Gittins picks up CPD’s recent discussion paper and he writes in The Sydney Morning Herald and The Age:

So, just as the Libs now accept the legitimacy of Medicare, so Labor now accepts the legitimacy of taxpayer-subsidised and enforced private health insurance. One of the few remaining ideological gaps has greatly narrowed.

The pity is that, as John Menadue and Ian McAuley explain in a new paper published by the Centre for Policy Development, subsidising private health insurance doesn’t only advantage the better-off (including yours truly), it makes healthcare more expensive than it needs to be.

Healthcare costs to the community – whether funded by the taxpayer or privately – are already growing rapidly and are set to keep outpacing most other costs, becoming by far the greatest pressure on government budgets.

That makes healthcare the greatest source of pressure for rising taxes. Nothing wrong with that – provided we get value for money. But that’s just where private insurance lets us down.

Howard’s subsidy of health fund premiums was really a vote-buying election promise and a gift to the well-insured Liberal heartland. He tried to justify it by claiming that getting more people into private insurance would relieve the pressure on public hospitals.

As all the experts predicted at the time, it didn’t work. It shifted patients from public to private, but it also shifted doctors from public to private, leaving public queues little changed. It did, however, subsidise the better-off in their efforts to jump the queue.

As anyone who’s done high school economics could tell you, the benefit from a government subsidy of the price of something is shared between the buyer and the seller. The health funds have become a lot more profitable than they used to be.

All arrangements that separate the true cost of something from what you appear to pay for it at the counter encourage overconsumption, overservicing and overcharging. That’s true of Medicare as well as private insurance.

But unlike private insurance, Medicare has countervailing advantages. Being a single national payer, it has lower administrative costs and, more to the point, greater ability to counter the market power of healthcare providers.

Our many private health funds have little ability – and little incentive – to counter overservicing and overcharging. It’s a well established principle in health economics that those countries with the greatest reliance on private insurance to finance healthcare have the most expensive healthcare – without a commensurate improvement in their health. The United States is the classic case.

Using carrots and sticks to prop up private insurance not only subsidises a two-class health system, it delivers its greatest benefit to the incomes of medical specialists. Great idea.

“While 64 percent of Australians live in state and territory capital cities, 74 percent of private hospital beds are in those capital cities. By contrast, the supply of public hospital beds is skewed away from capital cities. Because people in country and remote regions are generally not as well-off as city dwellers, this regional imbalance amplifies inequities already in PHI subsidies. Prosperous urban dwellers are being subsidized by less well-off people in rural and outback Australia.”

Read the full article in the Crikey’s health blog, Croakey here 

“We are not advocating what some may call “socialised medicine”. Private hospitals serve an important function: they should be funded by means other than through private Insurance.

Nor are we calling for universal “free” health care — there are many sound arguments in favour of those with means paying more from their own resources, without private or public insurance.

Our main message is that to the extent we choose to share our health care costs, a single national insurer provides the most efficient and equitable means of doing so.”

Read the full article on Crikey here

Follow the link to read Menadue and McAuley’s full 18-page discussion paper Private health insurance: High in cost and low in equity

One in three Australian live in rural and remote Australia but they are often overlooked by a public health sector that is geared towards servicing city dwellers and securing hospital resources. Critical areas such as rural health, Indigenous health and mental health are squeezed out of the equation.

In his paper Beating the hospital obsession; the key to rural health reform is in primary care, John outlines the minority Labor Government’s proposed reforms and actions thus far, and how concentrating on an integrated approach to primary care and the upskilling doctors and nurses will be key to driving real change.

Here’s a summary of what John had to say…

- Power is the single biggest problem in the health sector, which is driven by providers and stakeholders who direct health resources to areas of self-interest

- Thanks to the rural independent MPs who hold the balance of power, Australia has a ‘once in a lifetime’ opportunity to effect significant rural health reforms

- We need to stamp out inefficiencies in our health system. The CPD estimates that $10 billion or 10% of our total health expenditure is wasted due to inefficiencies.

- Move away from hospitals to instead encourage primary care and the provision of integrated care. This means upskilling doctors and more nurse practioner-led clinics. There are more doctors per capita in Australia compared to New Zealand, the US and the UK, so the next challenge is to improve General Practice and make it more appealing as a long-time profession

- Improving health outside of the health portfolio. Social factors such as poverty, prevalence of junk food and alcohol in our culture, education and childcare all impact on health. The NBN also offers opportunities in improve health services, particularly in remote areas, in terms of facilitating online payments and the transfer of data-rich information in real-time high-definition videos and images.

READ the summary transcript of John Menadue’s presentation here.

WATCH the video presentation John Menadue delivered at the conference here.

IN THE NEWS: John Menadues’ comments get picked by Melissa Sweet in Crikey here and here.

Here is an edited version of John Menadue’s speaking notes:

There are systemic problems in our health sector – a lack of guiding values and principles, governance confusion, exclusion of the community from health decisions, rapidly rising costs and the obsession with hospitals. We are bedevilled by powerful special interests.

