tag:theconversation.com,2011:/us/topics/health-budget-5514/articlesHealth budget – The Conversation2022-10-25T23:51:38Ztag:theconversation.com,2011:article/1928422022-10-25T23:51:38Z2022-10-25T23:51:38ZWhat does the budget mean for Medicare, medicines, aged care and First Nations health?<figure><img src="https://images.theconversation.com/files/491775/original/file-20221025-20664-bzssus.jpg?ixlib=rb-1.1.0&rect=17%2C898%2C5973%2C3089&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/coronavirus-hospital-covid-19-woman-medical-1721906755">Shutterstock</a></span></figcaption></figure><p>Labor’s first health budget in almost a decade has few surprises – and that is a good thing. </p>
<p>The budget foreshadows <a href="https://budget.gov.au/2022-23-october/content/bp2/download/bp2_2022-23.pdf">additional annual health and aged care spending of more than A$2.3 billion</a> when initiatives are fully implemented in 2025–26, the end of the four-year forward estimates. The bulk of this is for policy initiatives foreshadowed in the election campaign. </p>
<p>It should not be a surprise that governments promise one thing before an election and stick to it after, but unfortunately that has <a href="https://www.smh.com.au/national/then-and-now-the-abbott-governments-broken-promises-20140514-zrcfr.html">not been the case</a> over the past decade.</p>
<p>There are four big spending commitments in this budget: aged care, Medicare reform, pharmaceuticals, and First Nations’ health.</p>
<h2>Steps towards aged care reform</h2>
<p>Aged care in Australia is a <a href="https://grattan.edu.au/report/next-steps-for-aged-care/">renovator’s opportunity</a>. The system is understaffed and poorly regulated, with policy-making often captured by providers. </p>
<p>The consequences were laid bare by the aged care royal commission, which <a href="https://agedcare.royalcommission.gov.au/publications/final-report">reported in March 2021</a>. The previous government made a <a href="https://theconversation.com/budget-package-doesnt-guarantee-aged-care-residents-will-get-better-care-160611">down payment on reform</a>, but left much undone. </p>
<p>As promised in the election campaign, the 2022-23 budget provides for a major uplift in spending, with the “fixing the aged care crisis” spending line adding $1.2 billion in a full year. But that will only be the start.</p>
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<img alt="Older man looks at phone" src="https://images.theconversation.com/files/491782/original/file-20221025-11-75oyvi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/491782/original/file-20221025-11-75oyvi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/491782/original/file-20221025-11-75oyvi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/491782/original/file-20221025-11-75oyvi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/491782/original/file-20221025-11-75oyvi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/491782/original/file-20221025-11-75oyvi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/491782/original/file-20221025-11-75oyvi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Aged care facilities will employ more nurses.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/smiling-elderly-man-using-smartphone-communicate-1709172556">Shutterstock</a></span>
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<p>Key recommendations from the royal commission are being implemented, including funding the novel idea of requiring nursing homes to employ nurses. Funding is also provided for a <a href="https://www.health.gov.au/sites/default/files/documents/2022/10/budget-october-2022-23-restoring-dignity-to-aged-care.pdf">specified minimum number of care minutes</a> for each resident.</p>
<p>There is still much to do, especially in addressing the care workforce shortfall.
The Fair Work Commission is currently <a href="https://theconversation.com/when-aged-care-workers-earn-22-an-hour-a-one-off-bonus-wont-help-176136">reviewing minimum pay rates</a> in the aged care industry, and the outcome will be a significant uplift. The question is, how significant? At present, a burger flipper gets paid more than the person who cares for our grandmothers; this will at last be reversed. </p>
<p>The cost of the Fair Work Commission case is as yet unknown.</p>
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Read more:
<a href="https://theconversation.com/when-aged-care-workers-earn-22-an-hour-a-one-off-bonus-wont-help-176136">When aged care workers earn $22 an hour, a one-off bonus won’t help</a>
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<h2>Medicare reform underway, but no funds for hospitals</h2>
<p>In response to health system pressures, Labor promised several reform initiatives before the election. One of these – the development of <a href="https://theconversation.com/labors-urgent-care-centres-are-a-step-in-the-right-direction-but-not-a-panacea-181237">urgent care clinics</a> – is slated for implementation starting in 2022-23, at a full-year cost of $37 million. </p>
<p>Although there has been some criticism that the policy initiative is <a href="https://www.crikey.com.au/2022/10/25/budget-2022-doctors-sceptical-labors-urgent-care-clinics/">still not finalised</a> in every minute detail, Labor has only been in office for six months.</p>
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Read more:
<a href="https://theconversation.com/labors-urgent-care-centres-are-a-step-in-the-right-direction-but-not-a-panacea-181237">Labor’s urgent care centres are a step in the right direction – but not a panacea</a>
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<p>Broad system reform also awaits the conclusions of the Strengthening Medicare Taskforce (of which I am a member). This was established to provide advice on a further $250 million initiative that will be announced in the 2023-24 budget.</p>
<p>Dashing the aspirations of states, there is no provision in the budget for additional funding for state public hospitals, but of course there was no election commitment to do so.</p>
<h2>Price of medicines to drop</h2>
<p>In addition to the expected cost of new listings on the Pharmaceutical Benefits Scheme, the budget allocates $230 million in a full year to reduce the mandatory Pharmaceutical Benefits Scheme co-payment, from the current level of $42.50 per prescription for general beneficiaries to $30. </p>
<p>More than half a million Australians <a href="https://theconversation.com/last-year-half-a-million-australians-couldnt-afford-to-fill-a-script-heres-how-to-rein-in-rising-health-costs-178301">miss out on filling prescriptions</a> each year because of cost, and hopefully this budget initiative will reduce that number. Other people, who might have had to make hard choices to fill prescriptions by foregoing buying new school clothes, will also benefit.</p>
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<img alt="Pharmacist pulls medicine off a shelf" src="https://images.theconversation.com/files/491780/original/file-20221025-11305-4kv01p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/491780/original/file-20221025-11305-4kv01p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/491780/original/file-20221025-11305-4kv01p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/491780/original/file-20221025-11305-4kv01p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/491780/original/file-20221025-11305-4kv01p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/491780/original/file-20221025-11305-4kv01p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/491780/original/file-20221025-11305-4kv01p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Some prescriptions will drop from $42.50 to $30.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/byGTytEGjBo">National Cancer Institute</a></span>
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<p>However, the reduction in the official co-payment will lead to reduced discounts from the low-cost pharmacy chains, so the net impact of the budget change is probably <a href="https://medicalrepublic.com.au/whos-the-pharmacy-guild-scheme-really-helping/68992">less of a benefit to patients</a> than the headline $230 million cost to government.</p>
