Budget outcome reveals pandemic jump in health spending

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Publication of the 2019-20 Final Budget Outcome has revealed the federal government's spending on health rose almost $7 billion compared to the previous year.

Spending of $87.023 billion was up from $80.196 billion. It was also over $3.5 billion higher than forecast in the Mid Year Economic and Fiscal Outlook.

The higher than expected spending on health was attributed to $2.9 billion in payments to cover the cost to diagnose and treat COVID-19. There was another $2.1 billion for the procurement of personal protective equipment.

The Final Budget Outcome also appears to confirm the pandemic's variable impact on individual public health programs.

Spending on the 'medical services and benefits' sub-function, which is significantly comprised of Medicare, increased in 2019-20 but was lower than expected.

Spending on the sub-function rose from $31.964 billion in 2018-19 to $32.668 billion in 2019-20. However, it was over $900 million lower than the $32.668 billion forecast in the Mid Year Economic and Fiscal Outlook.

The lower than expected result could be due to the pandemic and the imposition of social restrictions that reduced the number of people engaging with healthcare professionals.

In contrast, spending on the 'pharmaceutical benefits and services' sub-function, which is primarily comprised of the PBS, finished the year almost $900 million higher than in 2018-19 and $347 million higher than forecast in the Mid-Year Economic and Fiscal Outlook.

The outcome could be linked to the surge in demand for medicines in the early stages of the COVID-19 pandemic.