But what are the particular issues which advocates of rural health reform should promote?

First, the driver of rural health reform must be primary healthcare with particular attention to the Medicare Locals and the roll out of the GP super clinics. The MBS schedule should be amended and contracts written with corporate and non-corporate general practices to promote integrated care.

Second, there are many health determinants and services outside the health portfolio that are vital – NBN, prevention and transport. Paper records are problematic enough in the cities. They slow down information transfers even more severely in the bush.

Third, unless there is an informed and open discussion about how the health dollar is spent, the media-savvy and the special interests in the city will squeeze out the major health priority needs in this country – rural health, Indigenous health and mental health.

Fourth, we need an upgrading and re-skilling of tens of thousands of people in the health sector who could help fill the gaps in the delivery of health services for country people. Particular attention must be given to expanding the roles of nurse practitioners, other allied health, pharmacists and ambulance officers. We don’t so much need more doctors; we need an up-skilling of tens of thousands of other clinicians. We need also to make sure we make best use of the skills they already have.

Disappointment of health reform

I was sceptical about the claims of Kevin Rudd last June that the health reforms were ‘the greatest since Medicare’.  I have seen little since then, including the Commonwealth Government announcement in association with the premiers last month that would change my mind. It is more muddling through.

What a disappointment it has been since the federal government came to power in 2007 with what I hoped were well considered strategies for healthcare reform and the means to implement them.

But before I become too pessimistic, let me acknowledge some incremental improvements that have been announced in recent months. They will be valuable – activity-based hospital funding, some local governance of hospital networks, primary healthcare organizations to aid primary healthcare integration and broader health service planning, including I expect, full Commonwealth responsibility for aged care.

At last there is some progress on e-health, although only this week the Victorian Government and the Liberal Opposition in NSW expressed reservations about the new systems being introduced in those states. There is clearly more money, but I believe that we are not getting value for the money we already spend. A survey of Canadians over 45, who were experienced healthcare users, showed that 58% did not believe that healthcare would improve if the government spent more money in health. I believe the same is true in Australia. We should be spending existing money much more effectively. We waste about $10 b pa or 10% of our total health expenditure.

Major problems and omissions remain

• It is not at all clear that the government has any clear values and principles which guide its health policies, e.g. universality, equity, efficiency – both technical and allocative – subsidiarity and single-funder. Without such guiding principles health policy will continue to be subject to managerial fads, responses to hot-button issues and the placating of noisy and selfish special interests.

• Governance problems between the Commonwealth and the States remain.  A 60/40, 40/60 or a 50/50 split doesn’t make any difference to divided responsibility. It seems that the Australian public are better prepared for reform than the Government with a strong majority in most states favouring a Commonwealth takeover of state hospitals. In addition to the unresolved Commonwealth/state issue, I have also come to the view that the traditional minister/departmental model in health is no longer viable given the size of the health sector, its complexity, its inertia and the power of vested interests. (Professor Garnaut refers to these interests in carbon pollution and mining as ‘diabolical’. They are more subtle, but just as diabolical in health.) For these reasons I have proposed a statutory Commonwealth Health Commission composed of professional and independent people, but subject to government guidelines to administer health programs in Australia. This would be similar to the way the Australian Reserve Bank acts in the monetary policy field. The health sector has broadly agreed for a decade about the general shape of necessary reform, but it has not happened because of the political power of health lobbyists to preserve corporate welfare, high prices and work practices, particularly by specialists who exploit their market power.

• The community is still largely excluded from health discussions and decisions. The Prime Minister and the Minister deal overwhelmingly with special interests and ignore the community except for some token photo opportunities, mainly in hospitals.

• Costs are continuing to rise at 5% real per annum. It is not, as often suggested, that it is ageing that is driving up healthcare costs. We all see our doctor or specialist far too much, across all age groups. In 1984/85, Medicare services per person per annum were 7.1 services.  By 2007/08 it had increased to 13.1 services and this increase was across all age groups. This is a doubling over 13 years of the number of times we see our doctor. The cosy deal between the government and the Australian Pharmacy Guild, results in Australian taxpayers and consumers paying $300 m more each year for statins compared with England and Canada. This is only for statin drugs which represent only about 16% of the costs of the PBS. We can’t afford these exploitive high prices.

• Fee for service is quite inappropriate for chronic care. It has perverse incentives. It encourages doctor shops and ‘turnstile’ medicine. It discourages integrated care. Present payment methods are underwriting the rapid growth of corporatisation of general practice in Australia, up to 30% in some metropolitan areas.

• The health workforce is still mired in 19^th Century work practices.

• 70% of health expenditure in Australia is for treating chronic disease – heart, cancer, neurological, mental and diabetes. But the public campaign, particularly in the media, focuses on waiting lists and emergency departments in hospitals.