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Read more:
<a href="https://theconversation.com/last-year-half-a-million-australians-couldnt-afford-to-fill-a-script-heres-how-to-rein-in-rising-health-costs-178301">Last year, half a million Australians couldn't afford to fill a script. Here's how to rein in rising health costs</a>
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<h2>Funds to expand First Nations health services</h2>
<p>The disparity in health outcomes for First Nations Australians is a tragedy. Medicare is <a href="https://theconversation.com/first-nations-people-in-the-nt-receive-just-16-of-the-medicare-funding-of-an-average-australian-183210">not delivering as it should</a>, with First Nations people in the NT receiving just 16% of the Medicare funding of an average Australian, due to poor access to doctors.</p>
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Read more:
<a href="https://theconversation.com/first-nations-people-in-the-nt-receive-just-16-of-the-medicare-funding-of-an-average-australian-183210">First Nations people in the NT receive just 16% of the Medicare funding of an average Australian</a>
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<p>It is pleasing to see an additional investment of $95 million in a full year to improve the health of First Nations Australians. The commitment appears well designed and includes improved infrastructure, expanded training and new health clinics.</p>
<h2>A broader view of health and wellbeing</h2>
<p>The budget signals the first steps towards adopting a new <a href="https://theconversation.com/the-beginning-of-something-new-how-the-2022-23-budget-does-things-differently-192850">health and wellbeing framework</a> for measuring societal progress, incorporating broader aspects of everyday life into <a href="https://budget.gov.au/2022-23-october/content/bp1/download/bp1_bs-4.pdf">budget reporting</a>.</p>
<p>Although the media obsession with the budget deficit and gross domestic product as the only measures of note will probably continue, future budget documents will begin to take a more holistic view.</p>
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Read more:
<a href="https://theconversation.com/the-beginning-of-something-new-how-the-2022-23-budget-does-things-differently-192850">‘The beginning of something new’: how the 2022-23 budget does things differently</a>
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<p>A range of potential indicators were foreshadowed in this budget, including a climate-related one (related to threatened species) and public trust in government, both areas where Australia is not performing well.</p>
<p>In terms of climate, the budget includes a very welcome, albeit tiny, commitment to assist the Commonwealth Department of Health provide leadership on the health impact of climate change by establishing a National Health Sustainability and Climate Unit.</p>
<p>The budget itself builds public trust by providing no real surprises, but gets on with the job of implementing what was already promised.</p>
<p><em>* Update: This article previously said the cost of the Fair Work Commission case was not included in this budget. Since publication, The Conversation has been advised that an unspecified amount has been included in the budget’s contingency reserve section.</em></p><img src="https://counter.theconversation.com/content/192842/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Duckett is a member of the board of directors of the Brotherhood of St Laurence, an aged care provider, and is also a member of the Strengthening Medicare Task Force.</span></em></p>The budget gets on with the job of implementing the health policies already promised. But there’s still more to do to get the new government’s policy settings right.Stephen Duckett, Honorary Enterprise Professor, School of Population and Global Health, and Department of General Practice, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1901372022-09-09T02:43:59Z2022-09-09T02:43:59ZThe price of PBS medicines is coming down. But are we helping the right people?<figure><img src="https://images.theconversation.com/files/483384/original/file-20220908-22-2dsabg.jpg?ixlib=rb-1.1.0&rect=5%2C11%2C1911%2C1264&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.pexels.com/photo/person-holding-blister-pack-3873191/">Polina Tankilevitch/Pexels</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Some Australians will be paying less for prescription medicines from January, in a move <a href="https://www.news.com.au/lifestyle/health/government-to-slash-cost-of-pbs-medicines-under-new-cost-of-living-measures/news-story/2de49504d536ab308f5060d9550a1411">announced this week</a> and designed to ease cost-of-living pressures.</p>
<p>Prime Minister Anthony Albanese <a href="https://www.pm.gov.au/media/cheaper-scripts-millions">said</a> the maximum price of Pharmaceutical Benefits Scheme (PBS) medicines would drop from A$42.50 to $30, at a cost to taxpayers of <a href="https://www.alp.org.au/policies/cutting-the-cost-of-medications">$765.3 million</a>.</p>
<p>There is no reduction for concession-card holders, who will continue to pay up to <a href="https://www.pbs.gov.au/info/about-the-pbs">$6.80</a>.</p>
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<p>Cutting the cost of medicines this way is a welcome move. But the government has missed a chance to better target cost cuts to certain patient groups, for specific medical conditions and for generic drugs.</p>
<h2>Australians are going without medicines</h2>
<p>Australians are currently <a href="https://bmjopen.bmj.com/content/bmjopen/7/1/e014287.full.pdf">paying more</a> for their prescription medicines than some similar countries, including the United Kingdom, Germany, the Netherlands and New Zealand.</p>
<p>And we know many Australians <a href="https://theconversation.com/last-year-half-a-million-australians-couldnt-afford-to-fill-a-script-heres-how-to-rein-in-rising-health-costs-178301">can’t afford</a> to fill their scripts.</p>
<p><a href="https://bmjopen.bmj.com/content/bmjopen/7/1/e014287.full.pdf">Just under 7%</a> of older Australians said they didn’t buy their prescribed medications because they were too expensive, a higher proportion than other similar countries. For the UK, this figure was about 3%, in New Zealand it was just under 5%. </p>
<p>This is a problem because people who cannot afford to buy essential medicines have worse health and <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7735485/">higher mortality</a>. Forgoing medicines may also lead to more health costs in the future, as conditions go untreated and complications arise, leading to emergency care and hospital visits.</p>
<p>So reducing the price of prescription medicines, as announced this week, will mean more people will be able to afford them, with the health and other benefits this brings.</p>
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<em>
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Read more:
<a href="https://theconversation.com/last-year-half-a-million-australians-couldnt-afford-to-fill-a-script-heres-how-to-rein-in-rising-health-costs-178301">Last year, half a million Australians couldn't afford to fill a script. Here's how to rein in rising health costs</a>
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<h2>Can we better target the price cuts?</h2>
<p>People who cannot afford to fill their scripts <a href="https://journals.sagepub.com/doi/abs/10.1258/jhsrp.2009.009059">are more likely</a> to have a below-average income, be Indigenous, be adults under 65, and have little input in decisions about their medical treatment. A high price for medicine at the pharmacy (known as a co-payment) is another big factor.</p>
<p>So other countries use a variety of strategies to make it easier for people to afford to fill their scripts. These include:</p>
<ul>
<li><p>reducing the price of medicines (reducing the co-payment)</p></li>
<li><p>varying the co-payment by patient characteristic (for instance, income, age and health needs)</p></li>
<li><p>promoting the discussion of medicines and their costs between providers (such as doctors, pharmacists) and patients. </p></li>
