Massive saving but not very feasible?

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Government spending on health would be slashed $265 billion over three years if government adopted a proposal from the Liberal Democrats, according to a costing done by the Parliamentary Budget Office (PBO).

Liberal Democrat senator, David Leyonhjelm, requested the just released costing last year.

The request included two options. The first was based on the complete abolition of federal government spending on the PBS, Medicare, the private health insurance rebate, the delivery of 'health services', preventative health and medical research. The policy option only allowed for ongoing federal health spending on infectious disease, health service standards, health statistics and radiation protection.

According to the PBO, adoption of the policy framework would cut federal health spending by over $265 billion over three years, comprised of $262 billion in program spending and almost $4 billion in departmental expenditure.

The costing does not include any allowance for the financial impact of essentially abolishing health programs that provide funded access to health care, including doctors and prescription medicines. However, the second option costed included the creation of a medical expenses subsidy.

Under the proposal, half the saving generated by abolishing federal health programs, or around $132 billion, would be a means-tested direct subsidy to consumers for health costs.

According to the PBO, "The financial implications for both options are considered to be of very low reliability. While estimates are mainly based on the Department of Finance aggregate expenditure estimates, given the magnitude of the change in Commonwealth policy it is difficult to estimate the impact with any certainty.

"No assessment of the feasibility of each option has been undertaken or whether either option could be implemented from the specified commencement date of 1 July 2017."