An analysis of the 2008-09 health budget

• Lesley Russell
• Australian Health Policy Institute

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02 June 2008The 2007-08 Budget, the first from the Rudd Labor Government, delivers on the Government's election commitments and adds some additional health spending.

Total new spending on health is $2.917 billion / 5 years. In addition, $10 billion is promised for the new Health and Hospitals Fund.

It is anticipated that in the future an unspecified amount from the increased tax on ‘alcopops’ will be allocated to preventive health programs.

This spending is offset by savings of $2.608 billion/5 years.

Total Commonwealth Government spending in health is $46.03 billion in 2008-09 or
$241 billion / 5 years, averaging around 15.7 percent of total budget spending.

The budget papers predict that expenses related to health are likely to be a major contributor to the growth in Commonwealth Government spending in future decades.
Total expenses for health is estimated to increase by 5.2% in real terms over the forward estimates, or on average by around 1.7% pa.

Medical services and benefits funded through Medicare and the Private Health Insurance rebate are the main contributors to rising health costs (average increase 2.2% pa), driven primarily by the number of services provided by GPs and a shift by GPs to management services which provide higher rebates. However due to the cuts in this budget, the outlays for primary care practice incentives are not predicted to increase over the forward estimates.

Despite a growing number of new high-cost drug listings on the Pharmaceutical Benefits Scheme, estimated growth is expected to increase by just 1.9% pa. over the forward
estimates.