Funding health is one of the biggest challenges facing Tasmania, as Eric Abetz prepares to hand down his first budget

With an interim state budget to be handed down on Thursday, a peak health body fears Tasmania's public health system won't receive enough support to address ballooning demand.

Government policies to rein in spending — such as staff vacancy controls and efficiency measures — are already affecting service delivery, according to the Australian Medical Association (AMA).

AMA Tasmania president Dr Michael Lumsden-Steel said staff were "delaying decisions about anything that might cost money".

While Dr Lumsden-Steel said this budget was "critical" for health, he had little hope of it having anything other than short-term supports — or it may even introduce cuts — after Treasurer Eric Abetz foreshadowed a focus on reducing spending.

Dr Lumsden-Steel said funding problems were not unique to T