The renewal of the Commonwealth-State Medicare and hospitals agreement has degenerated into a fairly typical and predictable spat. The Commonwealth says it has increased hospital funding to the states in a fair and reasonable way and that any financial pressure is due to state incompetence and parsimony in running their hospitals. “”Mucked up,” were the words of Federal Health Minister Michael Wooldridge.
The states, on the other hand, say the Commonwealth has not maintained funds in the light of increased burdens flowing from past years’ drift in privately insured patients. “”Dudded,” was the word of Victorian Health Minister Rob Knowles. Nor has the Commonwealth, the states argue, increased funding in light of the aging population and increased medical technology. “”An insult to the health of Australian people,” were the words of the South Australian minister, Dean Brown.
The colourful language flying between members of at least nominally the same political flavour highlights the fundamental flaw in the Australian health-funding system. The Commonwealth politicians who raise the money have little say in how it is spent and the politicians who spend the money have little control on how much money should be allocated. It provides each side with an easy cop out. The states blame the Feds for not providing enough money and the Feds blame the states for misspending what they get.
The solution, ultimately, must be a closer alignment of responsibilities for raising and spending money.
The Commonwealth is forever trying to police the states’ health administration and spending of money. The states are forever bleating for more money as the easy solution because state politicians do not have to carry the political burden of raising the money through higher taxes or spending cuts elsewhere.
As Dr Wooldridge pointed out, it is not a magic pudding.
Further, the complexities and vagaries of the funding mix enable the states to shift some of their burden to Commonwealth schemes. For example, if a patient comes to a state hospital for outpatient treatment of minor events, the state picks up the tab. But if the same patient goes to a GP the Commonwealth picks up most of the tab through Medicare. So the states discourage outpatient visits. Some have even tried charging extra. Similarly, drug supplied in hospitals are a state responsibility; those outside come under Commonwealth funding. These cost shifts add inefficiencies and inconvenience to patients and health-care providers.
Dr Wooldridge to his credit has tried to do something about these anomalies. He has said the Commonwealth will take over hospital drug provision and he will set up a committee to investigate cost-shifting.
But this is tinkering at the edges. The fundamental imbalance of responsibilities will require major constitutional resolution and resolution of broad tax and federal financing issues. It will also require a less ideologically driven program to halt the drift from private insurance and to get more money into Medicare
Whether the state ministers accept the present offer immediately is of small moment. Ultimately, they will have to yield the Commonwealth’s greater financial power. The more depressing thing is that they will inevitably have to come back for another spat next time with none of the fundamentals addressed.