Funding health research: a win-win alternative to co-payments

The $14 billion derived annually from tobacco and alcohol tax is already a pretty good bucket from which to fund health and medical research. Reinis Taidras/Flickr, CC BY-ND

One of the most criticised components of the federal budget has been the proposed $7 co-payment for GP visits and some medical tests. But there’s a healthy way the treasurer can have his cake and eat it too.

While the main debate has focused on the co-payments plan, it would be a pity if its love child, a substantial boost for health and medical research, disappeared from the equation.

There are other ways the government could provide all the funding promised for research and more – along with a standing ovation from health groups.

Chorus of criticism

Criticisms of co-payments have included that, whether for treatment or important preventive services, they will deter people who most need to visit GPs from doing so; they will reduce services to the aged; they will undermine the principles of Medicare; the plan will turn doctors into de facto tax collectors; and it will all be expensive and complex to administer.

The intended sweetener was the government’s announcement that money from co-payments would go into a new medical research future fund.

Health researchers are as keen as anyone else to attract more funding, but as Professor Fiona Stanley (one of just four researchers recognised in treasurer Joe Hockey’s budget speech) commented, not at the expense of “the sickest, most marginalised, the poorest”.

Positive steps

To its credit, the government has maintained support for tobacco control, including plain packaging and a commitment to continuing funding for much-needed media campaigns.

A few months ago, it was praised by health groups for implementing the first of four successive 12.5% annual increases in tobacco excise (along with an improved approach to indexation).

Its rationale included emphasis on the need to “provide real health benefits” and to “move towards international best practice in the pricing of tobacco products”.

Increasing tobacco taxes is popular, especially if the funds are applied to worthy health purposes; the government estimates it will derive $7.85 billion from tobacco taxes this year alone. Combined revenues from tobacco and alcohol taxes bring in some $13.8 billion.

Crying out for reform

The Australia’s Future Tax System Review concluded that Australia’s alcohol tax system was incoherent" and recommended long-overdue reform.

The most obvious change is abolition of the [Wine Equalisation Tax (WET)](https://www.ato.gov.au/Business/Activity-statements/Wine-equalisation-tax-(WET), which discriminates in favour of cheap wine. The WET enables sale of products with high alcohol content at dirt-cheap prices.

Ending it would end the sale and promotion of cheap and nasty products and help to make major inroads into a wide range of alcohol harms. This simple measure alone should bring the government an estimated $500 million a year.

There’s massive community concern about the harms of alcohol. Only 17% of respondents to an online survey believed that governments are doing enough to address alcohol problems.

A fourfold win

When the treasurer told us with stars in his eyes that new research might find cures for cancer and heart disease, he might not have been aware of overwhelming evidence that reducing smoking would do more than any other single measure to reduce cancer and heart disease.

The money from tobacco and alcohol taxes is already a pretty good bucket from which to fund health and medical research. Tobacco excise increases alone would cover all the proposed funding for medical research – with enough left over to fund a mass of further initiatives.

A further modest increase in tobacco tax or an abolition of the WET would make this a financially painless process for the government. It could get all the benefits of increasing our medical research capacity without the downsides of introducing an unpopular co-payment scheme that will keep researchers (and ultimately reporters) busy charting its damaging impacts over time.

Indeed, it would be a win-win-win-win-win: meet the commitment to fund more health and medical research; improve the health of the community; bring added benefits to disadvantaged groups rather than put them at further risk; attract praise and support from health groups; and no public pain.

What more could any government want?

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