Federal

Sickness in the System

An argument for centralised health care.

This was probably our country’s best chance for real reform in the health system. Instead we’ve had another abject failure from the Labor government at the recent Council of Australian Governments meeting (COAG). Patients and patients-to-be should be rueing another opportunity lost to tackle in the single biggest challenge facing our clunky federation. The issue is that just about everyone in health policy knows that a Commonwealth takeover of health is the only viable solution for a system needlessly fractured, but no one in the government has the guts to say it anymore. As a consequence we remain unable to keep any level of government responsible or accountable for delivering better care in this country.

Gillard’s health proposal is even weaker than Rudd’s original deal. Gillard is moving from a 40/60 federal-state funding agreement to a 50/50 agreement on all future costs. The money going into a single pool, which will mean that bad systems like Queensland and New South Wales will be propped up by the likes of Western Australia and Victoria who have the money and know-how to run a good system. The plan doesn’t even try to deal with linking primary care with hospital care and is void of any mention of ageing, dentistry and mental health.

The case for reform is stark and split into three arguments. First, health costs will continue to rise as the population continues to age and medical procedures become more complex, but only the Commonwealth collects taxes that will grow in-line to meet this. Treasury figures show that by 2050 government will pay in excess of 300% more per person on health services. This burden can’t be met by state governments because, aside from untied GST handbacks, the states have to rely primarily on customs and duties (or Commonwealth handouts) for their spending money, which have limited potential to be increased and to be autonomous.

Only the Commonwealth can collect income tax. This imbalance means that they receive 80% of all tax in this country. They need to be paying for this otherwise entire state budgets will be consumed by the system. Despite the brutal logic of these numbers, Gillard has tried to pretend it is a big reform to move from 40% to 50% of future funding. It is nowhere near enough and she knows it. Put simply, a national takeover is imperative because only the national government can afford to pay for the public health system anymore.

The third case for health reform is that the existing split between primary and hospital care gives no incentive for any level of government to invest in programs which keep people healthy and out of hospital (and save us all money). The national government almost solely pays for primary care like GP clinics, aged care, mental health and the Pharmaceutical Benefits Scheme (PBS) to keep people’s sickness becoming hospitalizations whereas the states own all the hospitals and generally run policy in this area.The second reason is born out from the first. Because the national government has the lion’s share of revenue and the states have the default constitutional responsibility for running the health system, the states have been heavily reliant on grants from the national government to keep the system chugging away. Unfortunately this means that whenever there are shortcomings in the system it is next to impossible to pin down which level of government is responsible. The Commonwealth always claims the states have managed their grants and resources poorly. The states argue they aren’t being given enough to manage effectively with. Hence why Gillard calls it the “blame game” and hence why going for a totally even funding split will be a disaster for patients and taxpayers who want to know definitively who is responsible for change. Gillard may say ‘the buck stops with me’ but she will almost definitely change her tune when she has to take full responsibility for the agony rife in a failing health system.

What this means is that the national government doesn’t use the savings to keep people from needlessly ending up in hospital, removing the benefits that should be keeping the primary health dollars rolling in. On the other hand the states can’t coordinate levels of care to move people from the wards into cheaper and more appropriate theatres like aged care and mental health facilities. Emergency rooms are clogged up with people who wouldn’t have been there if they had received the right basic care earlier, and wards are filled with the aged and mentally infirm who generally benefit from community (as opposed to medical) environments. Current patients suffer, future patients suffer and the taxpayer suffers. This is perhaps the great tragedy of Gillard’s health agreement. At least Rudd made an effort to tackle this deeply entrenched flaw in the health system.

Tony Abbott has been in favour of a federal takeover of the states since he was Health Minister in the Howard Government. Unfortunately he faced a COAG room with wall-to-wall Labor Premiers who refused to give up their single largest public power and assets: their hospitals.

After Rudd’s election, the nation finally had total party unity across all levels of government and the best opportunity ever presented to have a national takeover. He promised he was even prepared to put it to the people in a referendum. But, like so much of his Prime Ministership, as soon as the moment of delivery came he buckled into a half-baked approach which even then he spoiled in a needless show-down with Colin Barnett over GST revenue. This latest conference was really our last chance for a very long time to have a relatively amicable bunch of states approve a national takeover, and Gillard stuffed it up. After the Coalition wins the NSW state election and COAG is once more divided we may have to wait for Abbott as PM before we see a real commitment to reform. For now what we’re left with is a system that doesn’t work now, won’t work in the future and a government unwilling to do anything about it.

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One thought on “Sickness in the System

  1. Pingback: Current Issue « State

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