Budget cuts could hurt regional health

RURAL and regional pathology and radiology services could face downgrades or closures if the Turnbull government gets Senate approval for $650 million of subsidy cuts from July.

Announced in Treasurer Scott Morrison's mid-year budget update on Tuesday, the cuts to pathology and diagnostic imaging subsidies would help fund a $627 million program to list new drugs on the Pharmaceutical Benefits Scheme.

Health Minister Sussan Ley defended the cuts on Wednesday, saying they were to subsidies for large pathology companies, not rebates for people.

"The decisions they (the companies) make about what they fund and what they price are matters for them," she said.

Australian Medical Association president Associate Professor Brian Owler dubbed the exercise a "GP co-payment in disguise".

The AMA, the Rural Doctors Association of Australia and Royal Australian and New Zealand College of Radiologists all said they had not been consulted about the change.

RDAA president Ewen McPhee said the move was part of a wider and "concerning trend of successive governments" to make health policy through budget decisions rather than solid evidence, and he was concerned large pathology and radiology companies would see their margins contract because of the cuts.

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"Rural centres are likely to be on the hit list as they are the highest cost for the lowest return," he said.

"I guess for rural people, we won't know what the effects are immediately, but ultimately it either means a reduction in availability or access to those services."

The government also plans to cut about $595 million from health and aged care workforce funding, with $225 million of those funds going to new rural health training programs.

Dr McPhee said while he welcomed the training funding, there was a risk of "perverse outcomes" when budget decisions replaced evidence-based policy.

Opposition Leader Bill Shorten said Labor would examine the fine print of the government's proposals and the party's initial instinct was to "stand up in defence of Medicare".