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Families pick up the tab as Commonwealth health spending slows

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Government spending on health has slowed dramatically while the health bill for households has increased sharply as the Commonwealth pushes more of the burden of care on to individuals and families.

In a result that undermines Federal Government claims that health funding is ‘out of control’, an Australian Institute of Health and Welfare report shows that Commonwealth spending grew by just 2.4 per cent in 2013-14 – below the rate of inflation – and its share of total health spending has plunged from almost 44 per cent to 41.2 per cent in just five years.

At the same time, individuals and families are shouldering more of the burden, Institute spokesman Dr Adrian Webster said – non-government funding grew by 5 per cent after inflation.

“Over the decade, funding by individuals was the fastest growing type of non-government funding, growing by an average of 6.2 per cent a year in real terms, compared with 5.3 per cent for all non-government sources,” he said.

The figures are in line with other data showing only moderate growth in government health expenditure.

“The sky is not falling in when it comes to Federal Government funding for health,” AMA Vice President Dr Stephen Parnis said.

The Commonwealth’s Commission of Audit had predicted that Medicare spending would grow by 7.1 per cent per year until 2023-24, but Dr Parnis said the AIHW report and recent Medicare data showing that MBS expenditure increased 5.6 per cent in 2014-15 and just 3 per cent the previous financial year cast doubt on this projection.

“Costs are not escalating in the way that some have suggested,” Dr Parnis said. “There is an ethical obligation on health professionals to improve efficiency wherever we can, but this should not be at the expense of undermining the pillars of the health system which have served us so well.”

But the Coalition Government appears set to continue with health cuts despite last week’s change of leader.

In his first major press conference as Treasurer, Scott Morrison indicated he would maintain the focus of his predecessor Joe Hockey on cutting Commonwealth expenditure, declaring that “we have a spending problem, not a revenue problem”.

The Abbott Government implemented major cuts to health spending, including ripping $57 billion from public hospital funding in the next decade and freezing Medicare rebates until mid-2018, contributing to one of the sharpest slowdowns in health spending on record.

Dr Parnis said this was the wrong prescription for Australia’s health system.

“The answer is not to cut away at Commonwealth funding for health. It is to ensure that Commonwealth funding achieves greater benefit, and the way we can do that is by having a more modern Medicare Benefits Schedule, and having an understanding that the Commonwealth has a central role in supporting the states on hospital funding,” he said.

Earlier this week, AMA President Professor Brian Owler warned the Government’s MBS reviews needed to ensure patients had access to the best evidence-based services and procedures, rather than simply being a cost-cutting exercise.

Dr Parnis said the Government also needed to ensure it got maximum value for its support for the private health insurance industry.

“We need to ensure that Commonwealth funding for private health insurance extracts maximum benefit for patients in the health system, rather than policies that are designed simply to avoid premium surcharges,” he said.

The AIHW found that total spending on health, including from governments, families and private organisations, grew by just 3.1 per cent in real terms in 2013-14, faster than the 1.1 per cent growth recorded the previous financial year, but well below the annual average of 5 per cent recorded in the past decade.

As the Institute figures show, most of this growth was driven by spending by individuals and private organisations, with the Commonwealth’s share dropping and that of State, Territory and local governments holding steady.

Adrian Rollins