How psychologists responded to better access

CHE RESEARCH BITES

By Nicole Black, Anthony Harris, David Johnston, and Trong-Anh Trinh

19 January, 2026

Medicare expansions aim to improve access by reducing costs for patients. But affordability only translates into access if the workforce expands to meet higher demand. Australia’s Better Access Initiative, introduced in 2006, was one of the largest such reforms, extending public subsidies to psychological therapy nationwide. Examining how the workforce adjusted provides important lessons for future health system investments.

This new study used national administrative tax data and Census records to track psychologists’ workforce participation, location, and earnings before and after the reform, compared with similar healthcare workers not affected by the policy.

The results show a large and sustained workforce response: a 44% increase in the number of psychologists working in allied health settings. This expansion was driven primarily by trained psychologists drawn into clinical practice who were previously working outside the sector or not in the labour force.

The reform also reshaped where psychologists worked. Even without explicit rural incentives, the Better Access Initiative increased the likelihood that psychologists practised in non-metropolitan areas. By increasing demand and reducing out-of-pocket costs for patients, the policy appears to have made providing services outside major cities more viable.

At the same time, psychologists’ earnings rose in the years following the reform, reflecting strong demand and gradual supply adjustment. These higher returns likely played an important role in attracting new entrants and encouraging workforce re-entry over time.

Overall, the findings show that Medicare expansions can causally increase workforce capacity and improve geographic accessibility. As governments consider similar investments in other areas of healthcare, understanding how providers respond is crucial for designing policies that improve access while delivering value for public spending.

Black, N., Harris, A., Johnston, D. W., & Trinh, T. A. (2026). Workforce impacts of subsidised mental healthcare: Evidence on supply, geographic distribution, and earnings. Journal of Health Economics, 105, 103102. https://doi.org/10.1016/j.jhealeco.2025.103102

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CHE Research Bites are short, easy-to-understand summaries of our recent academic papers highlighting new evidence and insights on topical issues in the health and healthcare sectors.

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