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<p>Australia already has <a href="https://www.pbs.gov.au/info/about-the-pbs#What_are_the_current_patient_fees_and_charges">different co-payments</a> – one for general patients and a much lower one for concession-card holders. </p>
<p>There is no firm evidence concession-card holders are forgoing medicines at a different rate to the general population because of costs. So, it makes sense to target any price cuts to the general population, with its higher co-payment.</p>
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<a href="https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Emergency department sign with arrow" src="https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=446&fit=crop&dpr=1 600w, https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=446&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=446&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=560&fit=crop&dpr=1 754w, https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=560&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=560&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">We could make certain drugs cheaper to encourage people to use them, preventing a trip to hospital.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-illustration/emergency-sign-334306280">Shutterstock</a></span>
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<p>But there are ways of lowering the co-payment for certain medicines, in particular those that control life-threatening conditions and prevent hospitalisation.</p>
<p>These medicines <a href="https://www.nejm.org/doi/full/10.1056/NEJMsa0807998">include</a> those used to treat asthma, severe mental disorders (such as severe depression, schizophrenia, bipolar disorder), heart diseases and diabetes. </p>
<p>The government could consider lowering the co-payment for these medicines, especially for people with multiple chronic conditions and on lower incomes.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/what-is-the-pbs-safety-net-and-is-it-really-the-best-way-to-cut-the-cost-of-medicines-180315">What is the PBS safety net and is it really the best way to cut the cost of medicines?</a>
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<h2>What else could we do?</h2>
<p>This latest announcement only affects medicines costing more than $30. The patient will pay this co-payment and the government will cover the rest. </p>
<p>But some PBS subsidised medicines are cheaper than the co-payment, so the patient will pay the full cost.</p>
<p>Most of these cheaper drugs are generic drugs – ones no longer under patent protection. So lowering the co-payment will unlikely affect the cost of these.</p>
<p>If we were hoping to cut the cost of medicines even further, we need to target these generic drugs, which Australians <a href="https://grattan.edu.au/wp-content/uploads/2017/03/886-Cutting-a-better-drug-deal.pdf">generally pay more for</a> than people in countries including Canada, New Zealand, Japan and many member states of the European Union.</p>
<p>One reason is these countries set a price for each generic drug by using the best price obtained by other comparable countries. If Australia adopted this international benchmarking pricing, we could be saving even more at the pharmacy.</p>
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<p>
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Read more:
<a href="https://theconversation.com/explainer-what-is-medicare-and-how-does-it-work-22523">Explainer: what is Medicare and how does it work?</a>
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<p><em>The article has been updated to reflect the cost of PBS medicines affected by the proposed changes.</em></p><img src="https://counter.theconversation.com/content/190137/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Yuting Zhang receives funding from Australian Research Council, Department of Veterans' Affairs, the Victorian Department of Health, and National Health and Medical Research Council. In the past, Professor Zhang has received funding from several US institutes including the US National Institutes of Health, Commonwealth fund, Agency for Healthcare Research and Quality, and Robert Wood Johnson Foundation.</span></em></p>The government has missed a chance to better target cost cuts to certain patient groups, for certain medical conditions, and for generic drugs.Yuting Zhang, Professor of Health Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1709662021-11-04T15:52:10Z2021-11-04T15:52:10ZFuel subsidies in Nigeria: they’re bad for the economy, but the lifeblood of politicians<figure><img src="https://images.theconversation.com/files/429566/original/file-20211101-21-1bvvygm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A January 2012 demonstration against the removal of petroleum subsidies in the northern Nigerian city of Kano
LPhoto credit should read </span> <span class="attribution"><span class="source">Pius Utomi E/kpeiAFP via Getty Images)</span></span></figcaption></figure><p><em>Nigeria, Africa’s biggest oil producer, has <a href="https://www.reuters.com/world/africa/nigerias-renewed-use-fuel-subsidies-concern-imf-says-2021-06-17/">come under fire from the International Monetary Fund as well as World Bank</a> for the heavy financial burden it carries in providing subsidies for fuel and kerosene. The criticism is rooted in the belief that the money could be better spent on other essential services, such as healthcare and education. The Conversation Africa’s Wale Fatade asks Steve Onyeiwu about fuel subsidies in Nigeria.</em> </p>
<h2>How long have subsidies been in place?</h2>
<p>Fuel subsidies have been in place in Nigeria <a href="https://www.ictd.ac/publication/fuel-subsidy-social-contract-microeconomic-analysis-nigeria-rib/#:%7E:text=Subsidies%20exist%20because%20the%20government,oil%20price%20shock%20in%201973">since the 1970s</a>. It began with the government routinely selling petrol to Nigerians at below cost. But most Nigerians were unaware that this was being done. </p>
<p>Fuel subsidies became institutionalised in 1977, following the promulgation of the <a href="https://gazettes.africa/archive/ng/1977/ng-government-gazette-supplement-dated-1977-01-13-no-2-part-a.pdf">Price Control Act</a> which made it illegal for some products (including petrol) to be sold above the regulated price. This law was introduced by the General Olusegun Obasanjo regime in order to cushion the effects of the global <a href="https://www.npr.org/2021/05/29/1001023637/think-inflation-is-bad-now-lets-take-a-step-back-to-the-1970s">“Great Inflation”</a> era of the 1970s, caused by a world-wide increase in energy prices. </p>
<p>Between 2006-2018 Nigeria spent about <a href="https://www.reuters.com/article/us-nigeria-oil-gasoline/nigeria-pays-14-million-for-fuel-in-june-despite-subsidy-removal-nnpc-idUSKBN25R1DO">10 trillion Naira</a> (or US$24.5 billion at the current official exchange rate of 411 Naira = US$1) on petroleum subsidies. </p>
<p>In <a href="https://www.vanguardngr.com/2020/04/n1-5trn-spent-on-fuel-subsidy-in-2019-fg/">2019 and 2020</a> about 3 trillion Naira ($7 billion) was spent on subsidies. The number is expected to go up <a href="https://www.bloombergquint.com/markets/nigeria-s-annual-spending-on-subsidy-could-exceed-eurobond-raise">this year and next</a>. </p>
<p>It means that Nigeria has spent over $30 billion on fuel subsidies over the past 16 years or so. In 2018, it spent 722 billion ($2.4 billion at that year’s official exchange rate of $1 = 306 Naira), but spent only <a href="https://data.worldbank.org/indicator/SH.XPD.CHEX.PP.CD">$1.5 billion</a> on health. Nigeria’s growing fuel subsidy may have contributed to the country’s <a href="https://www.devex.com/news/sponsored/2-decades-on-nigeria-falls-short-of-landmark-health-pledge-99555">health-financing gap</a>. </p>
<p>Although the absolute amount spent on fuel subsidies has increased over time, the relative sum spent has decreased. </p>