• Dental health is still a Cinderella as is mental health, although we may hear more about the latter in the near future.

• But probably the most serious problem is the continuing obsession with hospitals, an obsession shared, I must say, by the media, many health professionals and the community. According to OECD data, we have for example more acute beds per 1000 of population than in the UK, Canada or Sweden. But the continual drum-beat in Australia is for more hospital beds to accommodate particular medical fashions. In the last decade caesarean sections have increased by about 50% and joint replacement by almost 70%.  We all know that about 10% of people in hospitals would not be there if there were proper alternatives available, and that it costs about ten times as much to treat a patient in hospital compared with treatment in the community. The Productivity Commission in 2008 said that 450,000 admissions to public hospitals could have been avoided if there was better community care in the three-week period before hospital admission.

Private health insurance and country people

A particular issue which should concern country people is the inequity and inefficiency of the $5 billion p.a. government subsidy to high cost private health insurance companies. Put simply, this corporate welfare enables relatively wealthy people in the cities to jump the queue for elective surgery in private hospitals and it deprives public hospitals of resources.  Recent data from the Australian Institute of Health and Welfare (Australian Health Expenditures by Remoteness, January 2011, page 41) shows how this subsidy short-changes country people because of the few private hospitals in country areas.

In 2006/2007, the latest year for which these figures are available, the expenditure per person in private hospitals in the country compared with major cities was 16% lower in ‘inner regional’; 34% lower in ‘outer regional’; 48% lower in ‘remote’ and 60% lower in ‘very remote’. By contrast, public hospitals served the country community much better. Compared with expenditure in public hospitals per person in major cities, public expenditure in public hospitals in ‘inner regional’ hospitals was 10% higher, 28% higher in ‘outer regional’; 68% higher in ‘remote’ and 250% higher in ‘very remote’.

Country people are being duded by the $5 b p.a. subsidy. Yet National Party MPs allow themselves to be led by the nose by the Liberals. Because there are so few country private hospitals, the $5 b p.a. subsidy inevitably operates to the disadvantage of country people. The transfer of this $5 b subsidy to rural health, mental health and indigenous health would have dramatic benefits. That would be $50 b over ten years. The new hospital package that Julia Gillard announced last month is only $16 b over ten years.

Winning the case for country health reform

On almost any measure, country people have worse health outcomes than city people. Mainly due to lack of early detection, cancer sufferers outside capital cities are 35% more likely to die within five years. Country sufferers of heart disease are more likely to die early. The story is similar across the board – stroke, birth defects and mental disorders.

Four major issues on which country health reform should focus

First, primary care. The inequity in healthcare in Australia, rural, mental and indigenous, will only be effectively addressed through primary care, not hospitals. The dignity, autonomy and good health of all citizens are best served by delivering health services in the home or as locally as possible. It is the principle of subsidiarity.

Second, health improvements are just as likely to be advanced outside the health portfolio, eg broadband.

Third, winning the debate for priority-setting and allocation of health dollars depends on an informed community. Unless this is done, the well-organised and worried-well in the cities will continue to skew resources in their favour. Unless country people can win the debate, they will continue to be unfairly serviced in health.

Fourth, workforce reform.

Primary Care

In the hospital sector, it is hard to teach old dogs new tricks. Ministers, officials and professionals with their century-old ways of doing things, are hard to change. They think institutions and providers rather than people, and the almost sacredness of existing work practices. Primary care offers the best prospect of services for country people, integrated care, the curtailment of chronic disease, reduced service fragmentation and increased efficiency, particularly through new work practices. As Jennifer Doggett has set out in ‘A new approach to primary care…’ (CPD, June 2007), primary care provides

• A greater focus on prevention
• Faster medical action
• Consolidated service delivery
• A seamless one-step approach
• Consolidated history with test results
• Better access for all.

As Jennifer Doggett summarises it, ‘Primary care reform is the single most important strategy for improving our health and making the health system sustainable. Community level prevention and primary care is essential to restoring universality and efficiency in Australian healthcare’. Health decisions and health services must be made at the most local level possible – the principle of subsidiarity.

In the long and recent statements arising from the government’s obsession with hospitals, there has been included, almost as a footnote, that ‘the Commonwealth will have full funding and policy responsibility for general practice and primary care … including community health centres … and aged care’. Those few lines if properly and fully implemented could really reform and transform healthcare in Australia. That reform won’t come through hospitals.

How Medicare Locals develop will be an important key. The first thing that government should do is change their name to make it clear that these entities will not be delivering care. This is not just a cosmetic issue. They must be seen to be, and in fact become, regional planners and co-ordinators with adequate funds based on population and socioeconomic needs and for the purchasing of some services. They must be proactive in prevention. They must develop so that they can influence all hospital and non-hospital services in their region. These newly named entities must have resources and government support to drive regional planning and the delivery of services by others, e.g. early childhood, schools, welfare, housing and transport both for patients and families. Dialysis is a major problem. These new entities must be judged by their health outcomes and not their health inputs. They must get away from the medical model based on sickness that determines so much of what we do in health.  If they in fact become a new name for the Divisions of General Practice, they will fail. I suggest that the rural health alliance should be focusing its activities on the development of these new entities, mistakenly called ‘Medicare locals’.

