Welcome to the The Conversation’s Election 2013 State of the Nation essays. These articles by leading experts in their field provide an in-depth look at the key policy challenges affecting Australia as the nation heads to the polls. Today, we examine the issue of health care, from service reform and hospitals, to balancing the budget, and keeping Australians healthy.
This year is shaping up to be one of the first federal elections in decades where health is not a headline issue. So far, both parties have avoided grand promises. And the partisan rancour that once marked Australian health policy has diminished.
A decade ago, cuts to Medicare funding had proved a major sore for the Howard government. A decline in bulk billing was causing electoral pain, driven by the Howard government’s slow squeeze on payments to GPs. Tony Abbott made his name as the health minister tasked - and funded - to remove this electoral liability. He restored bulk billing levels and declared himself “the best friend Medicare ever had”.
Both Kevin Rudd and Abbott have a history of grandiloquent claims in health services reform: Abbott declaring that the only reform worth doing was removing control of hospitals from the states (until swiftly silenced on the issue by John Howard). Rudd combined grand promises of sweeping health system reforms with the threat of a referendum to seize state hospital powers.
These ambitions have disappeared in the current campaign. It may be that the Australian public, and politicians, have been exhausted by the recent reform agenda. Changes have been implemented at the organisational and funding level, with reform objectives getting lost in the mire of federal financial relations. It will take years before their effects are clear. And the benefits for consumers are taking even longer to trickle down.
So, what are the key health issues that could emerge during the election campaign?
Bipartisan support for Rudd health reform
The Coalition has been silent on Rudd and Julia Gillard’s shift of hospital funding towards “efficient pricing”, where hospitals are paid a standard price for each service they provide. This rewards hospitals which can provide services for less than the standard price.
Rudd’s hospital funding reforms will gradually increase the proportion of hospital funds coming from the Commonwealth government. Again, since the states signed off on this deal, it has become bipartisan policy.
Labor also set up Medicare Locals to coordinate primary care - general practitioners, allied health and pharmacists - and to link these community services with hospitals. For a long time the Coalition (egged on by the Australian Medical Association) threatened to abolish this “new level of bureaucracy”. But Coalition and AMA hostility has been receding.
Medicare Locals are now well established and many are successfully pulling together our fragmented health services. The threat of abolition has turned into a promise of a review, which would centre on the regions where the Medicare Locals have been less successful.
Other recently created agencies may be more vulnerable – the Australian National Preventive Health Agency (2011) and the Australian Commission on Quality and Safety in Health Care (2011) through to the Independent Hospital Pricing Authority (2011) and the National Health Performance Authority (2012).
However, each agency has responsibilities under the complicated federal arrangements negotiated by Rudd and Gillard. So simple abolition may prove difficult.
Both parties played a catch-up game with mental health in the 2010 election, offering counter bids to fund adolescent and other early-intervention services, such as Headspace and Partners in Recovery, local consortiums of non-profit mental health providers led by Medicare Locals to target areas of high need.
Delivery on these new services has been uneven, and both sides of politics have lost interest. Mental health advocates have now diagnosed their own malady: obsessive hope disorder.
Public hospitals and their waiting lists have usually provided the storm centre of political controversy. The “blame game” of buck-passing between states and federal government targeted by the first Rudd government is still thriving.
The Coalition demand for a shift towards local control of hospitals, with a return to the old system of local boards, sits awkwardly with the new reform structures, which have created several layers of federal oversight. The strongest demand from state hospital systems is for a breathing space, rather than another round of radical reform.
Despite the noise, for the moment, the subsidy of private health insurance has shifted to a means-tested formula. Individuals with incomes below $84,000 now receive a 30% rebate, and the subsidy gradually reduces to zero for incomes greater than A$124,000.
While the Coalition has promised to remove the means test, this has been postponed to an indefinite future, when budgetary situations justify the extra cost. Unless the more lurid warnings of a mass exodus from the private health funds prove correct, the current compromise – of means testing rather than abolishing the rebate – is likely to remain.
Policies around prevention are the main divide between the parties. The half-hearted bipartisan support for plain packaging of tobacco products has been crumbling. Tony Abbott and Joe Hockey have attacked the rise in tobacco excise as merely another Labor tax.
For sections of the Coalition, this is part of a sharpening of the divide around “nanny state” measures. The Australian National Preventive Health Agency may become a symbolic victim of this campaign. However, the federal government is now so bound in partnership agreements with the states on prevention, these functions would have to be recreated – if only to report on how Commonwealth funds are spent.
The health system faces major challenges in four areas: none is likely to figure much in the election campaign. They will provide the main challenges to a government trying to control spending while improving care.
The relationship between public and private sectors
This issue has been swept under the carpet by both sides of politics. The majority of Australian health services have always been delivered by the private sector (including GPs). Health-care services have been paid for with a complicated mix of public and private funding.
Recent years have seen a major shift in specialist services to the private sector. Public hospitals have become the domain of more complicated medical admissions, while elective surgery has continued a long-term move to the private sector. This has fuelled out-of-pocket payments. Services have moved outside the reach of many and the cost of illness has returned as a cause of poverty.
Medicare was well-designed to meet the health problems of the 1960s and 1970s. But we now face a growing burden of chronic illness for which our health services and funding arrangements are ill-equipped. Nor has Medicare kept up with growing costs that fall on the consumer, such as co-payments for pharmaceuticals and the lack of coverage of dental services.
A broad-based campaign to “mend Medicare” - drawing in an impressive range of interest groups, ranging from Catholic Health through consumer organisations - is calling for a fundamental rethink. However, we are unlikely to see much progress until the glare of the election campaign has passed.
Balancing the health budget
Whatever the truths of the “debt and deficit” debate, rising healthcare costs are a major challenge. Health costs increased more than 74% over the past ten years - far faster than GDP and other areas of social expenditure.
Again, it is hard to put any partisan gloss on these complex issues: promises to drastically cut the Commonwealth Department of Health as “it doesn’t actually run a single hospital or nursing home, dispense a single prescription or provide a single medical service” may provide nice rhetorical flourishes, but would not touch the real cost drivers.
The temptation will be to make cuts rapidly, primarily as budget measures. In the past, this has led to attacks on low-hanging fruit – payments to GPs and investment in training new medical professionals, for instance – while avoiding much larger problems.
Health is a difficult terrain, with well-organised interests prepared to fight to defend great personal and corporate investments in current patterns of care. The most likely road to success will be one that accepts that overnight success – especially major cuts in expenditure – gives illusory gains.
Consumer-directed payment systems
We are currently seeing a major shift in the funding of social care services - this is one of the possible drivers of real reform. Top-down systems focused on funding service providers are gradually being displaced by “consumer-directed” payment systems. This started in aged care on July 1 and will continue as DisabilityCare Australia (the former National Disability Insurance System) gradually rolls out, again with bipartisan support.
This will create new possibilities for health service consumers. Will people who are used to organising and purchasing their own personal care services be content with a centralised health care funding model that ignores consumers’ needs? This may provide the largest challenge to a system packaged primarily to suit service providers, whether state governments, hospitals or Medicare.
Health may not arouse the same political passion as in early elections. An optimistic reading is that we have finally moved beyond the standoffs over the survival of Medicare and the need for a vibrant private sector. On September 8, Australia’s next government will face crises of cost and access that will need fresh thinking, and considerable political courage.
Jim Gillespie’s latest book Making Medicare: The Politics of Universal Health Care in Australia, co-authored with Anne-Marie Boxall, will be published next month by UNSW Press.