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. For background information on these and other health reform
issues, see my submission to the Senate Community Affairs Committee: http://cpd.org.au//article/managing-demand-and-supply-health