We also need to improve General Practice.  I spoke earlier about fee-for-service dramatically putting up costs and discouraging integrated care. The government should consider two possible changes. The first is that the MBS schedule be amended to permit private practices to remunerate a supervising general practitioner in their practices. That supervising GP would be remunerated for over-sighting the treatment and referral of patients and their records. The second is that the government should offer to negotiate contracts with practices, both corporate and non-corporate, that will commit to the delivery of integrated care. I expect that the government would be agreeably surprised at the number of GP practices that would respond because of their concern about the ‘turnstile’ nature of a lot of general practice in Australia today.

What of the GP super clinics that the Commonwealth is rolling out? Including this year the Government will be spending $650 m over two years on 64 clinics. It is not yet clear that these clinics are on the right track. I hope we don’t have another insulation mess.

• I can’t see that the roll out of these clinics is part of a universal program.  Only six of the planned 64 are operating. Why call them ‘super’? I should have thought they should be ordinary and common-place. They do appear to be part of a marginal-seat strategy rather than a health strategy.
• ‘GP’ suggests that it is doctor-centric, when the emphasis should be on multi-disciplinary teams with enrolled patients/families. Often the need is not even for a clinician, particularly for people who face lifestyle and social problems. Often a case-manager is necessary to access other agencies, e.g. education, housing and justice.
• Are the clinics the right size to enable the team to be made up of a wide range of health professionals, or will they be GP clinics with a few and limited professional add-ons?
• Emphasis seems to be on bricks and mortar and co-location, rather than the provision of integrated care. Accommodation under one roof does not necessarily lead to integration.
• How can the MBS be amended to promote more team treatment and payments to all professionals in the clinic?
• Two vitally interested organisations, the Australian Nurses’ Federation and the Australian Practice Nurses’ Association have heard very little about the program.
• The Australian Pharmacy Guild has refused to allow professional pharmacists to join the clinics unless they do so as shop-keepers. That clearly tells me that the APG is more concerned about shop-keeping than the professionalism of its members.
• There is a ‘deafening’ silence about the superclinics and how they are performing. The fact that the AMA is saying little, suggests to me that the program is not going well.

Improving health outside the health portfolio

The mis-named Medicare Locals must also drive improved health services outside the health portfolio.

Ministers for Health in Australia are seen very largely as ministers in charge of health services rather than health. The fact is that some major issues causing poor health or which could be the means to improve health are outside the normal health portfolio.

• Medicare has become a payments vehicle, and an efficient one, rather than a health insurance commission as its name suggests was intended. How can we have integrated health funding, even at the Commonwealth level, when the Minister for Human Services, not the Minister for Health, has administrative responsibility for Medicare.
• The major health problems caused by junk food, alcohol and tobacco are best addressed through taxation and restrictions on advertising, particularly for children. (Health improvement is made very difficult when the major sponsors of sport in Australia are interests associated with alcohol and junk food. They are complicit in promoting bad health habits and undo a lot of the good work on prevention. How can our sporting codes discipline players for excessive alcohol consumption, when the main sponsors of the codes are liquor companies?)
• We know that because of social and economic disadvantage, the death rate for those with the lowest socio-economic status is 13% higher than the Australian average, and for those living outside capital cities it is 8%. Poverty is the principal cause of poor health in Australia.
• Education, childcare, including pre-natal, spacial planning, housing, trade (particularly relating to intellectual property in pharmaceuticals), population, transport, taxation and social security, employment, justice and the environment, all have direct impacts on the health of Australians.
• We are coming to appreciate how electronic health and the national broadband network offer great opportunities for improved health services, particularly for people in remote areas. They offer a new model of care particularly for remote and chronically ill patients. It will hopefully be possible to bill Medicare for online treatments. But the NBN is not within the health portfolio. NBN can transmit data-rich information such as scans and close-up real-time high definition videos, say, of a burn or a cancerous skin mark.

In short, the health Minister and her department must have expertise beyond ‘health services’ and particularly economic expertise in a joined-up government approach.

As Ian McAuley has put it:

One problem … is a reluctance by policy makers to look on healthcare as an industry and to apply the normal evaluative mechanisms which are applied to other industries. Such a blinkered view allows the development of an idea that health should be exempt from the normal economic considerations of efficiency and equity. It’s a notion that pushes economic thinking to one side, in the erroneous belief that economics is intrinsically illiberal and dismissive of human welfare. For a country reviewing its healthcare industry, it is useful to take a broad view and consider the whole industry. Only in such a way is there likely to be policy coherence and resulting economic and equity benefits of integration of programs into one system, underpinned by principles which align with the community’s values and priorities.

