Comments on the National Health and Hospital Reform Commission report

The government needs to summon up the political will for some major decisions in health, but unfortunately the NHHRC’s final report fails to give them clear guidance for those decisions. The Commission’s emphasis on indigenous and mental health is certainly welcome. However, while their report is strong on specifics and incremental change, it fails to espouse a clear strategy based on a public consensus on the values that should drive our health system.
The Canadians have been much more successful than we have in establishing this consensus – they have a clear public understanding that their health system should be based on the values of universality and equity. To achieve such a consensus here the government will need to go beyond the report’s recommendations on the following key issues.

  1. Health Care is more than hospital care: The report says that we must address the ‘fragmentation in the health system’. We all agree, but its proposals don’t go far enough. The Commonwealth Government should seek the agreement of the Australian people for it to take financial and political responsibility for all health care and not just hospitals. I think the government would be surprised at how tired the public is of the blame-game and how well they would respond to national leadership. In providing such leadership, the government must acknowledge that Canberra cannot run 750 hospitals, or a health service from Burnie to Broome. Wherever possible health delivery should be devolved to the most local level possible consistent with national policy, national guidelines and national standards. If the government believes that a national referendum is a bridge too far, it could offer to establish a Joint Commonwealth/State Health Commission in any state that would agree. The commission would have pooled funding from the Commonwealth and the State, agreed governance and a plan to deliver all statewide health services.
  2. The private health insurance issue (PHI):In line with the Rudd government’s instructions the Commission left the wasteful PHI rebate untouched, but they’ve nevertheless produced a report which provides a platform for the expansion of government subsidised private health insurance which presently costs the taxpayer about $5 billion per year. The first recommendation of the report affirms the ‘value of universal entitlement to (health services)… together with choice and access through PHI’ – implying that universalism’s worst enemy is its partner. The dental proposal is a means to churn further taxpayers’ money through PHI. Every country that has significant PHI has major problems with escalating health costs. Just ask Barack Obama. It can hardly be said that this report is independent when it takes such a partisan view on PHI. The lobby groups supporting PHI deliberately confuse funding arrangements and delivery of health care. PHI is not necessary to support individual choice and treatment of patients either in the public or the private sector. The Department of Veterans’ Affairs is a single funder for veterans but the funds follow the veteran whether he or she decides to go to a public or a private hospital. Business journals continually attack the $6 billion per year subsidy over four years for the auto industry, but ignore the $5 billion per year in corporate subsidy for PHI. Recent data shows that the operating, management and profit margin of PHI is 15% of revenue. For Medicare, including the taxation cost, the margin is 4%.
  3. The demand for health services: There is no serious attempt in the report to face the issue of burgeoning demand for health services. No government will tell us publicly that we can’t have all we want. There are perverse incentives such as fee-for-service which escalate the demand. In 1984-85, Australians had just over seven Medicare services per head per year.  In 2007-08, that number had increased to just over 13 services – a doubling in 13 years. The problem is not simply ageing.. The
    report fails to outline how as individuals and as a community we can manage the demand for health services. Unless we can, the health system will be unsustainable.
  4. Transparency: The report highlights the importance of transparency throughout the health
    system, but nowhere does it attempt to propose measures to make health providers more accountable for what they do. Accountability for services does not exist in health, despite taxpayers paying over 79% of doctors’ incomes.
  5. Health costs: Health costs are rising at about 5% per year in real terms. This report proposes an additional $5.5 billion per year or between 5% and 6% more. The government has said that it will need to bring the growth of government spending back to 2% p.a. once the present recession is over. The health sector will have to vastly improve its management of demand and the inefficiencies in the supply of services to achieve this goal.
  6. Workplace Reform: The report is timid on the question of workforce reform.. Unfortunately
    demarcations and restrictive practices are rife in our health services. Substantial increases in productivity are possible through across-the-board workforce reforms. Nurses hold the ‘system’ together, but they are denied career opportunities and professional satisfaction.

Finally, powerful vested interests – state governments and the health bureaucracies, the AMA, the PHI, and the Pharmacy Guild will now gear up to protect their interests during the next six months’ consultation period. This effort will be added to the tens of millions of dollars that special interests already spend on lobbyists to advance and protect their agendas.
Most public debate about health is between ministers and special interests. I wonder if Kevin Rudd and Nicola Roxon can instead engage effectively with the community. In the end, it is only a persuaded community that will assist and encourage the government to show the political will to achieve sustainable
long-term improvements. Real reform in health must tilt the power balance towards the community and away from special interests.

This is an edited version of a piece first published by Crikey.