of General Practitioners warned that major components of the Plan remain unfunded and that workforce shortages must be addressed and Medicare rebates reformed. The Consumers Health Forum of Australia expressed similar disappointment at the ‘lost opportunity’ for transformational reform.

Budget paper no. 2 (pp. 97–98) commits $230.7 million over 5 years from 2021–22 to improve access to primary health care, including:

• $108.5 million over 2 years from 2022–23 to extend the Federation Funding Agreement of Public Dental Services for Adults to support the states and territories in providing public dental health services and to fund the next National Child Oral Health Study—this is the fourth extension to the Agreement
• $56.0 million in 2022–23 to support Primary Health Networks to address after-hours healthcare demand
• $7.5 million over 3 years for the Palliative Care Service Navigation Pilot to trial models for improved coordination of palliative care
• $4.4 million over 4 years to improve access to allied health services for deaf and non-English speaking Australians
• $3.0 million to expand Street Side Medics’ service delivery within homeless communities
• $0.2 million to extend the Patient Pathways Program pilot to connect patients with rare diseases with health services.

Other funding included under this measure is discussed in the MBS and Digital health sections of this article.

Rural health

The Budget provides $296.5 million as part of the 10 Year Stronger Rural Health Strategy (Portfolio budget statements 2022–23: health portfolio, p. 17), with the Australian College of Rural and Remote Medicine welcoming the continued commitment to the Strategy, despite calling for ‘reform of primary care funding models’ to ensure rural practice remains sustainable.

Rural health measures include:

• $66.0 million over 4 years to remove the restriction on the number of magnetic resonance imaging machines eligible for Medicare in regional, rural and remote Australia (Budget paper no. 2, pp. 94–95)
• $224.4 million over 4 years (Budget paper no. 2, pp. 98–99) to improve access to health services and support doctors working in rural and remote areas, through:
  • $99.3 million to increase the number of medical students studying in rural and remote locations
  • $36.2 million to fund 2 new University Departments of Rural Health in Western Australia
  • $33.3 million to the Royal Flying Doctor Service as part of a new 10 year Strategic Agreement—this forms part of a $1 billion 10-year partnership
  • $22.1 million to increase CareFlight’s and Little Wing’s service capacity
  • $17.2 million to fund Heart of Australia’s provision of specialist medical support in regional and remote Queensland
  • $14.8 million to support Charles Sturt University to deliver a Rural Clinical School
• $4.2 million over 5 years from 2021–22 to encourage general practitioners’ work in rural and remote headspace centres (Budget paper no. 2, p. 111).

Digital health

Measures related to digital health include:

• $71.9 million over 4 years to support Phase Three of the Health Delivery Modernisation Program, with the primary focus being to improve claim timeframes for patients and medical providers for Medicare services, the PBS and other health related payments. Investment in this Program totals $96.8 million (and $2.2 million per year ongoing) and is expected to achieve departmental efficiencies from Services Australia of $24.9 million (and $13.3 million ongoing) (Budget paper no. 2, p. 168)
• $12.0 million over 2 years from 2022–23 for healthdirect Australia (Budget paper no. 2, p. 97)
• $23.8 million over 4 years to improve measures in general practice accreditation, improve linkages with My Health Record and provide additional funding to accredited practices for the provision of temporary telehealth services during the pandemic and for areas affected by natural disasters (Budget paper no. 2, p. 97)
• $35.2 million over 4 years (Budget paper no. 2, p. 94) through the Guaranteeing Medicare—Digital Health measure, including:
  • $32.2 million in 2022–23 to extend the Intergovernmental Agreement on Digital Health, which supports My Health Record and the Health Care Identifiers Service
  • $2.9 million over 4 years from 2022–23 to transition the Australian Institute of Health and Welfare’s data holding to cloud-based services and off-site data centres.

Research

The Budget commits $28.1 million over 4 years from 2022–23 to establish a new agency, Genomics Australia, from 1 January 2024 (Budget paper no. 2, p. 93).

The Budget also commits $6.8 billion over 4 years (Health portfolio budget stakeholder pack, p. 16) for medical research, provided through 3 funding sources:

• $3.7 billion for the National Health and Medical Research Council
• $2.6 billion for the MRFF
• $0.5 billion for the Biomedical Translation Fund.

Additional funding of $1.3 billion (Health portfolio budget stakeholder pack, p. 16) brings investment in the updated Medical Research Future Fund 10-year investment plan to $6.3 billion from 2022–23 to 2032–33 (Budget paper no. 2, p. 103). This includes:

• $384.2 million to assist early to mid-career researchers
• $478.0 million for preventative and public health research
• $374.4 million for clinical trials
• $240.0 million for medical research commercialisation
• $70.0 million for primary health care research.

 

All online articles accessed April 2022

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