Election places national health reform at a crossroads

Until the Opposition releases its health policy, it’s impossible to know what will happen to the health reform agenda. Alejandro Polanco

Prime Minister Julia Gillard has announced the federal election will be held in mid-September. So, what will happen to the ambitious program of health reform that the Labor government is in the process of implementing?

Medicare is popular with the community, but that hasn’t stopped health being an election issue in most, if not all, of the federal elections held over the last three decades. For most of that time, the major difference between the major parties has been the role of public finance vs private insurance.

But come the 2007 election, the focus shifted fairly and squarely to the well-being of public hospitals. This was somewhat puzzling because the responsibility and ownership of public hospitals rested with the states and territories. But they have relied on Commonwealth funding to support public hospitals since the mid-20th century, and increasingly so under Medicare with its universal access to free public hospital treatment.

As hospital costs outstripped the growth in state and territory revenue, governments blamed the Commonwealth for reneging on its share. Labor under Rudd promised to “end the blame game” between the states and the Commonwealth and embark on a new era of reform and co-operation.

The age of health reform

Fast forward to 2013 and Labor’s health reform program is well underway, with the 2011 National Health Reform Agreement providing its basis and framework. The broad vision is for a national system, with more local decision-making, accountability and public reporting; incentives for more efficient use of resources; and emphasis on out-of-hospital care and prevention.

Public hospitals have been reorganised into Local Hospital Networks (the names and the extent of reorganisation vary by state) with a high degree of local autonomy and accountability. But states and territories are still the public hospital and community services system managers.

The Commonwealth has committed to pay an agreed share of the growth in public funding to the states and territories. This share will be based on a price set according to the type of patient or treatment, and is intended to improve hospital efficiency. A new agency, the Independent Hospital Pricing Authority has been established and has already provided its first pricing determination for 2012-13. The determination for 2013-14 is to be released this month. Its work is well under way.

The complementary part of “a national system with local control” are Medicare Locals, 61 of which have been established across the country. Their role is to support all primary-care providers, liaise with hospitals, and identify and fill gaps in local services.

A second agency, the National Health Performance Authority has also been established. It has taken over the myhospital website, and released its first report on emergency waiting times in 2012. Its second report on primary-care providers is due soon.

Yet another such body is the Australian National Preventive Health Agency, which will manage national campaigns, and fund research and fellowships.

More to be done

So far, the focus of implementation has been public hospitals, their governance and funding. Presumably Labor will continue developing these reforms. Their initial reform plan is quite clear that the steps outlined above were not intended to be the end but rather the start of the process. And there are a number of issues that still need to be addressed.

Private hospitals, which are increasing in size and complexity of case-mix, have to be brought into the system. Although Medicare Locals have the potential to play a pivotal role, their ability to exert influence may be limited, as the arrangements for primary care and community services are still fragmented and responsibilities diffused throughout the system.

Funding streams have been kept separate and distinct across hospitals, medical services and pharmaceuticals, and there’s no flexibility to move money across programs or pool funds. And there’s been no attention how new technologies, often considered the major driver of increasing health-care costs, are used throughout the public and private systems.

The incentives for individual providers (in hospitals and in other services) remain unchanged, in contrast to reform efforts in other countries, which have a stronger focus on changing payment mechanisms.

The devil you know

Until the opposition releases its health policy, there’s limited information to gauge how they will approach the current state of the health system. And whether they will continue down the path already started or radically change direction.

Tony Abbott has been critical of the number of new agencies – and therefore new bureaucracies – created. What might we see dismantled? And would that affect the development of more transparency and accountability, trends that are well underway in other mature health systems? There’s a promise of more public say in the running of hospitals and schools – but will that mean further changes to governance?

Presumably, we can expect continued support for the private sector and the private insurance industry. But will it go as far as allowing an opt-out of Medicare in the form suggested by the reform commission, which was rejected by the Gillard government?

Perhaps the most encouraging promise so far is the Coalition’s pledge to support medical research funding and the implementation of recommendations from the McKeon review. Let’s hope that in this election, both parties support medical and health services research as the basis for continuing the development of our health system.