A full-frontal assault on Australia’s universal health system

Chifley staff writer JM Butskell* asks if the 2014 Budget spells the end of universal healthcare.

A month after the Budget, the public debate on health policy is still mostly focused on the Government’s plans to introduce a compulsory $7 co-payment for each GP visit and a $5 hike for PBS co-payments. The anger in our community is palpable, as it should be: these are the budget measures which are likely to hit hardest those who can afford it least.

Today, concession card holders (such as old age and disability pensioners, the unemployed, and others on very low incomes) make up the vast majority of patients for whom GP consultations are currently bulk-billed. These are the people usually most in need of the doctor’s visit: the poor, the old, and the sick. And they are the same people most likely to not go to see a doctor when they need to if there is an additional cost involved.

We know this.  Look for instance to the United States, where the absence of a universal health insurance system means much higher fees for doctors’ visits are routine, and where in turn 37 per cent of people – more than one in three – say they do not see a doctor when sick, or they fail to get recommended care, or they do not fill a prescription because of cost.[1]

Of course, it is possible that in some cases, the ailment which required the trip to the doctor in the first place will go away of its own accord. We’ve all been there – putting off the trip to the GP hoping that the cough or cold or flu or ache or pain will go away by itself, and eventually it does. But this is less likely to be the case for the poor who tend also to be the most sick. Then the ailment which might have been managed with a visit to the doctor and a script turns out to require much more serious care.

Medicare is often described as the foundation of universal health care in Australia – and to a very large extent this is true. But the other pillar of our system of universal health system is the right of all Australians to seek treatment in a public hospital whenever we need it, including in an emergency, free of charge.

This is where this health budget strikes another dangerous blow to our universal health system – one not even our anger over the GP tax should distract us from.

The budget cuts more than $2 billion in planned funding for public hospitals over the next four years, and projects many more tens of billions in savings for the Commonwealth government over the longer term. But more than just cutting funding – are short-sighted as this is – from 2017-18 the budget will undo the important reforms to Commonwealth-state financing in health which were included in the health care agreements struck between the last Labor Government and the states and territories.

You don’t have to get very far down memory lane to recall a time when the Commonwealth and the states were constantly bickering about the adequacy of the Commonwealth’s funding to public hospitals: “the blame game”. Before 2007, the states had a pretty fair point: the two levels of government supposedly had joint responsibility for financing public hospitals, yet the Commonwealth’s payments were not keeping pace with the actual cost of delivering the services. This is not only because they were probably inadequate to begin with, but also because the Commonwealth’s funding contributions never kept pace with increases in health care costs (which far outstrip increases in general inflation). The Commonwealth government wrote a cheque every five years, and walked away. As a result, the states were left to shoulder an increasing proportion of the cost of delivering public hospital services, despite being the level of government with the least capacity to raise revenue to cover the increasing costs.

The reforms to health and hospitals under Prime Ministers Rudd and Gillard made important progress to change this. Labor’s reforms provided significant additional funds to the states and territories for public hospital services, but with each and every dollar of additional Commonwealth funding tied to reform: first, in targeted funds for improving elective surgery and emergency department waiting times; and then, in additional core funding for public hospitals, with future increases more closely aligned with the actual cost of delivering services. This is critical to understand: the additional funding was not to be a blank cheque.  Labor’s approach included incentives to help drive improvements in the efficiency of service delivery, through pegging payments to the states and territories for services to the ‘efficient’ price of delivering them.

Labor’s was a smart and strategic reform model: for the first time, the level of government with the greatest capacity to raise revenue was going to be funding its fair share of the costs in return for higher productivity from the level of government with the greatest capacity to make changes to how services are delivered. As a result, Labor’s reforms would have provided tens, and over time hundreds, of billions of additional funding for public hospitals, while changes in the financing model would have leveraged the Commonwealth’s ‘buying power’ to drive improvements in efficiency and standards. More money, in other words, but with systematic incentives built in to ensure that extra money actually provided more and better services.

But from 2017-18, it will be back to block payments indexed to CPI (not health costs) – and back to the blame game between the Commonwealth and the states. Not for nothing has this been described by Stephen Duckett – the health economist and former Secretary of the Commonwealth Department of Health – as the most parsimonious funding model since the introduction of Medicare.

And taken together with the cuts to public dental health, some mental health programs, preventative health programs, and Indigenous health, it’s really not a stretch to describe this as the most brutal assault on Australia’s health system in, well, forever.

The Liberals will say that public hospitals will be just fine, because those who are well-off should use their private health insurance to go to a private hospital if they need hospital care instead. (Stay tuned for more money into private health insurance incentives before the next election.) But inherent in this suggestion is the risk of creating a ‘two-tiered’ health system – where capacity to access services is determined by capacity to pay.

Why does all of this matter when talking about universal health care? Because, the capacity of public hospitals to deliver high quality services will be fundamentally compromised by the changes proposed in this budget. And if public hospitals are compromised in their ability to deliver high quality services, then Australia’s universal system of health care is fundamentally compromised too.

Despite pre-budget positioning by the Government about the need to address the sustainability of health system, this health budget does not include any reform: it will not fix any problems in the health system, or make it more sustainable. On the contrary; most of the budget measures are just straight cuts. As well as lacking reform, the health budget lacks empathy: for example, for those for whom $7 is not spare change, but, perhaps, the choice between a trip to the doctor and a meal for the family.

It also lacks imagination: in not only dismantling the fundamental pillars of our universal health system, but in so spectacularly failing to foresee the impact of each of these changes in the future, and what they will mean for the health system we have now.

The point, the whole point, of having a universal health system is to ensure that access to health services is not impeded by a lack of capacity to pay. If the poor and the sick don’t go to the doctor, and can’t access decent hospital services (without private health insurance), will it any more be a universal health system at all?

[1] The Commonwealth Fund.



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