Setting health priorities

Unless there is an informed community debate, rural health will continue to be squeezed out by organised city-centric interests. You just do not have the lobbying power of the AMA, private health insurance funds, the Australian Pharmacy Guild and hospital interests. But you do have Independents who hold the balance of power in the House of Representatives. The case must be won that choices have to be made and priorities set. It will be a red-letter day in Australia when we have a prime minister, premier or health minister who will publicly say that we can’t have all we want in health. We need to shift the debate away from hot-button issues of more beds, and emergency departments, to the longer-term issues of priorities in spending the health dollar. I happen to think that the major priority areas of need in Australian health are rural health, mental health and Indigenous health. But that is not reflected in informed community debate. The squeaky city wheels get the oil.

Healthcare is rationed on a vast scale. But it is done behind closed doors to the benefit of the powerful and the media savvy. Canberra has 34 full-time lobbyists for every Cabinet minister. They are very influential in determining priorities in government health spending.

Unless the debate is continuously conducted about limited resources and choices, we will always be applying bandaids rather than ensuring genuine long-term reform. The urgent will be addressed rather than the important. In speaking about community engagement – I am not speaking about opinion polling, marketing and focus groups. If that is all we do, we will only get a snap shot at a particular time on community attitudes formed by the West Australian, talk-back radio or hospital vested interests.

We must move beyond this superficial debate of community attitudes. The object must be to educate and inform the community about new ways of doing things. It is about being truthful with the community about what is possible. There are a whole range of ways of doing this where the methodology has been validated – citizens’ juries, town hall meetings and deliberative polling. Country health in Western Australia has had some success. Professor Gavin Mooney will be talking further on this subject. My experience is that when the community is informed and engaged in structured discussions it comes to good decisions about the choices that need to be made and the priorities set. This makes it easier for ministers to make hard decisions when they confront the special interests. This would greatly benefit country people and country patients.

Julia Gillard was derided in the last election campaign for her proposed citizens’ assembly on climate change. But it has the germ of an idea for an informed public discussion and informed government decisions on health spending priorities at every level in Australia – national, state and particularly, local.

Workforce

There is certainly more money in the COAG package for workforce training, although it is largely to do the same things, the same way that we have done for decades. A break-through has been made in nurse-practitioner prescribing and accessing MBS ($59.7 m over four years), and $18.7 m over four years in the budget for the evaluation of the role of nurse practitioners in aged care. Hopefully, we will see many nurse practitioner led clinics being established.  In Canberra, such a clinic, established in mid-2010 had 10,000 patients in the first nine months. Other clinics are operating out of pharmacies. There is also $390 m in the budget over four years to assist in the employment of practice nurses. But there are vast areas where we need to restructure work practices. We have tens of thousands of health professionals whose skills are under utilised or undeveloped – nurses, allied health, pharmacists and ambulance officers. We need clinical assistance at almost every clinical level, e.g. a physician assistant. We don’t have so much a shortage of doctors as a misallocation. In 2007 we had 1.5 GPs per 1,000 of population. In other countries it was much lower, NZ 0.8, Canada 1.0, USA 1.0 and UK 0.7. (AIHW, Australian Health, 2010, p.461) We have problems because doctors refuse to share territory with other clinicians, in the name of ‘safety’- a notion that ignores the danger of people finding it difficult to access any services. Auctioning provider numbers by postcode may not be politically do-able, as I suggested at your Albury conference, even though 80% of doctors’ incomes come from the Commonwealth Government. Perhaps we could start by capping the number of new provider numbers in areas already in over-supply.

About 10% of normal births in Australia are managed by midwives. In NZ it is over 90%. We have about 400 nurse practitioners when we should have thousands. The medical colleges have disproportionate influence in controlling access to the professions.  Medical training is strongly focused on acute care in hospitals, whereas most of the work of future doctors will be with chronically ill patients in the community. Few are trained to work in team practices and certainly not in country areas. Primary care is not seen as an attractive option for young doctors. Only 13% of final year students have any interest in working in primary care, and only 13% would consider working in rural areas. General practice must be made more attractive and better paid, but not via fee-for-service.

Health is the largest part of the Australian workforce (825,000 in 2008). It is the fastest growing – 23% growth in five years. We are regularly told that we need to improve the productivity of the Australian workforce. Every cocky in every aviary is cackling on about it, but the largest part of the Australian workforce is not mentioned. We have seen the dramatic benefits in productivity improvements through workforce reform on the waterfront. But those gains are small beer compared with the potential gains with health workforce reform, leveraged by such means as wider access to MBS and making all Commonwealth health funding conditional on substantial workforce reform.

It’s time to take on the vested interests

Professor Robyn McDermott referred to the “enormity, complexity and inertia” of the health system, as outlined by Menadue, and said Australia is facing a worsening misallocation of health care resources, and that this is being driven by vested interests, particularly pharma companies, and is leading to a “dumbing down of medicine”.

