Federal budget 2015: health care - what will be cut?

8 May 2015 | Many of the cuts announced last year have not happened - so where to now?

Major review of Medicare announced

Many of the cuts to health care announced in last year's budget have either stalled or were abandoned. But costs for health care have increased substantially over the last decade, so it's still one of the key areas where cost-cutting measures could be applied.

Minister for Health Sussan Ley has announced a wide-ranging review of Medicare, and the result of the review will only be announced in 2016 – so it's likely that there won't be any major structural changes in the 2015-16 budget.

However, that doesn't mean that there won't be any cost-cutting measures over the next few years, just that most of them are already known. They affect:

$20 billion was paid out by the government in 2014 for Medicare services, up from $8bn a decade ago. $800 per person was paid, for an average of 15 services.

GP visits – co-payment off the table

One of the main announcements in last year's budget is off the table: a $7 GP co-payment for bulk-billed services, alongside a $5 cut to the Medicare rebate for GP visits.

But despite this, there will still be extra costs for visits to GPs and specialists.

  • Medicare rebates for specialists have been frozen since 1 November 2012 and won't be increased until 1 July 2018.
  • Rebates for GP visits were frozen from 1 November 2012, indexed by 2% on 1 July 2014 and are now again frozen until 1 July 2018.

What does it mean for you?

  • If you're bulk-billed, GP visits are still free of charge.
  • However, bulk-billing rates may decrease and more people may incur out-of-pocket costs for a GP visit.
  • If you currently pay extra, your gap payment will probably increase as your GP will need to make up for increased costs for them. Recent research published in the Medical Journal of Australia estimates an extra charge of about $8.40.
  • If you need to go to a specialist, your gap will also increase. According to the AMA the average out-of-pocket cost for a visit to the specialist was $57 in 2012/13.

Hospitals – longer waiting lists

Funding for public hospitals has already been cut by $1.8bn over four years. This measure took effect by the ceasing of funding guarantees through a COAG agreement, the

National Health Reform Agreement 2011.
Major cost cutting will start from 1 July 2017: the government has announced cuts of $57bn between 2017-18 and 2024-25. The cuts come from a change in the funding model.
  • funding increases will only be in line with population growth and inflation.
  • there will be no provision toward increases in costs caused by rising treatment costs and the ageing population.

What does it mean for you?

If the cuts happen as announced and the states don't find major costs savings or extra funds through measures such as, for example, a possible increase in the GST, this probably means:

  • longer wait times in emergency departments
  • longer waiting lists for elective surgery such as hip replacements and cataract eye surgery.  

Medicines – PBS cuts

In last year's budget, the government announced that:

  • the cost of medicines on the PBS would increase by $5 for people without a concession card and 80 cents for concession card holders. 
  • the thresholds for the PBS safety net would increase. 
These measures have not been passed by both Houses of Parliament and therefore have not come into effect. Instead, the government has announced other savings from the PBS:
  • Common painkillers like paracetamol will no longer be subsidised under the PBS.
  • The government is negotiating with drug companies to cut costs for some leading medicines like new cancer drugs by 5%.
  • The government is considering allowing pharmacists to discount the current payment for prescribed medications by $1 to increase competition.

What does it mean for you?

  • Medications like paracetamol will no longer be covered under the PBS, so they don't count towards your safety net threshold. If you take a large amount of those medications, it will take longer to reach the threshold – after you've reached the threshold, you'll no longer incur a cost for medications.
  • The government says the savings they make could allow them to include new life-saving medications on the PBS.