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What the budget means for healthcare

Federal budget: Government set for another GP fight - Featured Image

Medical bodies have lined up to welcome new health measures announced in the 2017 budget this week, as the government seems determined to put its “Mediscare” problems behind it.

AMA President Michael Gannon said that with the new measures, notably the lifting of the freeze on Medicare patient rebates, the government has begun to win back the goodwill it lost with its disastrous 2014 health budget.

“Lifting the Medicare rebate freeze is overdue, but we welcome it,” Dr Gannon said.

Much the same message came from the RACGP, which described the lifting of the freeze as “the first step towards a commitment to reinvesting in preventative health”.

RACGP President Dr Bastian Seidel said the college was also pleased that the Medicare Benefits Review had been extended and that the government was committing to funding practice-based research networks.

The RACP also fell into line, welcoming the end of the rebate freeze as “a good outcome for the Australian health system as it will better support patients in accessing the care they need”.

The government has said it will be spending an extra $1billion on health in the next financial year compared with the previous one. Below are some of the key changes related to healthcare announced on Tuesday:

Medicare Rebate unfrozen

The government has announced an end to the freeze on indexing Medicare rebates, but it will be done slowly and in stages.

The rebate will be indexed from July 2018 for GP consultations and specialist attendances, and then from July 2019 for specialist procedures and allied health services. Payments for diagnostic imaging services will be indexed from July 2020 for the first time in 16 years.

These measures have been costed at around $1 billion over four years.

Medicare levy raised

Medicare levy will be increased by 0.5% to 2.5%, in a measure that should raise $8.3 billion for the government over four years. Low-income earners will continue to be exempt, with the threshold for the levy raised to incomes of $21,655 and over.

Medicare Guarantee Fund to be set up

The government will legislate for a Medicare Guarantee Fund to ensure funding for Medicare rebates and the PBS. Proceeds from the 0.5% increase in the Medicare levy will be paid into the fund, once NDIS funding costs are deducted. Some income tax revenue will also be diverted into the fund.

Cheaper medicines on the PBS

An overhaul of the Pharmaceutical Benefits Scheme will make an extra $1.2 billion available for new medicines, the government has said.

It said it has reached agreements with Medicines Australia, the Pharmacy Guild and Generic and Biosimilar Medicines Australia to bring down costs of some medicines.

This would include drugs such Entresto (Sacubitril/Valsartan) for chronic heart failure, which will now be PBS listed at a cost of $515 million.

A five-year agreement with Medicines Australia will also boost prescribing of generics and biosimilars, with savings of $1.3 billion.

More money for mental health

Mental health is a big winner in the budget, with the government committing to a range of mental health and preventive health services and strategies.

This includes $80 million for services to people with severe mental illness but who don’t qualify for NDIS or who haven’t yet transitioned to it. It will cover people with severe eating disorders, schizophrenia and severe post-natal depression.

And it also includes $9.1 million to improve access to psychologists for people in remote and rural areas via telehealth services.

Suicide prevention gets $11.1 million, with a particular focus on locations with high suicide rates. That includes money to build fences, barriers and lighting at notorious suicide spots, plus extra funding for Lifeline.

There’s also $15 million over two years for research into mental health, including funding for the Black Dog and Thompson Institutes.


Commonwealth funding to states and territories for hospitals is set to increase by $2.8 billion, including $736 million for hospital services in Tasmania.