2017-2018 Federal Budget Expert Analysis - Health

Key points

  • Medicare Levy to increase by 0.5% from 1 July 2019

  • Medicare Levy low-income thresholds increased

  • Medicare Guarantee Fund to be established to ensure Medicare is fully funded

  • The freeze on the indexation of the Medicare Benefits Schedule (MBS) has been lifted

  • Retention of bulk billing incentives for diagnostic imaging and pathology services

  • Affordable access to medicines continued

The Medicare levy is to increase by 0.5% from 2% to 2.5% from 1 July 2019. This increase is to ensure the NDIS is fully funded and is to apply in line with funding requirements. The current rules around levying of the Medicare levy remain unchanged.

The low-income thresholds for the Medicare Levy will be increased.  The threshold for singles will be increased to $21,655 and the family threshold will be increased to $36,541 plus $3,356 for each dependent child or student. For single seniors and pensioners, the threshold will be increased to $34,244. The family threshold for seniors and pensioners will be increased to $47,670 plus $3,356 for each dependent child or student.

The Medicare Guarantee Fund is being established to secure the ongoing funding of the Medicare Benefits Schedule (MBS) and the Pharmaceutical Benefits Scheme (PBS).  It will be funded via the Medicare Levy (excluding amounts set aside for the NDIS), and a portion of personal income tax receipts.

Indexation of the MBS will be reinstated with indexation of standard GP and speciality consultations resuming from 1 July 2018 with specialist procedures and allied health indexation resuming from 1 July 2019.

Bulk billing incentives will be retained for pathology and diagnostic imaging including blood tests, x-rays, scans and pap smears.  Indexation will be introduced for targeted diagnostic imaging services including mammography and CT scans from 1 July 2020.

Through agreements with the Pharmacy Guild, Medicines Australia and GBMA, the prices of certain medicines are being reduced in order to make medicines more affordable. The Government has committed $514m to list Sacubitril with Valsartan (Entresto) for patients with chronic herart failure which will benefit around 60,000 people. The Government is also encouraging the uptake of generic medicines.


LexisNexis Capital Monitor Summary:

Spooked by the effectiveness of Labor's "Mediscare" campaign at the 2016 election, the Government has moved to neutralise this as an ongoing issue, while maintaining the appearance of fiscal responsibility. The Government promises to preserve Medicare and the NDIS, while seeking to make it much clearer to the public just how much healthcare costs. The Budget establishes the Medicare Guarantee Fund, to lock in ongoing funding for Medicare and Pharmaceutical Benefits Schemes, and promises to fully fund the NDIS. The MBS, PBS and NDIS are to be funded by an increase of 0.5 per cent in the Medicare levy from July 2019 - after the next Federal election.