<p>In 1970, about 72% of the cost of a litre of petrol was paid by the government, but that figure fell to <a href="https://www.jstor.org/stable/40761059">43%</a> in 2011. This means that Nigerians are increasingly bearing the burden of fuel price increases. This may explain why they vehemently oppose, through <a href="https://www.bbc.com/news/world-africa-16390183">protests</a> and disruption of traffic, attempts at reducing or eliminating subsidies. </p>
<h2>Why are the subsidies there?</h2>
<p>The official reason for introducing oil subsidies was to minimise the impact of rising global oil prices on Nigerians. But other factors played an important role. </p>
<p>The period 1970-1979 was an era of subsidies in Nigeria. Virtually everything in Nigeria was heavily subsidised – education, health, electricity, water supply, air travel and even provisions or “essential commodities” such as milk, sugar, rice, wheat and beverages. </p>
<p>In the 1970s, Nigerians coined the phrase<a href="https://www.researchgate.net/publication/280131102_The_concept_of_national_cake_in_Nigerian_political_system_Implications_for_national_development"> “national cake,”</a> to depict a phenomenon whereby they felt entitled to government largesse. </p>
<p>Subsidies were sustained by the oil boom Nigeria enjoyed, thanks to the oil-shock caused by the <a href="https://www.brookings.edu/blog/markaz/2017/06/05/the-1967-war-and-the-oil-weapon/">Arab-Israeli conflict </a> that saw global oil prices skyrocket. </p>
<p>As part of the subsidy jamboree, public-sector workers received a big boost in their wages in 1975, under the <a href="https://www.nytimes.com/1974/12/22/archives/nigerians-awaiting-a-payrise-decision.html">“Udoji awards.”</a> The country’s state-owned National Electric Power Authority did not even bother to collect electricity tariffs, while the national carrier, Nigeria Airways, sold tickets at below market-clearing prices. </p>
<p>But this jamboree was short lived, as the government was unable to sustain subsidies, following steep drops in oil price <a href="https://energyfuse.org/opecs-history-of-oil-market-management-its-complicated/">in the 1980s</a>. The scarcity of foreign exchange made it difficult for the government to finance imports of essential commodities, which led to shortages.</p>
<h2>Has the government tried to remove them?</h2>
<p>Various administrations have unsuccessfully tried to remove fuel subsidies since the transition to civilian rule in 1979. </p>
<p>President Shehu Shagari’s <a href="https://www.britannica.com/biography/Shehu-Shagari">government</a> – from 1979 to 1983 – <a href="https://www.jstor.org/stable/40761059">increased</a> the price of petrol in 1982, from 15.3 kobo a litre to 20 kobo. This happened without the government making reference to easing subsidies.</p>
<p>Then in 1986 President Ibrahim Babangida <a href="https://www.jstor.org/stable/40761059">announced</a> a partial removal of oil subsidies, which saw petrol price rise from 20 kobo to 39 kobo per litre. This followed his implementation of the Structural Adjustment Program as set out by the International Monetary Fund. </p>
<p>There was a huge uproar against the decision, which reached a crescendo when workers, students and civil society groups embarked on <a href="https://www.nytimes.com/1989/06/04/world/economic-riots-are-spreading-in-nigeria.html">massive demonstrations</a> across the country. Massive and sustained protests against Babangida’s economic policies <a href="https://www.latimes.com/archives/la-xpm-1993-08-27-mn-28537-story.html">played</a> a big role in his hurried exit from power. The administrations that followed left subsidies in place.</p>
<p>It wasn’t until 2012 that action was taken again. President Goodluck Jonathan <a href="https://www.aljazeera.com/economy/2012/1/1/nigeria-ends-fuel-subsidies">parred down fuel subsides</a> and used the savings to invest in education and infrastructure. But he encountered <a href="https://www.reuters.com/article/ozatp-nigeria-strike-20120110-idAFJOE80900A20120110">virulent pushbacks</a> from labour unions, students, and civil society groups. He was subsequently forced to <a href="https://www.reuters.com/article/ozatp-nigeria-strike-20120116-idAFJOE80F00A20120116">cut the fuel price</a> by 30%. </p>
<p>Last year in June, President Muhammadu Buhari’s administration <a href="https://www.spglobal.com/platts/en/market-insights/latest-news/oil/060520-nigerias-president-confirms-removal-of-gasoline-subsidies">announced</a> it was eliminating fuel subsidies. It said it had <a href="https://www.vanguardngr.com/2020/06/fg-removes-fuel-price-cap-gives-marketers-freedom-to-fix-price/">granted approval</a> to the Petroleum Products Pricing Regulatory Agency to remove the price cap that was in place for petrol.</p>
<p>But by March of this year, the government <a href="https://www.bloomberg.com/news/articles/2021-03-01/nigeria-s-nnpc-won-t-increase-fuel-prices-in-march">announced</a> it was keeping the pump price of petrol unchanged despite increasing crude costs. This effectively marked <a href="https://www.bloomberg.com/news/articles/2021-03-01/nigeria-s-nnpc-won-t-increase-fuel-prices-in-march">a return to subsidies</a>. </p>
<h2>Why are the fuel subsidies difficult to remove?</h2>
<p>First, oil subsidies have survived when other subsidies have been removed because those benefiting from them are very powerful. They cut across a broad segment of the upper echelons of the government and political elites. </p>
<p>A host of players <a href="https://www.reuters.com/article/us-nigeria-fuel-scam/nigeria-investigates-4-billion-fuel-subsidy-fraud-idUSTRE80I1R220120119">benefit</a> from subsidies by inflating figures for oil imports, and over-invoicing the government for the cost of imports. They have used their political connections and influence to scuttle attempts to remove them. These include politicians, high-ranking government officials, business tycoons, officials at the state-owned <a href="https://nnpcgroup.com/Pages/Home.aspx">Nigerian National Petroleum Corporation</a>, the <a href="https://nigerianports.gov.ng/">Nigerian Ports Authority</a> and Customs. </p>
<p>A second reason is that Nigerians tend to use oil subsidy removal protests as a rallying point for many of their grouses against the government. This explains why the government prefers to borrow to finance the budget rather than scrap subsidies.</p>
<p>Third, some politicians deliberately miscommunicate the economics around subsidies. They <a href="https://www.vanguardngr.com/2020/04/buharis-subsidy-regime-a-monumental-fraud-pdp/">tell</a> Nigerians that the government intends to divert funds meant for fuel subsidies to private coffers.</p>
<p>Nigerians have come to believe that the removal of fuel subsidies will inflict untold hardships. They have lost faith in government initiatives, no matter how well-intentioned.</p>
<p>Lastly, various administrations have not had the political will or courage to jettison the subsidies because of their failure to uplift Nigerians’ economic conditions. It would have been politically easier to remove fuel subsidies if the government had provided jobs, entrepreneurial opportunities, and other forms of economic empowerment. </p>
<h2>Why are oil subsidies bad economics?</h2>
<p>Every year, the Nigerian government runs huge <a href="https://www.reuters.com/world/africa/nigeria-unveils-record-398-bln-budget-2022-spending-up-25-2021-10-07/">budget deficits</a> that could have been avoided if money budgeted for oil subsidies was allocated to other critical projects. </p>
<p>Subsidies should be used to spur investment in activities that raise the productive capacities of an economy (such as education, health, entrepreneurship, and infrastructure). They should be targeted at strategic sectors of the economy. They should not be used to finance non-durable consumption items like petrol. </p>
<p>Oil subsidies are inequitable, as they transfer the national wealth to those who own several cars and add little or no value to the national economy. </p>
<p>In lieu of subsidies, the government should invest massively in public transportation and boost the transport allowances of public-sector workers. </p>
<p>Removing fuel subsidies would also be good for the environment and safety on Nigerian roads. When motorists pay the full economic price for petrol, they will drive less, emit less pollution and reduce the incidence of road accidents.</p>
