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Health hit with cuts as deficit blows out

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Australian Medical Association

Health hit with cuts as deficit blows out

15 Dec 2015

The Federal Government plans to rip more than $1.2 billion out of the health budget by slashing bulk billing incentives for pathology and diagnostic imaging services and cutting funding for health workforce programs.

Unveiling a $26 billion blowout in the Budget deficit over the next four years, Treasurer Scott Morrison has targeted social services and health to deliver the bulk of spending cuts needed to put the Budget on the path to a surplus, which has been pushed back to 2020-21.

Delivering his first Mid-Year Economic and Fiscal Outlook, Mr Morrison downgraded national growth forecasts down to 2.5 per cent this year (from the 2.75 per cent predicted in May) and 2.75 per cent next financial year (down from 3.25 per cent).

The weaker growth and plunging commodity prices have slashed Commonwealth revenue which, combined with increased spending on initiatives like the $1.12 billion innovation statement, $909 million for processing 12,000 Syrian refugees and an extra $300 million for roads, has increased the pressure to find savings in other areas.

In MYEFO, Mr Morrison detailed plans to save $650 million by axing bulk billing incentives for pathology services and paring back bulk billing incentives for diagnostic imaging, including reducing the bulk billing incentive for MRIs from 15 to 10 per cent. The changes are due to come into effect from 1 July next year.

A further $595 million will be saved by “streamlining” health workforce funding, including dumping several programs including the Clinical Training Fund (which was originally intended to fund up to 12,000 clinical training places across a range of disciplines), the Rural Health Continuing Education Program, the Aged Care Education and Training Initiative and the Aged Care Vocational Education and Training professional development program.

An additional $225 million freed up from axing these programs will be redirected to other areas, including $131 million to expand the Rural Health Multidisciplinary Training Program and establish grants for private healthcare providers to support undergraduate medical places, and a further $93.8 million to develop an integrated prevocational medical training pathway in rural and regional areas - a measure the AMA has long been advocating for.

The Federal Government is also tapping the aged care sector for significant savings. It plans to cut more than $480 million by improving the compliance of aged care providers and making revisions to the Aged Care Funding Instrument Complex Health Care Domain.

The Government also expects to realise $146 million in savings from improving the efficiency of health programs, and plans to extract $78 million from the Independent Hospital Pricing Authority and $104 million from the National Health Performance Authority.

Published: 15 Dec 2015