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Changes in health spending

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Restricting the net medical expense tax offset

In a move that some commentators have warned could increase pressure on public health services, the government has announced plans to means test the net medical expense tax offset (NMETO) and reduce the amount available.

From 1 July 2012, the offset will only be available to people with adjusted taxable income below the Medicare Levy Surcharge threshold – $84,000 for singles and $168,000 for families and couples. The offset will only be available on eligible expenses over $5,000 (up from $2,000) in a financial year.

The NMETO rate has halved from 20% to just 10%. This will potentially affect all taxpayers and is a double blow when combined with the cuts to the Private Health Insurance Offset.

And in further moves, the private health insurance rebate will no longer be paid for natural therapies, unless the chief medical officer decides that they are "clinically effective".

Private health insurance rebate

As previously announced, from 1 July 2012 the 30% rebate on private health insurance will be phased out for family who earn more than $150,000. A strategy to save you a bit of money may be to prepay 12 months of premiums before 30 June 2012 and access the 30% government discount. For example, if a family health insurance policy costs $2,500, this is a saving of $750.

Improving access to dental services

The government plans to spend $346 million over the next three years to reduce the public dental waiting list. This is on top of a $10.5 million package to promote better oral health.

Dentists stand to gain from both a $77.7 million package designed to increase numbers in regional, rural and remote areas, and $81 million allocated to boost training for graduate dentists and therapists.

Boost for rural GPs

The budget contains provisions to inject almost $40 million into the general practice rural incentives program. This seeks to assist doctors who want to set up in regional communities.

Infrastructure projects to be implemented

A total of 76 infrastructure projects in regional Australia will receive funding of $475 million, part of a $5 billion Health and Hospitals Fund. An additional $19.8 billion will be directed to public hospitals as part of the National Health Reforms which will come into effect by 2019-20.

The government has allocated $49.7 million to expand the national bowel cancer screening program.

Cuts to some programs

The government will restrict Medicare rebates for cosmetic surgery.

The introduction of caps on a range of procedures covered by the extended Medicare safety net will create savings of $96.5 million over four years for the government.

Cuts were also announced to funding for:

  • multipurpose services
  • lead clinician groups
  • GP super clinics
  • health workforce programs
  • the Practice Incentives Program
  • the National Health Call Centre Network.

Amendment to GST-free health supplies

The government has further amended its 2011-12 budget measure in this year’s budget. A health supply by a health care provider paid for by a statutory compensation scheme operator is GST-free if the underlying supply from the health care provider to the individual is also GST-free.

 National disability insurance scheme

The establishment of a National Disability Insurance Scheme has been a hot topic of discussion in the lead up to the election. The budget provides for $1 billion to be committed to the first stage of the scheme over a four year period.

The first stage will be launched in up to four locations. It will provide personalised care for 10,000 people with significant and permanent disability from 2013-14. This will be expanded to support 20,000 people from 2014-15.

Individuals eligible for the scheme will be entitled to reasonable and necessary care and support that reflects their specific circumstances.

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