<p>There should be a clear communication to Nigerians that the removal of fuel subsidies favours the poor, and eliminates one of the several perks that the Nigerian elites undeservedly enjoy.</p><img src="https://counter.theconversation.com/content/170966/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Onyeiwu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Nigeria must remove fuel subsidies and channel the funds to critical sectors of its economy.Stephen Onyeiwu, Andrew Wells Robertson Professor of Economics, Allegheny CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/715542017-02-19T19:10:37Z2017-02-19T19:10:37ZNew study shows more time walking means less time in hospital<figure><img src="https://images.theconversation.com/files/153371/original/image-20170119-26582-llr8vc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">If all the over-55s got walking, we could save almost $2 billion in health care costs each year.</span> <span class="attribution"><span class="source">from www.shutterstock.com.au</span></span></figcaption></figure><p>In my practice as a GP, I have been impressed by a few energetic and active 80 year olds who remain in good health while many their age have succumbed to various chronic diseases. So in 2005, when the University of Newcastle established a <a href="http://ije.oxfordjournals.org/content/39/6/1452.extract?sid=e7cb7279-d503-43c0-ae54-e3291c8e9887">large community based health study</a> of people aged 55 to 80, I made sure we recorded the participants’ physical activity in detail. </p>
<p>A decade later, we can report the influence of physical activity on the need for hospital care as published in the <a href="https://www.mja.com.au/">Medical Journal of Australia</a> today.</p>
<p>We used pedometers to record daily step counts, giving a much more precise measure of activity than the usual self-report questionnaires. Median daily step counts ranged from 8,600 in the youngest to 3,800 in those over 80 years, and weekend days had on average 620 fewer steps than weekdays.</p>
<p>The inactive people (taking 4,500 steps per day) averaged 0.97 days of hospital care per year. The more active people (taking 8,800 steps per day) needed only 0.68 days of care per year. In our analysis we adjusted for the effects of age, sex, the number of illnesses people had when they started, smoking, alcohol intake and education. </p>
<p>We wondered if the causation might be running the opposite direction. That is, that sick people walk less rather than activity preventing illness. To test this idea, we repeated the analysis ignoring all hospital admissions in the first two years of follow up to remove the immediate effects of serious illness. The difference is shown in the graph below.</p>
<iframe src="https://datawrapper.dwcdn.net/IXblF/1/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="370"></iframe>
<p>The association extends right across the range of activity levels, showing any activity is good for health, and the more the better. The participants in our study wore the pedometers from morning until night, so a lot of what we recorded as steps was general activity around the house or the workplace, not necessarily continuous walking. <a href="http://jamanetwork.com/journals/jamainternalmedicine/article-abstract/2212264">Recent research</a> shows any that activity is better than sitting down, so even light activity is protective of health. Pedometers don’t capture swimming or cycling accurately, but these things make up a small part of daily activity.</p>
<p>Looking at why these patients were in hospital, more active people had fewer admissions for cancer and diabetes, but surprisingly, there was no difference for heart disease. We suspect that might be due to a gap in the data for heart admissions to private hospitals for a few of the years.</p>
<h2>What if everyone got walking?</h2>
<p>The difference of 0.29 hospital days per year between the inactive and active people is about a 30% reduction. Does this mean if we could get everyone in the population taking 8,800 steps per day we could shut a third of all hospital beds, and send a third of all doctors and nurses off to practice their golf swing? Unfortunately not.</p>
<p>It turns out our study sample is a rather healthy lot, requiring less hospital care than the average for their age. Compared to our average value of less than one day per year of hospital care, figures from the <a href="http://www.aihw.gov.au/haag12-13/admitted-patient-care/">Australian Institute of Health and Welfare</a> for 2014-15 show Australians between 55 and 85 years required 14.2 million days of hospital care, or 2.65 bed days per person.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/153377/original/image-20170119-26567-gbkyro.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/153377/original/image-20170119-26567-gbkyro.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/153377/original/image-20170119-26567-gbkyro.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=258&fit=crop&dpr=1 600w, https://images.theconversation.com/files/153377/original/image-20170119-26567-gbkyro.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=258&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/153377/original/image-20170119-26567-gbkyro.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=258&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/153377/original/image-20170119-26567-gbkyro.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=324&fit=crop&dpr=1 754w, https://images.theconversation.com/files/153377/original/image-20170119-26567-gbkyro.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=324&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/153377/original/image-20170119-26567-gbkyro.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=324&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Getting in 40 minutes of walking a day would reap big rewards in overall health.</span>
<span class="attribution"><span class="source">from www.shutterstock.com</span></span>
</figcaption>
</figure>
<p>Whether increasing activity would be of more or less benefit across the whole of the Australian population is unclear. It may be that the general population would have even more to gain from physical activity than our study participants, or it may be that they have serious chronic diseases that make increased activity impossible.</p>
<p>Let’s imagine for a moment that something changes the walking habits of all Australians, so everyone is walking at least 8,800 steps per day – maybe a combination of a Fitbit craze and an oil shortage that sends petrol to A$10 a litre. What effect would this have on health services? </p>
<p>Considering only the people aged over 55, at a minimum it would reduce the need for hospitalisation by 975,000 bed days per year, for a saving of $1.7 billion dollars. Given there are health benefits at other ages, and the less healthy Australians not represented in our study could benefit more, the actual benefit is likely to be even greater.</p>
<p>An extra 4300 steps per day is not much. It’s just 40 minutes walking, which might include going to the shops, picking up kids, or taking the stairs at work. It doesn’t have to be “exercise”, although higher intensity activity for those who enjoy it has <a href="http://www.health.gov.au/internet/main/publishing.nsf/content/health-pubhlth-strateg-phys-act-guidelines#apaadult">greater health benefits</a>.</p>
<p>With governments searching for ways to reduce spending, and <a href="http://www.budget.gov.au/2016-17/content/bp1/html/bp1_bs5-01.htm">16% of the federal budget</a> being spent on health, <a href="http://www.thelancet.com/series/urban-design">tackling physical inactivity</a> of individual patients, as well as ensuring our urban centres are walking- and cycling-friendly would make a major difference.</p><img src="https://counter.theconversation.com/content/71554/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ben Ewald has received funding from NH&MRC to conduct research promoting physical activity, and is a member of the group Doctors for the Environment Australia.