She argued that too many resources go to futile end-of-life care, and described the over-treatment of the elderly, and the problems caused by polypharmacy. We’re prescribing too many pills to old people for conditions that would be much better served by other treatments, she said.

While health dollars flow into medical treatments whose value is often over-stated, far fewer dollars go to community-based and non-medical interventions with the potential to have a far greater impact upon population health, particularly in preventing and controlling obesity, she added. The whole system is biased in favour of expensive pharmaceutical and medical interventions rather than population health. “We’re investing in all the wrong areas,” she said.

McDermott noted that many of big-ticket drugs are being prescribed for conditions related to obesity. We’re medicalising a problem we can much more effectively deal with by legislation, regulation and community activity, she said.

McDermott also called for reform of funding models to reward quality and continuity of care with some accountablility for outcomes, rather than the billable six minutes.

She made a rousing call to arms for public health advocates; it is time for them to stand up and challenge the statements made by vested interests in public debates about health.

“We need to call things for what they are,” she said. When the AMA, Pharmacy Guild and others came out with “motherhood statements”, dressing up self interest in concern for community good and patient care, there needs to be a “much more open and sophisticated calling of those people who make those kinds of statements”.

Otherwise, politicians would continue to be caught in the spotlight as a result of “those simplistic and often quite stupid statements”, she said.

McDermott said that when she went to SA in 2004, it was said that by 2043, the whole state budget would be spent on health care. This had since been revised back to 2023.

John Menadue, a key figure in establishing our system for universal health care, has had much to say about the direction of health policy in recent years. Now that health reform is back on the agenda, we’re pulling out some policy gems from the archive.

In August 2008, John challenged the belief that we have a doctor shortage. He shares his ideas to address the problem of distribution of doctors, and how we encourage doctors to work in rural and remote areas where they are most needed.

In Australia, we don’t have so much a shortage of doctors as a maldistribution of doctors. Auctioning provider numbers could be an effective way of addressing this problem of maldistribution whereby affluent parts of Australia are generally well-served with medical services, but remote areas are badly served. There is also, of course, a strong case to increase the delivery of health services by nurses, pharmacists and allied health professionals.

Continue reading what he had to say in his article for Crikey here.

Australia is one step closer to an integrated health system, due to the introduction last week into Federal Parliament of legislation to establish the National Health and Hospitals Network (NHHN). The NHHN will put into effect COAG’s agreement on handing responsibility for 60% of hospital funding and 100% of primary care to the Commonwealth and will form the foundation of the planned reforms of our health system.

The reforms aim to address some of the fundamental problems with health care in Australia today, including the division of funding and service delivery responsibility between Federal and State/Territory governments resulting in both gaps and duplications in services and creating barriers to the provision of coordinated care.

The introduction of the legislation is a crucial step in realising the goals of health reform for a more efficient, responsive and consumer-focused health system. However, there remain a number of implementation challenges which will need to be overcome to ensure these goals can be met. Three of these are as follows:

Consumer input: the success of any health system can be measured by the degree to which it meets the needs of consumers. For the planned health reforms to deliver the promised gains of improved health outcomes, they need to address the needs and concerns of consumers. The Government has made a promising start to obtaining input from the community during the initial stages of the health reform process. This needs to be sustained during the implementation of the reforms, in particular, in relation to the planning and delivery of community-based health services, such as Super Clinics.

Consumer consultation needs to occur at all levels of the planning and implementation process and involve consumers in a range of capacities. These include appointing trained and skilled consumer representatives to relevant boards and committees, seeking feedback from clients of health services on the care they have received and obtaining the views of the broader community on the values and principles that should underlie our health system. A particular challenge will be to obtain input and feedback from consumer groups which often feel marginalised from traditional general practices for financial, social or cultural reasons, including young people, Indigenous Australians and people who inject drugs illicitly. Partnering with peak consumer bodies and groups that already work with and are trusted by these groups will be the key to obtaining input from a broad consumer base.

Integration: a central aim of the planned reforms is to deliver a more integrated health system. A better integrated health system will mean that consumers experience their health care as a coordinated and seamless process, even when provided by multiple professionals in different locations. It also means that consumers can receive timely health care in the most appropriate setting. For example, people at risk of developing chronic diseases can be identified and treated in their community before their problems become more serious and require hospitalisation. This will reduce the current high incidence of preventable hospital admissions and take pressure of our stressed public hospital system.

Currently, while there is a stated commitment to greater integration of the health system through the reform process, no specific mechanism has been identified to achieve this aim. This needs to be addressed through specific strategies which build on current successful models already working in local areas to enable their expansion and adoption more broadly. For example, the Australian Healthcare and Hospitals Association has proposed that regional entities be funded to develop integrated models of care, against national guidelines. This would support the development of models which best fit the needs of local consumers and service providers, rather than imposing a rigid one-size-fits-all model which will not suit the diverse health care needs of our population.

