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Removing doctor incentives counter-productive

In broad terms the health portfolio was saved from the ‘slash and burn’ visited on other departments in this year’s Commonwealth Budget. This is a tick for health department advocates scrambling to maintain their portfolio allocations. This preoccupation, even sport, is limited to a small band of ‘insiders’ that populate the parliamentary triangle in budget season. Relieved bureaucrats chant how lucky health was to have ‘dodged the bullet’ on budget night.

09 May 2012

In broad terms the health portfolio was saved from the ‘slash and burn’ visited on other departments in this year’s Commonwealth Budget. This is a tick for health department advocates scrambling to maintain their portfolio allocations.

This preoccupation, even sport, is limited to a small band of ‘insiders’ that populate the parliamentary triangle in budget season. Relieved bureaucrats chant how lucky health was to have ‘dodged the bullet’ on budget night.

Once budget week concludes these same bureaucrats return to the grinding exercise of finding more ‘saves’ and less ‘spends’ to deal with the inevitable blowouts in the budget estimates that the Mid-Year Economic and Fiscal Outlook will reveal. For this is the real thing about budgets - they change.

Experienced commentators have noted the increasing difficulty of making sound forecasts in these turbulent international economic times. Treasury forecasts are beginning to become unreliable as events rapidly change. The Australian economy is vulnerable to international upheavals, and their short term impacts can have significant bottom line effects on the budget. This undermines confidence and reputations. In this light, what are we to make of this year’s budget?

Clearly, the over-riding working principle for the health budget was to restrict measures that would add to the cost-of-living burden for average income Australians. Thus, the usual areas where governments seek to reduce outlays - MBS and PBS payments - were generally quarantined.

The changes that were made to the Medicare safety net were justified on the grounds of excessive billings by a minority of practitioners. The overall purpose and benefit of the safety net was maintained. Likewise, the previously introduced market-based changes to the PBS were maintained without increases to eligibility thresholds. Again, consumers were spared the risk of increased fees.

But it is in the medium term effects that this budget is best brought into question. Restraining the growth of health expenditure to a mere 3 per cent begs the question of whether the system is well placed to meet evolving demand pressures.

Ignoring the investment needs of medical research and training can certainly reduce immediate outlays, but it definitely restricts system capacity for the years ahead.

This is also reflected in the removal of incentive payments in general practice.

For a number of years the public policy setting to achieve sound public health measures was to encourage  GPs to promote and dispense immunisation programs. The public benefit was obvious. The return on investment likewise. So to take away the incentive either means the measure has run its course – unlikely - or it is near-sighted and will have to be restored.

A similar case relates to the personally controlled electronic health record (PCEHR). Already a somewhat fraught issue over reimbursement to doctors for engaging with the PECHR, this budget confirmed that there is no specific allocation to encourage the take up of e-health recording in surgeries. Again, any incentive payment that was designed for this purpose has evaporated.

These are short-sighted measures that will have significant impacts. Strangely, they are integral to the reform agenda this government has been so clearly identified with. The promotion of preventative health measures and the development of an e-health system are vital. Removing incentives to make them happen is counter-productive.


Published: 09 May 2012