Australian Economy

Cutting mental health rebates would cause great harm

Mental health has been a focus across the COVID-19 pandemic, with increased incidence of anxiety,
depression, domestic violence and marital breakup. Strange then that the federal government would be considering cuts to Medicare-funded services for mental health treatment.

The pandemic has taken a shocking toll on our mental health.

The pandemic has taken a shocking toll on our mental health.

The 2021 census reveals that about 2.2 million Australians (one in 12 people) report a chronic mental health condition. This is consistent with other evidence. In 2011, the Australian Institute of Health and Welfare calculated mental ill-health as the third-highest burden to the community. When an individual’s mental health is compromised, this impacts the individual, their family, support networks and the broader community. Mental health is also integral to economic
participation and productivity.

However, the incidence of anxiety and depression was increasing within our community even before the pandemic.

In 2016, serious mental ill-health was estimated to cost the Australian economy almost $60 billion and 6 per cent of GDP. Unsurprisingly then, effective psychological treatment has ripple effects through families and the community. A report commissioned by Beyond Blue in 2014 demonstrated that for every dollar spent on implementing an appropriate mental health treatment, on average, there was $2.30 in productivity gains.


In 2020, an inquiry into mental health in Australia was undertaken by the Productivity Commission. Two of their recommendations were to address healthcare gaps in community settings and consider increasing the number of Medicare rebated psychological services.

Indeed, a simple and cost-effective way to address existing gaps in accessible and affordable mental
health care is to permanently increase the number of Medicare sessions for psychology services.

To date, psychology treatment within community settings has been hampered by the inadequate
number of sessions rebated under Medicare: at 10 per year. During the pandemic the federal
government increased this to 20 sessions per year which assisted psychologists to more effectively
complete treatments. Alarmingly however, these extra sessions are due to cease in December 2022.

An essential question when deciding whether to invest in a permanent increase in the number of
Medicare rebated sessions for psychology treatment is a cost/ benefit analysis. Research convincingly demonstrates that psychological therapies provide relief of suffering and benefits the
community, in terms of wellbeing and economic productivity.

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