</span></em></p>Walking has been proven to reduce the risk of heart disease, bowel and breast cancers, osteoporosis and diabetes. New data shows it also reduces the need for hospital care.Ben Ewald, Senior Lecturer, University of NewcastleLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/586382016-05-03T10:54:16Z2016-05-03T10:54:16ZFederal budget 2016: health experts react<figure><img src="https://images.theconversation.com/files/120994/original/image-20160503-19535-17tqaht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">What does the budget hold for health care?</span> <span class="attribution"><span class="source">from www.shutterstock.com.au</span></span></figcaption></figure><p>To help pay for the National Disability Insurance Scheme (NDIS) the government will scrap the carbon tax compensation to new recipients of government welfare benefits. This will save the government A$1.4 billion over five years.</p>
<p>The government is putting $2.1 billion towards the NDIS in this year’s budget. This money will also this come from savings by cutting the NDIS advertising campaign, ceasing to back-date Carer Allowance claims and the reviewing of people’s eligibility for the Disability Support Pension.</p>
<p>There’s $1.7 billion in funding for the <a href="https://theconversation.com/policycheck-the-coalitions-dental-health-care-policy-58410">Child and Adult Public Dental Scheme</a> leaked before the budget and the <a href="https://theconversation.com/hospital-funding-deal-experts-respond-57122">agreement made at the Council of Australian Governments for $2.9 billion funding</a> for public hospitals, with reforms to reduce hospital admissions, improve patient safety and boost quality of services.</p>
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<p><em><a href="https://theconversation.com/policycheck-the-coalitions-dental-health-care-policy-58410">Read more: PolicyCheck: the Coalition’s dental health care policy</a></em></p>
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<p>This budget also marks the start of the Healthier Medicare package announced earlier this year. This includes funding of <a href="https://theconversation.com/time-for-better-chronic-disease-management-in-primary-care-57035">$21.3 million for a trial of “Health Care Homes”</a>, designed for people with chronic diseases and complex conditions. The trial will go for two years and will aim to keep these people out of hospitals. The package will also create bundled payments and incentives for GPs treating the chronically ill.</p>
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<p><a href="https://theconversation.com/time-for-better-chronic-disease-management-in-primary-care-57035"><em>Read more about Health Care Homes trial</em></a></p>
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<p>The Healthier Medicare package also aims to save $66.2 million over four years by targeting providers who make Medicare claims that are inconsistent with existing rules. The government will also implement the recommendations of the Medicare Benefits Schedule (MBS) Review to remove or amend clinically obsolete items from the MBS.</p>
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<p><em><a href="https://theconversation.com/medicare-review-must-deal-with-elephant-in-the-room-incentives-40819">Read more on the Medicare Benefit Schedule Review</a></em></p>
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<p>A series of 12.5% increases in tobacco tax over the next four years is estimated to generate $4.7 billion. </p>
<p>New and amended listings on the Pharmaceutical Benefits Scheme (PBS) and the Repatriation Pharmaceutical Benefits Scheme will receive $45.2 million in funding over five years, these include for new treatments for hepatitis C, asthma and cancer.</p>
<p>The 2016 budget health facts sheets <a href="http://www.health.gov.au/internet/budget/publishing.nsf/Content/healthbudget1617-1">are available here</a>. </p>
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<h2>Prevention</h2>
<p><strong>Rob Moodie, Professor of Public Health, University of Melbourne</strong></p>
<p>As expected there is a rise in tobacco taxes in the budget, which is estimated to raise $4.7 billion over the next four years. This is part of a long-term multi-partisan approach which is good for health and good for the government’s bottom line. Increasing the price of cigarettes through taxation is the most effective way of decreasing the number of Australians who die or get ill from smoking. One of the great problems is that so little of this money is invested back into preventive health programs.</p>
<p>Despite everyone chanting the mantra prevention is better than cure, there are no other investments in preventive health that can, in any way, be seen as commensurate with the size and costs of the problems we face with obesity, diabetes, cancer and alcohol related injury, illness and death.</p>
<p>The current government has the unenviable distinction of having ripped out substantial funding for preventive health programs. And if Australia continues with these very poor levels of investment in preventive health programs, then the people, the costs and the burdens end up, uncontrollably and unsustainably, in our hospitals. Australia is in dire need of visionary health ministers that do understand prevention – like Roxon, Wooldridge and Blewett. </p>
<p>If increasing the tax on tobacco is so effective, why aren’t successive governments thinking of introducing a tax on sugar as they are in the UK, or thinking of increasing taxes on alcohol products with higher alcohol volumes? These are win-win outcomes, but despite there being strong community support for these approaches, our politicians currently fear Big Food and Big Alcohol lobbies more than they fear the little voters. But that can change.</p>
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<h2>Public hospitals and private health insurance</h2>
<p><strong>Mike Woods, Professor of Health Economics, University of Technology Sydney</strong></p>
<p>As expected, the Commonwealth’s contribution to public hospital funding reflects the agreement negotiated at the <a href="https://www.coag.gov.au/node/537">April COAG meeting that restored $2.9 billion in federal funding</a> over three years. The states will receive an estimated $17.9 billion in 2016-17. Expenditure is then expected to increase by 9.9% in real terms over the period 2016-17 to 2019-20, with growth in total Commonwealth funding capped at 6.5% a year from 2017-18 for the following three years. </p>
<p>This is very much a stop-gap measure to get the federal government through the upcoming election. The underlying problem for the states is the escalating cost of delivering public hospital care. The issue may have been deferred, but it hasn’t gone away. Health is the <a href="http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/5512.0Main%20Features42014-15?opendocument&tabname=Summary&prodno=5512.0&issue=2014-15&num=&view=">single largest expenditure item</a> in all of their budgets. And expenditure has been <a href="http://www.aihw.gov.au/WorkArea/DownloadAsset.aspx?id=60129552833">growing at around 5% in real terms</a> over the past decade. This isn’t sustainable.</p>
<p>Over the next three years the incoming federal government, of whatever political persuasion, will need to sit down with the states and territories and agree on reforms to reduce the rate of growth of health expenditure.</p>
<p>Private insurance rebates are budgeted to cost $6.5 billion in 2016-17. In October last year, the federal minister for health launched a series of national consultations focused on the consumer value of private health insurance and the long-term sustainability of current arrangements. A Department of Health online survey elicited over 40,000 responses. In something of an understatement, <a href="https://www.health.gov.au/internet/ministers/publishing.nsf/Content/health-mediarel-yr2016-ley160331.htm">the minister reported</a> that, “… consumers are frustrated with their Private Health.”</p>
<p>The immediate response was to set up a working party on the cost of prostheses. The budget is also funding a private health sector committee to provide advice on private health insurance reforms – an issue for sometime after the election. In the meantime, the government is making more savings by continuing to “pause” the indexation of the <a href="http://www.privatehealth.gov.au/healthinsurance/incentivessurcharges/insurancerebate.htm">private health insurance income tiers</a>.</p>
