Health and the Federation

There are few more respected institutions in Australia than Medicare. Universal health care is now such an article of faith that even conservative governments seeking to tear it down have to pretend they are only destroying the village in order to save it.

For many in the labor movement, Medicare represents the peak of our achievements in health care, but this not ignores the history of great reforms in health under Curtin and Chifley, but also, the great work done in more recent times under the Rudd and Gillard governments.

The one thing that is clear is that in Australia it has only ever been Labor which has driven the reforms in health through an expanded role for the Commonwealth.

Along the way, we’ve had to fight the senate, conservative state governments, reactionary high courts, and on a number of occasions, the medical profession to achieve reforms which, for the most part, have now become accepted as sensible and much needed health policy embedded in the nation’s social contract.

This fight began in 1941 when the Curtin Government passed the Pharmaceutical Benefits Act, providing for the first time for free drugs for patients.

The Act was struck down by the High Court in 1945, but the 1946 referendum granting the Commonwealth the power to legislate for, amongst other things, pharmaceutical, sickness and hospital benefits, and medical and dental services, effectively secured the introduction of the Pharmaceutical Benefits Scheme that we enjoy today.

A year earlier the Hospital Benefits Act of 1945 had introduced the first national scheme to finance public hospitals under an arrangement that laid the foundations for hospital funding agreements that continue to this day.

The Commonwealth paid the states six shillings a day for each patient occupying a bed in a public or private hospital, provided the patients in those public beds were not required to pay an additional fee.

Although the Commonwealth now had the constitutional powers to expand its role in health, 26 years of coalition rule meant it was not until Whitlam’s election that these powers were taken to their next logical step with Medibank.

Medibank’s reason for being was to provide adequate healthcare to all citizens regardless of their financial means, in particular the 17 per cent of Australians who at that time did not have, or could not afford private health insurance.

Medibank had to survive a double dissolution, a joint sitting of parliament and a high court challenge, as well as a campaign by doctors who feared it would restrict their incomes or amounted to a socialist takeover of medicine.

However, once the scheme did come into law, the Commonwealth was then able to negotiate agreements with state governments to integrate their hospitals into the system.

Again, these negotiations were protracted and difficult, with conservative governments in power in four of the six states, but despite this, Medibank began operation on October 1, 1975, just six weeks before the fall of the Whitlam Government.

The familiar pattern then reasserted itself, with the Fraser Government turning Medibank into a residual system for pensioners and others on low incomes before Bob Hawke restored it as Medicare.

There is a tendency in some quarters to argue that serious health reform effectively ended with of Medicare. There is also in the current context a tendency to equate cuts in health expenditure with healthcare reform and to argue Labor, in standing up for decent affordable universal healthcare in the face of these cut are somehow opposing reform.

This badly sells short the work done through the Health and Hospitals Reform Commission and enacted by Nicola Roxon and Tanya Plibersek.

While the public outrage and political fight over the 2014 budget has been dominated by the GP Tax other changes made to health in that Budget are every bit as damaging.

Principally among these was the decision to abandon Labor’s agreement with the states to fund 50% of growth in the efficient price of hospital based activity over the next decade.

In March’s Intergenerational report this was the single biggest contribution to the savings claimed by the Abbott Government and yet, it is a complete fraud.

The growth in hospital costs will not magically be lowered by declaring that, from 2017, the federal government’s share of hospital spending will grow each year in line with inflation and not by the 6% or more that is the actual cost of running hospitals.

This cut didn’t “save” the claimed $57 billion over the next 10 years, it just flicked the cost on to the states.

At the same time the Abbott Government also tore up a series of agreements, years in the making and agreed by governments state and federal, Labor and Liberal, to use that funding to improve patient care and make hospitals much more efficient.

When Labor came into office in 2007 we faced a health and hospital system that had been badly neglected for a decade, funded by a model that neither encouraged efficiency, nor patient outcomes but certainly encouraged cost shifting.

In April 2010, we reached an historic agreement for the Commonwealth to take on full funding and policy responsibility for all general practitioner and primary healthcare and aged care services.

Critically, this agreement also included funding of 50 per cent growth of the national efficient price of every public hospital service provided to public patients.

The agreement delivered better quality care in primary health, hospitals and aged care while putting in place a secure funding base for the health system and hospitals well into the future.

They were in short, the most significant reform to the health system since the introduction of Medicare and negotiated yet again by a Labor Government in co-operation with the states and territories.

Almost six years in the making, and agreed by all states and territories, Labor and Liberal, and ditched by Tony Abbott in his first budget.

Labor’s policy development process

Of course this inevitably leads to the question of what Labor will do.

To start look at our record.

Labor in government did embark on a substantial period of health reform through the Health and Hospitals reform process.

We achieved the highest rate of bulk billing in Medicare’s history

We invested more in public hospitals and established new efficient mechanisms to start to fund them into the future. We invested heavily in new medical research facilities, cancer centres in our regions, eHealth and upgrades to existing and new integrated GP clinics, primary and community health centres and Aboriginal Medical Services.

And yet we did this at the same time as Australia experienced its lowest rate of growth in health expenditure in 30 years.

In government Labor will return to the path of cooperative federalism.

Australia’s health care system, despite all its flaws and all of its achievements can only be reformed in cooperation with the States and Territories.

But the Commonwealth must should play the lead role in driving reforms which strengthen primary care, prevention and our public hospital system for the benefit of all Australians, wherever they live.

About Catherine King

Catherine King

Catherine King is the Shadow Minister for Infrastructure, Transport and Regional Development.

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