Evaluation: without a robust evaluation of the health reform process it will be difficult to know whether, and to what extent, the changes have achieved their stated aims. Our health system should be constantly evolving and improving to meet the changing needs of the community and this can only occur where there is an ongoing evaluation process to inform future changes.

Clearly, consumers must play a central role in any evaluation process. A key challenge will be to include the views of consumers who have (or are at risk of) a health problem but who are not currently accessing care. It’s relatively easy to obtain the views of clients of a particular health service but much harder to locate potential clients in order to identify why they are not accessing care. While the Government has indicated that it plans to evaluate elements of the reform process (for example, the Super Clinics), no plan has been put into place for an overall evaluation. This needs to be addressed through the development of a comprehensive evaluation strategy which identifies and measures the key outcomes of the reform process and which is implemented independent of government and driven by consumer needs.

Finally, it should also be noted that a major gap in the reform process is the omission of oral and dental health services. The failure to include dental health within the scope of the reforms will increase the incidence of health and social problems related to dental issues and further entrench the inequities in access to dental care in our community. If the Government is genuinely committed to comprehensive health reform it will stop treating the mouth as separate from the rest of the human body and ensure that all Australians can access affordable dental care in their local communities.

Almost all health economists and policy experts agree that the private health insurance rebate is a poorly designed and targeted program. In fact, when Labor won the 2007 federal election, the Department of the Treasury advised the incoming government that the funds allocated to the rebate scheme would deliver better outcomes if used to directly subsidise health services.

Therefore, the attempts by the Labor Government to roll-back the scheme through means-testing the rebate should be applauded. While the Bill to effect this change failed in the last parliament, due to opposition from the Coalition and independents, Health Minister Nicola Roxon has announced that she plans to re-introduce it in the near future.

Clearly, means testing will not eliminate the waste of these scarce health resources but it will go some way towards reducing the high cost of this program. Unfortunately, the Government does not appear to have considered the preferable policy option of abolishing the program altogether.

This may be due to the fact that the Government is concerned about the electoral impact of removing the rebate. While it is always difficult for a government to take something away from consumers – particularly a subsidy that has now been built into the price of the service – there are other alternatives to continuing this inefficient program that do not leave consumers worse off.

One option put forward in CPD’s book More than Luck: Ideas Australia needs now is for the funding currently allocated to the rebate to be redistributed to consumers in the form of ‘health dollars’ that they could then use to pay for health services, including PHI premiums. This would ensure people retained the value of the subsidy but were given greater choice over how it could be used.

If the funds currently going into the PHI rebate – approximately $4.5 billion per year – were redistributed in this way to low and middle-income households they would provide approximately $600 a year for each household earning less than $200 000 a year. This would represent a much more equitable allocation of health funding, compared with the current rebate scheme which disproportionately benefits high income earners.

This option would enable Australians on low incomes to access private health care, which currently can be difficult due to the high co-payments for many services. As the funds could be used to pay for basic forms health care – such as GP visits and prescription medicines – families who struggle to afford these services at the moment would also benefit. This would help respond to the growing body of evidence that many low income and chronically ill Australians struggle to afford basic, preventive health care services.

For example, a recent survey of people with mental illnesses, conducted by SANE Australia, found that the majority of respondents reported that they often had to choose between paying for healthcare or meeting daily needs. In fact, over half of the respondents (54%) said they had not been able to afford treatments recommended by their doctor, and 42% had not filled scripts for medication they had been prescribed because of the expense.

Another study conducted in 2008 by Commonwealth Fund survey surveyed chronically ill adults in Australia, Canada, France, Germany, the Netherlands, New Zealand, the United Kingdom, and the United States. The research found that over a third (36%) of Australians with chronic conditions reported problems with accessing health care due to cost. This was higher than participants from any other country, apart from the US.

Giving these consumers access to the funding currently being used to subsidise insurance premiums would achieve significant health and equity gains and result in a more efficient allocation of health care resources.

Those people who find PHI useful could simply use their subsidy to pay for part of their premiums, as occurs presently. They would therefore be no worse off than they are under the current scheme.

Means testing the rebate would be a major step forward but it will still result in the wasteful allocation of billions of dollars every year. If the Government is serious about maximising the value of our health dollars, it should carefully consider all options to redirect the entire $4.5 billion annual funding for the scheme into direct subsidies for health services, in particular for those who currently miss out on their fair share of care.

It has been reported that the Government will re-introduce to Parliament its bill to increase the Medicare Levy Surcharge and to abolish the 30 percent private health insurance rebate for people with incomes above $75,000.

The Surcharge is bad policy, but not for the reasons its opponents raise.

It’s bad because it contributes to a two tier health system. It encourages those with above average incomes to opt out of sharing their hospital services with other Australians.

