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Health Reforms’ Date with Destiny

Will the outcome of the Federal Government’s proposal for major health sector reforms be like a Stieg Larsson novel – slow moving, very detailed, with flashes of occasional violence and an inconclusive outcome? Or can it pull off a policy win on health the equal of President Obama’s health reform successes in the US?

The narrative of the proposal’s acceptance or otherwise will unfold at the April COAG (Council of Australian Government) meeting, which will focus solely on health and hospital reform.

Debate by Media

To recap, the key elements of the Commonwealth’s proposed reform package include establishing a national network to bring together the ‘disparate’ state-run hospital systems; the Commonwealth to take the dominant funding role; and the establishment of a series of local hospital networks.

Much of the debate between the Commonwealth and the States has played out in the media, focussing on issues connected with funding and the size and composition of the proposed local authorities. There may appear to be considerable differences between the various parties – and the media coverage has sometimes dropped to the level of did ‘Kevin snub Kristina’ – but it would be surprising if COAG did not lead to some major agreements.

Vote One Health

Health reforms might appear to be about patients, but they are about money and politics, notably the forthcoming Federal election and the elections scheduled in Victoria and NSW within the next year. In the NSW election, the public health system will be a major issue, perhaps the dominant issue. Premier Kenneally arguably has as much riding on a good outcome at COAG as Prime Minister Rudd does, and this will help condition the discussion.

The Federal Government’s higher public approval rating on health than the Opposition’s was a major reason for Rudd challenging Opposition leader Tony Abbott to a recent Press Club debate. Rudd was seen as a clear winner and the Opposition bereft of policy. This will encourage the Government to remain focussed on health as compared to climate change, where outcomes are difficult to achieve and public opinion more divided. Senior Government Ministers would not have conducted more than 100 public consultations on health reform if they did not believe that there was strong public support for change.

Band Aids and Fundamentals

We should not ignore the fact that the Government has already made major commitments to improving the health system. These have included increased spending on hospitals and preventative health, and increased training places. These initiatives, however, while welcome, have been band aids on a system in need of fundamental reform.

If agreement cannot be reached at COAG, the Commonwealth has also been explicit in threatening the States with a referendum at the next election. In this scenario it would seek support for a takeover of health service delivery. As Minister Roxon recently commented:

“On the 19th, we’ll obviously let that COAG meeting go for as long as is required to get a resolution and . . . the Government is making contingency plans if we are not able to reach an agreement . . . as we hope we will be able to, to ensure that this question can then be put to the public.”

For Minister Roxon, credibility as a reforming Health Minister rests on COAG’s outcome. In a recent speech that coincided with her birthday she said “ . . . for my birthday this year I want an agreement at COAG on a National Health and Hospitals Network.”

Different States of Mind

In the lead up to COAG the State Governments’ positions vary considerably.

Victoria has been the most vociferous critic of the proposed reforms, particularly from a funding perspective. It has lead Australia in reform of its hospital and health system, via significant investment in infrastructure and improvements, such as activity funding, in service delivery. It also has arguably Australia’s best State Health Minister, Daniel Andrews.

Victoria has less to gain – and potentially more to lose from the Commonwealth’s proposed funding arrangements – than the other States. But this is the risk that a leader faces when general reform occurs. Premier Brumby has proposed an alternative: the States keep their GST revenue and a hospital funding pool is established, comprising State and Commonwealth funding. The Commonwealth has responded that the proposal is uneconomic.

Moving the compass west, the Commonwealth must be relieved by the re-election of Mike Rann and the ALP in South Australia; he has been a strong and consistent supporter of the Commonwealth’s proposals, and also the recipient of considerable Commonwealth funding. Western Australia itself, under Liberal Premier Colin Barnett, has expressed concern over potential “short changing’’.

NSW and Queensland arguably have the most to gain from the new arrangements; their health service investments have lagged behind population growth, and much needed administrative reforms have been ignored. Both States have been relatively positive about the proposed funding arrangements, but have still expressed concerns about them and how the proposed local hospital networks would operate, particularly given these States’ size and population densities.

Change and its Implementation

So what is likely to happen on the 19th? The Federal Government will continue to offer sweeteners for the States to encourage their support, such as the recent increase in funding for healthcare workforce training. And to allay concerns over matters such as appropriate size, it will also likely release further details about how the proposed local networks will function.

The Commonwealth and State Governments are aware that health is one area where the Australian population expects Government to have a major role. As Minister Roxon noted:

“The public do see this as an opportunity that only comes every few decades, to be able to really fix things for the future. And those expectations weigh on our shoulders and the Premiers’ shoulders, I think in equal measure.”

For Minister Roxon a good outcome on the 19th would be most welcome, but will provide little respite from the ongoing challenges for her health portfolio. But the pressure she notes is likely to drive an outcome that all participants will welcome as being ‘historic’, with the Commonwealth taking on major funding responsibilities. The change in the allocation of GST funding could potentially usher in a new era in Commonwealth and State relations.

It should be remembered, however, that developing policy is only five per cent of the journey, implementation the rest. Implementation has more than its fair share of challenges (as demonstrated by the home insulation scheme) and so public and media attention will remain focused.

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