The federal budget contained a number of high profile announcements affecting the health sector, such as the Medicare benefits co-payments, the new medical research fund and changes to hospital funding. Less high profile, but also important, were the announcements regarding the pausing of indexation of some MBS fees and the thresholds for the Medicare levy surcharge and the PHI rebate.

There were also some important announcements about changes to the way the private health insurance industry will be regulated.


Regulatory changes announced

  • PHIAC to be abolished
    • Prudential regulatory functions to be transferred to APRA
    • Some functions to be transferred to the Department of Health (including risk equalization trust fund)
    • Price monitoring functions to be transferred to ACCC
  • PHIO to be abolished and functions transferred to the Commonwealth Ombudsman
  • Review of PHI regulatory framework

Timing and implementation

  • Proposed for 1 July 2015
  • But legislative amendments required for full implementation

Watching brief

  • Review of PHI regulatory framework
    • Possible red tape reductions
    • Prostheses reimbursement framework to be revised
    • Likely announcement regarding outcome of natural remedies rebate review
  • Split of functions between regulators to be determined during FY14-15
  • Transition impact to considered, in particular on industry specialization, staffing and regulatory approach
  • Potential changes to premium regulation process
    • Options to be developed
    • Regulator responsibility is yet to be determined (including the ACCC’s future role)