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<h2>Primary care</h2>
<p><strong>Jim Gillespie, Deputy Director, Menzies Centre for Health Policy and Associate Professor in Health Policy, University of Sydney</strong></p>
<p>The budget gives a few more details for changes to primary care that had already been announced.</p>
<p>The main innovation is a trial of “Health Care Homes”, a tiny budgetary item ($21.3 million) which could have major implications for the way general practitioners are paid, and how they deliver care to the growing population of chronically ill. </p>
<p>The trial will be run in seven Primary Health Networks. GP practices choosing to join will move away from fee for service: payment for each individual service provided. Instead, they will get a “bundled” sum to cover all the services, medical and allied health, that the patient needs. </p>
<p>This trial was announced in March, following the report of the <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/primaryHealthCareAdvisoryGroup-1">Primary Health Care Advisory Group</a>. It is a significant attempt to move beyond the fee-for-service system that has made it difficult for Australian primary care to adapt to the new burdens of chronic illness. </p>
<p>The budget’s other major item affecting general practitioners is a continuation of the freeze on increases in Medicare Benefits Schedule (MBS) item payments started by the Gillard government. The savings are significant – more than $900 million over the next two years. It will also put pressure on the fee-for-service model.</p>
<p>The Health Care Home, with its experiments in alternative modes of payment, will look more attractive to GPs squeezed by the MBS freeze.</p>
<hr>
<h2>Disability and aged care</h2>
<p><strong>Helen Dickinson, Associate Professor, Public Governance, University of Melbourne</strong></p>
<p>The budget will be of little comfort to those in receipt of disability or aged care services. Both are areas targeted for making unrealistic projected savings and the identified reinvestment areas are unlikely to deliver the magnitude of changes needed in these service areas.</p>
<p>An NDIS savings fund will be established to help fund the scheme, with initial deposits being made through projected savings of $2.1 billion from the welfare budget. This will be achieved by preventing new recipients of government welfare payments from receiving carbon tax compensation, worth $14 per fortnight for pensioners. </p>
<p>Those in receipt of the Disability Support Pension will face their eligibility reviewed in order to assess their capacity to work that is expected to save $62 million. The UK’s recent experience in these processes has shown these to be highly unfair, with individuals having their welfare payments suspended when they are <a href="http://www.theguardian.com/commentisfree/2016/mar/11/disability-benefits-broken-iain-duncan-smith-adviser-work-capability-assessment">far from being able to work</a>. Such moves rarely save the levels of money intended and sanction individuals with disabilities, doing little to move them closer to the workforce.</p>
<p>In aged care, $1.2 billion will be saved through the “better use of funding”. Some of the $249 million reinvestments will be welcomed, including $102 million to improve services for those living in rural and remote areas, $10 million for unannounced compliance site visits of aged care providers and $136 million for My Aged Care, a contact point for older people seeking to explore their aged care options. </p>
<p>Yet it is difficult to see how these relatively small investments will meet the intended aims of “preventing a spending blowout” in coming years and are likely to shift increasing costs of aged care to future governments.</p>
<hr>
<h2>Overview</h2>
<p><strong>Stephen Duckett, Director, Health Program, Grattan Institute</strong></p>
<p>For health care at least, this is a no surprises budget, albeit dressed up with some fancy announcements. The major positives have been pre-announced with confirmation now appearing in the budget papers.</p>
<p><strong>Primary care</strong></p>
<p>The primary care upside, “medical homes”, new arrangements which were said to <a href="https://theconversation.com/time-for-better-chronic-disease-management-in-primary-care-57035">“revolutionise” care for people with chronic conditions</a> were announced on March 31. These are laudable changes but small; the total cost over the forward estimates is $21.3 million.</p>
<p>In what is surely not a coincidence, the budget announces almost the same amount ($21.2 million) in savings from primary medical care through tightening up grants under the <a href="https://www.humanservices.gov.au/health-professionals/services/medicare/practice-incentives-program">Practice Incentives Program</a> which provides payments to general practice including for asthma and diabetes care.</p>
<p>A recent <a href="https://grattan.edu.au/report/chronic-failure-in-primary-care/">Grattan Institute report</a> recommended these incentive payments could be used as a funding source for redesigning care for people with chronic conditions but it is probably not wise to reduce the funding before the new scheme has been designed.</p>
<p><strong>Medicare Benefits Schedule</strong></p>
<p>The biggest savings item in health comes from the continued pause on indexation for Medicare rebates, estimated to save $925 million over the four-year forward estimates. This continues the fee freeze until 2019-20. Although there has been no impact on bulk billing rates from the fee freeze so far, whether that will continue into the future depends on inflation, and whether doctors are feeling the squeeze from the freeze over the past few years.</p>
<p>The budget makes no attempt to kill off some zombie policies – initiatives from previous budgets that are stuck in the Senate. The budget thus assumes the tightening up of the Medicare Safety Net, which was supposed to save $64 million in 2016-17 and twice that the next year, is going to proceed.</p>
<p><strong>Hospitals</strong></p>
<p>The most significant apparent budget spend is on public hospitals. The <a href="https://theconversation.com/hospital-funding-deal-experts-respond-57122">deal reached with the Premiers on April Fool’s day</a> is costed at almost $2.9 billion. </p>
<p>This can be spun two ways: that it is almost a $3 billion injection into the public hospital system or that it is still an effective cut on what was promised by both Labor and Liberal prior to the 2013 election. </p>
<p>The table shows the impact of the 2014-15 budget (big savings) and the partial restoration in the 2016-17 budget.</p>
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<img alt="" src="https://images.theconversation.com/files/121011/original/image-20160503-19828-11ifg5e.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/121011/original/image-20160503-19828-11ifg5e.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=183&fit=crop&dpr=1 600w, https://images.theconversation.com/files/121011/original/image-20160503-19828-11ifg5e.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=183&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/121011/original/image-20160503-19828-11ifg5e.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=183&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/121011/original/image-20160503-19828-11ifg5e.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=230&fit=crop&dpr=1 754w, https://images.theconversation.com/files/121011/original/image-20160503-19828-11ifg5e.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=230&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/121011/original/image-20160503-19828-11ifg5e.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=230&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p><strong>Dental care</strong></p>
<p>Another pre-budget announcement was a new <a href="https://theconversation.com/policycheck-the-coalitions-dental-health-care-policy-58410">Child and Adult Public Dental Scheme</a>. This provides additional funding to states for dental care for both adults and children. The details are still not clear but it appears states will be asked to contribute to funding this policy. The Commonwealth funding comes from chopping the Child Dental Benefits Scheme so in fact this is a savings initiative over the forward estimates to the tune of $17 million.</p>
<p><strong>Pharmaceuticals</strong></p>
<p>New listings on the Pharmaceutical Benefits Scheme are scheduled to cost $57.6 million over the forward estimates.</p>