It provides a massively over-generous incentive for the well-off to hold private insurance.  Even with the 30 percent subsidy removed, the increase in the MLS from 1.0 percent to 1.5 percent actually increases the subsidy to hold private insurance for those with incomes above around $120,000. At present, a person with an income of $150,000 taking out a $1000 policy, has a $1500 incentive through the MLS and a further $300 incentive through the rebate – $1800 in all. The higher surcharge would bring her incentive to $2250, an increase of $450, and $1250 more than the price of the insurance policy!

In any event, a survey by the Australian Bureau of Statistics shows that financial incentives have very little influence on people’s decision to hold private insurance. This confirms more general studies on insurance of all types, showing the well-off tend to over-insure. They don’t need incentives.

Concerns for private hospitals are valid, but they should not have to rely on private health insurance for their viability. Public funds for private hospitals should be paid directly to them, rather than being churned through private insurance where around 15 percent of that money goes in administration and profits. That would also be fairer to those Australians who pay for private hospital care from their own pockets, without being dependent on insurance.

Earlier this year, we heard the Prime Minister announce that the new regional hospital authorities would be buying services from private hospitals. That would break their dependence on private insurance, and would introduce some useful competition between public and private hospitals. Is the government now backing away from this policy? Is the government serious about “social inclusion”, or does it want to support a “gated community” in health care –  with private hospitals for the well-off, “charity wards” for the masses.

It’s not clear what the Government is trying to do, in part because it has failed to articulate any principles in health care funding.  In any event, if it puts the Surcharge bill to the Senate before July, it will surely be rejected. It would surely be far better to use the time between now and July to sort out how private hospitals can be funded more efficiently and equitably than through private insurance incentives, to explain the economics of health care funding to those who are uneasy about changes to private insurance, and to find ways of improving health services in non-metropolitan Australia, where there are very few private hospitals anyway.

Along with the ghosts of Labor leaders past, Julia Gillard now has to contend with ex-Labor supporter and adman John Singleton’s foray into the election campaign. Singleton’s agency Banjo has developed a series of advertisements attacking Labor’s health record on behalf of corporate medical outfit Primary Health Care.

The ads feature a woman dying of cervical cancer — allegedly because she could not afford to have a pap smear due to the Labor Government funding cuts for pathology services.

Of course the suggestion that the Labor (or any) government can be held responsible for an individual death from cancer is outrageous. The complex interplay of factors that result in the tragic situation depicted in the ads cannot be reduced to a single policy decision. It’s also unfair to imply that a Coalition government would have resulted in a better outcome for women at risk of cervical cancer.

The fact is, the Labor Government has done more in a single term to re-orient the health system around primary care and preventive health than the Coalition did in its entire term in office. While Labor’s health reform agenda certainly has significant gaps and limitations, it does at least involve a commitment to preventive health at its core.

The same cannot be said for the Coalition which has largely ignored preventive health in its election health policy and instead has directed resources into increasing the numbers of hospital beds.

Furthermore, the Coalition has said nothing in its health policy that would address the problem of affordability of health care raised in the ads engineered by Singleton. In fact, the Coalition’s policy of diverting funds from primary care programs to individual GPs is likely to increase out-of-pocket costs to consumers, rather than reduce them.

There is no question, given their respective records on health policy and their election platforms, that the Government should be comprehensively beating the Coalition on health.

However, ludicrous and distasteful as the ads are, they highlight why Labor is getting into difficulties in a policy area where it should have a home ground advantage.

A major area of oversight in Labor’s health reform agenda is the issue of patient co-payments for health services. We know from extensive research that co-payments are an issue for many consumers. In particular, they create difficulties for people with chronic conditions and families. The reforms address many of the structural problems within our health system but barely mention out-of-pocket costs for services — despite the powerful influence these have over how consumers access health care.

We know from extensive research that co-payments are an issue for many consumers. In particular, they create difficulties for people with chronic conditions and families with young children who use health services more frequently than average. This is why the Singleton ads may resonate with some sections of the community.

The irony of this is that co-payments are not a significant issue for pap smears, compared with other health care services. Pap smears generally attract only a small payment (and are often free) and are required (for most women) only once every two years. Even if the co-payment has increased over the last term of government, it is hard to see how this increase would create financial hardship for any woman.

People with chronic and complex conditions who require regular tests to monitor their conditions (for example those on anti-coagulant therapy) are much more likely to experience difficulties in affording any out-of-pocket costs associated with pathology services.

But when it comes to advertising, an overweight middle-aged man with heart disease isn’t as powerful as a young woman dying of cancer.

In the end, these ads are unlikely to change any voter’s mind about who should govern the country. But they will be an unnecessary – and largely undeserved – distraction for Labor as we enter the home stretch of the election campaign.

More Than Luck is a collection of ideas for citizens who want real change edited by Mark Davis and CPD Executive Director Miriam Lyons. A to-do list for politicians looking to base public policies on the kind of future Australians really want, More Than Luck shows what’s needed to share this country’s good luck amongst all Australians – now and in the future. Click here to find out more. Like what you’ve read? Donate to help make good ideas matter.