- The federal budget included 58 budget measures for health
- 23 measures involved funding cuts, deferrals, directions or changes valued at more than $10 billion
- Two measures valued at more than $2 billion directly impact on state and territory government funding
- Cut to hospitals funding will begin from July, PM concedes
The federal budget handed down by Treasurer Joe Hockey last week proposed winding back the rate of rises in hospital funding, as well as removing funding guarantees for public hospitals.
The announcement came three years after the National Health Reform was adopted, which had pledged an extra $16.4 billion in Commonwealth funding through to 2019-20.
A review of the scheme was not scheduled to be held until 2015-16.
Changes to funding agreements for Commonwealth Public Hospitals
The Abbott Government’s first federal budget outlined plans to cut funding guarantees made as part of the National Health Reform Agreement 2011.
In March alone, Commonwealth funding under the Agreement totalled more than $1.16 billion. The year-to-date spending, dated to March 2014, totalled more than $10.5 billion.
Under the Agreement, the Commonwealth was also due to increase its contribution to growth funding for public hospital services to 45 per cent from July, increasing to 50 per cent from July 2017.
The National Partnership on Improving Public Hospital Services looks set to be axed with the budget ceasing reward funding to states and territories.
The funding, valued at $201 million over three years, funded services such as subacute beds throughout the Victorian health system.
The government also outlined plans to revise the Commonwealth Public Hospital funding arrangements from July 2017, indexing its contribution by a combination of the Consumer Price Index and population growth in moves to save an estimated $1.8 billion over four years.
Pausing indexation of fees and thresholds
Further tightening of the health budget will be achieved by pausing the indexation of some Medicare Benefits Schedule fees, the Medicare Levy Surcharge and Private Health Insurance Rebate thresholds.
The measures are expected to cut $1.7 billion from budget over five years as the indexation of some Medicare Benefits Schedule fees are paused for two years from July and the indexation on income thresholds for the Medicare Levy Surcharge and Private Health Insurance Rebate are paused for three years from July 2015.
Government reaction
Prime Minister Tony Abbott told media on Monday that there were no cuts made to health, though budget documents outlined estimated savings of $67 million in the remainder of the financial year.
Savings of $86.2 million are estimated for the following financial year, while a further $1.89 billion is expected to be saved throughout 2015-16.
“We’re not cutting funding,” he said.
“All we’re not doing is continuing… promises of the Rudd/Gillard Government.”
In a post Budget speech delivered May 15, Health Minister Peter Dutton said more responsibility was needed from states and territories for public hospitals.
“Commonwealth has decided it will not proceed with the previous government’s funding guarantees,” he said.
“Neither will we proceed with ineffective National Partnership Agreements that muddy the waters of Commonwealth-State responsibilities and do not result in better, more efficient public hospital and other services.”
He said the Abbott Government would continue funding to the tune of approximately $14.8 billion in the coming financial year, as well as increase hospital spending by an average of 7 per cent over the next four years.
These budget savings, along with measures such as the introduction of $7 Medicare co-contributions, are set to be used to establish a $20 billion Medical Research Future Fund.
Treasurer Hockey described the fund as the "biggest medical research endowment fund" in the world within six years and expected it to be established by January 2015.