<p>Another zombie policy, <a href="https://theconversation.com/hidden-cost-of-increasing-drug-co-payment-poses-a-high-risk-37482">increasing co-payments for the Pharmaceutical Benefits Scheme</a> is still retained.</p>
<p><strong>Screening and public health</strong></p>
<p>The budget also makes provision to rationalise administration of cancer screening registers, combining nine separate cancer registers into a single National Cancer Screening Register and providing for ongoing funding of the registers. The estimated cost is about $30 million over the forward estimates.</p>
<p><strong>Overview</strong></p>
<p>This is a steady-as-she goes budget, mostly just confirming pre-announcements with only the expected unpleasant decisions, such as the continuation of the Medicare rebate freeze. </p>
<p>It is to some extent a pea-and-thimble budget, most obviously seen in the primary care switcheroo where the positives about new funding to improve care for people with chronic conditions through “medical homes” is offset, almost to the dollar, by savings in other funding for care of people with chronic conditions.</p>
<p>The pea and thimble also makes an appearance in public hospital funding with the 2016 positives hoping to erase the 2014 negatives from people’s minds.</p><img src="https://counter.theconversation.com/content/58638/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Helen Dickinson receives funding from Federal Department of Health. </span></em></p><p class="fine-print"><em><span>Jim Gillespie has received funding from the NHMRC and from WentWest/Western Sydney PHN/ New Horizons Inner West Sydney Partners in recovery.</span></em></p><p class="fine-print"><em><span>Rob Moodie has received funding from the Australian Department of Health, and chaired the National Preventative Health Taskforce from 2008-2011. He chairs the GAVI Alliance Evaluation Advisory Committee and his University receives sitting fees. He has worked with WHO as an adviser over many years. He is currently on the WHO expert panel on Health Promotion.</span></em></p><p class="fine-print"><em><span>Michael Woods and Stephen Duckett do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>This is a steady-as-she goes budget, mostly just confirming pre-announcements with only the expected unpleasant decisions, such as the continuation of the Medicare rebate freeze.Helen Dickinson, Associate Professor, Public Governance, The University of MelbourneJim Gillespie, Deputy Director, Menzies Centre for Health Policy & Associate Professor in Health Policy, University of SydneyMichael Woods, Professor of Health Economics, University of Technology SydneyRob Moodie, Professor of Public Health, The University of MelbourneStephen Duckett, Director, Health Program, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/141482013-05-15T04:12:23Z2013-05-15T04:12:23ZSmall tilt toward health equity in the federal budget<figure><img src="https://images.theconversation.com/files/23800/original/vrbtfcbf-1368584864.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Last night's budget edges closer toward equity but a broader view of health is required if we are to make real progress.</span> <span class="attribution"><span class="source">winnifredxoxo/Flickr</span></span></figcaption></figure><p>Health took a back seat in this year’s federal budget. While the proportion of money being spent on health is increasing in 2013-14, the bulk of it is due to spending commitments made in previous budgets.</p>
<p>Headline grabbers include additional money to expand screening for breast and bowel cancer, as well as other new funding to improve cancer research and support services. And there are some additional funds for the mental health nurse incentive program. </p>
<p>While such investments may well produce health benefits, it would be interesting to understand the process that informed the decision to invest in these areas and not others. </p>
<p>Were the decisions based on estimates of the relative value of a range of alternative investment options? Do they align with the public at large, or more so with the mass media? And it’s always interesting to have an insight into the relative influence of alternative lobby groups.</p>
<h2>Private health insurance rebates</h2>
<p>Despite the introduction of means testing for the private health insurance rebate, the government is still spending $5.4 billion on these subsidies. </p>
<p>The means testing to be introduced in July will remove support for high earners. It’s predicted this will lead to savings of $149 million in 2013-14 and rise to $279 million in 2016-17. </p>
<p>Such small changes are unlikely to affect uptake of private insurance, and hence population health outcomes will remain the same at lower cost to the government. A coalition government would remove means testing, while a (less likely) Greens government would scrap the rebate completely. </p>
<p>All this leads to the question: how far should or could the government go with respect to reducing what it is still spending in this area? What would the consequences of further means testing be on the uptake of private health insurance? And what else could the government be funding with this money, so what associated benefits are we missing out on?</p>
<p>Indeed, why should the search for equity stop at the private health insurance rebate? The government is reviewing some Medicare-subsidised items and the Coalition has indicated that it would also do the same.</p>
<p>And while savings are being made by the decision to delay indexed increases in Medicare item fees, the whole system of Medicare funding for inpatient services is a subsidy for higher earners, who are more likely to use private inpatient services. </p>
<p>The government might be spending less on such services than if they were wholly provided (and funded) by public hospitals, but could the Medicare fee levels be reduced with limited impact on private health insurance uptake? In the United Kingdom, private health care is not subsidised at all.</p>
<h2>Pharmaceuticals</h2>
<p>Over $10 billion will be spent on pharmaceuticals over the next year, and this figure excludes a large proportion of pharmaceuticals prescribed in public hospitals. </p>
<p>Despite cited savings in the pharmaceutical budget due to expected price reductions for some existing drugs, spending on new drugs is expected to eclipse these savings. A net pharmaceutical budget increase of $143 million is predicted for 2013-14.</p>
<h2>A broader view</h2>
<p>An important area that was not addressed in any significant manner is the issue of variation in clinical practice, which has been shown to have a large impact on both health service costs and patient outcomes. </p>
<p>It’s likely that dollars spent reducing variation in clinical practice will produce greater benefits than dollars spent funding new drugs and services.</p>
<p>This is an internationally recognised area of importance, and countries such as the United States and the United Kingdom are spending large sums to tackle the issue head on. Of course, Australia can learn from the experiences of these countries, but the Australian health system is unique in many ways and overseas solutions may not be transferable. </p>
<p>Solutions are complex, involving better data collection, negotiation, and potentially regulation. It’s time to switch funding priorities from new technologies with marginal benefits to informing actions so we can improve the use of existing technologies and services.</p>
<p>Overall, looking at the new announcements, the 2013-14 federal health budget is relatively balanced. But previous funding announcements have loaded considerable additional costs onto this year’s budget and beyond. </p>
<p>A deeper analysis of the health budget requires consideration of not only alternative funding options within the health sector, but the broadly defined value of funding options outside of the health sector. By broadly defined, I mean the direct effects on individual quantity and quality of life, as well as the long-term sustainability and equitable distribution of societal well-being.</p><img src="https://counter.theconversation.com/content/14148/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jonathan Karnon does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Health took a back seat in this year’s federal budget. While the proportion of money being spent on health is increasing in 2013-14, the bulk of it is due to spending commitments made in previous budgets…Jonathan Karnon, Professor of Health Economics, University of AdelaideLicensed as Creative Commons – attribution, no derivatives.