MYEFO – The devil is in the details

8 Nov 2012
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The old adage “the devil is in the details” is never more true than when it comes to the federal budget, writes Lesley Russel for APO.

Analysis of the 2012-13 Mid-Year Economic and Fiscal Outlook (MYEFO) shows that behind the bland statements in the document are some decisions that will have far-reaching consequences in prevention and public health, some confusing statements about funding sources for dental health reforms, what looks like a lack of interest in ensuring the success of a promised push for telehealth services for medically under-served areas, and some very opaque budget numbers.

The hidden disaster in the 2012-13 MYEFO is the hit (unacknowledged by anyone in the Government) taken by preventive and public health. We know that $1.5 billion over four years ($254 million in 2012-13) has been cut from the National Health Reform (NHR) funding. The MYEFO says this reflects downward revisions to both the weighted population used to calculate hospital utilisation following the 2011 Census and the Australian Institute of Health and Welfare health price index. However, closer examination reveals that cuts have been made in both hospital services and public health funding. The latter funding has been reduced by $400 million over the forward estimates, down from a total of $1.383 billion. With public health funding always such a negligible proportion of healthcare funding, every dollar counts here.

What is even more distressing is to discover that major cuts have been made in the National Partnership for Preventive Health. What was originally $584 million provided over the years 2012-13 to 2014-15 for Healthy Children, Healthy Communities and Healthy Workers is now only $397 million. Presumably, some of the $188.6 million that is clawed back goes towards the $74.1 million over four years provided since the 2012-13 Budget for preventive health activities. Of this funding, $29.1 million will support the Australian National Preventive Health Agency’s core activities and research as well as initiatives to combat eating disorders. The remaining $45.0 million will fund social marketing to discourage tobacco use, complementing the plain packaging initiative. However, in the light of MYEFO, this is not such a generous policy initiative and overall the Treasury has pocketed $100 million in savings from preventive health activities.

If Australia is to tackle the growing and costly burden of non-communicable diseases and ensure that our population is as healthy as possible throughout life, then increased efforts and investments in public health and prevention are essential. To date there is little evidence that the Government is committed to these.

Elsewhere in the MYEFO we find that the Government appears to have lost interest in what was a key 2010 election promise to deliver telehealth services through the Connecting Health Services with the Future package. Changes to the telehealth programs included in the MYEFO will deliver savings totalling $139 million. The MYEFO cuts to this program come on top of savings of $183.9 million taken in the 2012-13 Budget. Essentially this program has been cut by around 50 percent.

In the twelve months since the introduction of the telehealth consultation MBS items, there have been 26,557 specialist consultations at a cost of Medicare of $4.3 million, and 16,026 patient- end services, the majority of which have involved GPs, at a cost to Medicare of $1.2 million. It’s hard to know whether this should be considered an appropriate rate of uptake. However it is certainly less than that budgeted for, and that means the considerable savings that could be achieved by the use of telehealth services are not being realised – especially as there are now additional efforts in place to restrict access to these items. The Government seems happy to simply claw back savings rather than asking if additional effort is required to reap the patient health and economic benefits of telehealth it once touted.

It would be churlish at this early stage to criticise the new package of dental health reforms; the proposed initiatives are a good foundation on which to build a sustainable dental health system that will benefit those Australians most in need. However the MYEFO information raises questions about where the savings to fund these reforms will come from.

When the dental reform package was announced in August, it was stated that the funding for these new initiatives, the majority of which will not be implemented until 2014-15, would come from the axing of the Medicare-based Chronic Disease Dental Scheme (CDDS), the cost of which has blown out to around $1 billion annually, and the Teen Dental Scheme which cost $65 million in 2011-12 but has consistently failed to hit its targets because it funds only check-ups and not the treatments found to be needed. It is estimated that over the next six years CDDS costs would amount to $6.6 billion, considerably more than the $4.1 billion cost of the new proposals. While closure of the CDDS has been included as a budget measure for several years, presumably Treasury has not been able to take these savings, so it can be inferred that these reforms will save money over that currently being spent on dental programs, at least over the next six years.

However the MYEFO states that “the cost of this dental health reform will be offset by savings including from changes to private health insurance” which will take effect from 1 April 2014, and result in savings of $1.09 billion over four years. When asked in Supplementary Senate Estimates where the money for dental reforms would come from, Departmental Secretary, Jane Halton, responded: “That is a matter for Treasury, the Finance Department and the centre of government.” Consequently it is impossible to determine where and how the budget impact for these reforms of $495 million in 2012-15 and 2015-16, as indicated in the MYEFO, arises.

Those who have followed my Budget analyses and prognostications over the years will be aware that I regularly complain about the difficulty of tracking programs and spending over time and the lack of both consistency and transparency in how financial information is conveyed. The 2012-13 MYEFO document is no exception. This might be a function of the growing complexity of government, it might be deliberate obfuscation, or it might just be accidental. It certainly impacts on the ability of outsiders to assess the impact, effectiveness and efficiency of government strategies, policies and programs.

Dr Lesley Russell is a Senior Research Fellow at the Australian Primary Health Care Research Institute, The Australian National University.

Image: Flickr / amy_b

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