The healthcare sector is Australia’s biggest employer, employing 1 in 7 Aussies or roughly two million people.

Treasurer Josh Frydenberg announced last night that Australia’s health budget will top $132bn in 2022-23, up from $62bn a decade ago.

He said that rising healthcare costs, the expansion of the PBS scheme, the response to Covid-19 and mental health issues have all added to the need for increased funding.

Here’s a summary of where the healthcare budget funds are going to, and which ASX stocks could benefit.

Medicare and PBS

As usual, Medicare reimbursements takes a big chunk of the health budget, or around $31 billion in 2022-23.

This is an increase of $7.3bn compared with the previous year, reflecting the increased use of doctors and telehealth during the pandemic.

The budget has also allocated an additional $2.4bn over four years for new medicines added to the PBS (pharmaceutical benefits scheme).

Frydenberg noted that telehealth had been the most significant reform to Medicare since its creation, and was “the key landmark reform” within the government’s primary healthcare 10-year plan.

Since March 2020, more than 100m telehealth services have been delivered to 17 million people.

ASX telehealth stocks that could benefit from the ongoing shift towards telehealth include:

Global Health (ASX:GLH), a company that offers various telehealth solutions including Lifecard – an online facility allowing patients to provide relevant health information directly to their health provider.

Oneview Healthcare (ASX:ONE), which has a platform that helps healthcare workers conduct tele-consulting, caring for COVID-19 patients.

1st Group’s (ASX:1ST) platform capabilities, meanwhile, include but are not limited to an online directory of telehealth clinics and an appointment booking service.

Aged care

The government has implemented the first year of an $18.8 billion, five-year aged care reform program in response to the Royal Commission into Aged Care.

The reforms are based on five pillars – home care, residential aged care services and sustainability, residential quality and safety, workforce and governance.

The 2022–23 Budget further invests $20.1 million in this pillar of reforms, with the government’s total investment climbing to $129.9 billion over the next four years.

ASX aged care stocks that could benefit from this funding include:

Pure play aged care providers like Regis Healthcare (ASX:REG), Estia Health (ASX:EHE), and Japara Healthcare (ASX:JHC).

Telehealth tech plays that focus on the aged care sector could also benefit, and these include:

Intellicare (ASX:ICR), an SaaS telehealth company catering to the senior market, helping seniors to live independently at home, without the presence of caregiver.

PainChek (ASX:PCK) has a clinically validated smartphone app that can measure and detect pain in people who have trouble verbalising it, such as those with dementia.

HSC Technology Group (ASX:HSC), which has wearable devices and sensors (not cameras) to monitor seniors in their home and alert emergency services in the event of a fall or something similar.

COVID-19 vaccines and RAT (rapid antigen tests)

The government is providing an additional investment of more than $900 million on COVID-19 prevention.

More than 56 million vaccine doses have been administered around Australia, making us one of the most vaccinated nations in the world.

The government also said it wants to bring the production of the revolutionary mRNA vaccine technology to Australia.

All this new investment brings the total expenditure on COVID-19 vaccines to more than $17 billion since the pandemic began.

ASX stocks that could benefit from this include:

Biotech giant CSL (ASX:CSL), which has been hired by the Morrison government to produce the AstraZeneca COVID-19 vaccine since 2020.

IDT Australia (ASX:IDT), which had hoped to be involved in the government’s plan to bring mRNA research into the country. IDT’s submission was rejected, but the company says it’s continuing to progress on other submissions, such as Round 2 of the MMI translation stream.

Lumos (ASX:LDX), which has completed the development and verification requirements to support its regulatory submission for ViraDx. ViraDx is a 15-minute three-in-one COVID-19 and flu rapid antigen test used by healthcare professionals.

Atomo Diagnostics (ASX: AT1), manufacturer of rapid tests for HIV/AIDs as well as COVID-19. It listed in April 2020 soon after COVID-19 first broke out.

Biotech research grant

As part of last night’s Budget, the government also announced a new program called Biotechnology in Australia – Strategic Plan for Health and Medicine.

The program is designed to support the development of a vibrant and thriving biotechnology sector in the country. It will encourage the commercialisation of products that are invented and developed here.

ASX stocks that could benefit include:

Mesoblast (ASX:MSB), which has ongoing clinical research activities in the country to commercialise a drug that treats GVHD (graft versus host disease).

Cogstate (ASX:CGS), which has recently increased its investment in Alzheimer’s disease research.

MediBio (ASX:MEB), which is conducting research into AI and deep learning algorithms to identify biological markers and patterns, to aid in early detection of mental health conditions.

The hot immuno-onclogy sector, which includes clinical stage biotechs such as Imugene (ASX:IMU) and Immutep (ASX:IMM).