Notch One Up For Health Funding


It’s taken weeks of tough negotiations, but Kevin Rudd has finally got his health reform package. Well, most of it, anyway. It took billions of dollars of extra funding and Western Australia is still holding out, but the Prime Minister can finally hold up a healthcare agreement and call it a "reform".

"This is a deep reform," he was saying yesterday, "the biggest reform since the introduction of Medicare." It’s certainly not as important as Medicare, but there’s no doubt the new healthcare is big in terms of dollars. The Commonwealth-State agreement on health funding is expensive — very expensive.

In fact, no one is saying exactly how much it will cost right now, but the final dent in the national budget will certainly run into the billions. $5.4 billion of expenditure has already been announced, but that’s not counting the extra dollars that will flow in future years as the Commonwealth assumes more responsibility for health and hospitals funding.

The health deal will be sold by Labor as more doctors, nurses and hospital beds, but it’s really about money. Indeed, you could argue this is not really a health reform at all, but rather a fiscal reform to the way the various levels of Australian government carve up their taxation revenue. The nitty-gritty of health reform has largely been ignored.

That’s a missed opportunity, because if ever there was a time to implement significant reform to health policy, this was it.

The Government has spent months — years really — canvassing the options, gathering submissions, holding inquiries and campaigning around the country for healthcare reform. The result has been disappointing. This new deal will shuffle some paper around and contribute some new money to our public hospitals. But it won’t address the big picture issues confronting our health system like rising costs, poor work practices and a lack of patient focus. Our health system will remain fragmented and confusing, especially in areas like mental health — a huge issue which the current negotiations have basically ignored.

One of the biggest policy errors of the health portfolio was never up for debate: the private health insurance rebate, which sucks up nearly as much annually as Canberra has promised to the states to clinch this deal. The rebate, which channels money to consumers with private health insurance by first lining the pockets of health insurers, makes no sense from almost any perspective. It’s expensive, wasteful and has only a modest beneficial outcome, at best. But private health insurance is politically controversial and the Opposition has argued that Kevin Rudd has broken a promise simply by trying to means test it.

That measure, by the way, has been blocked in the Senate. The new health deal may well share the same fate. Indeed, you could almost argue that Labor is counting on it: by blocking the deal, the Opposition will hand Labor yet another trigger for a double dissolution.

Sure, the Federal Government will now get to boast that it is the "dominant funder" of healthcare. But even here the Government has compromised. Funding will no longer bypass the states, but will instead be paid into a pooled Commonwealth-state agency that will then fund the local hospital networks Rudd envisages. The states will not be locked out. Their health bureaucracies will continue to have an important say in the running of Australian healthcare. On the other hand, Canberra has succeeded in its bid to quarantine 30 per cent of the bigger states’ GST.

The hold-out is Western Australia. Because of Colin Barnett’s intransigence, "our friends in the west," as Rudd was calling them on Sky News yesterday, will remain on the current healthcare system. This means healthcare in the west will miss out on billions of extra federal funding. Or will it? In the medium-term, it seems likely Rudd and Barnett will work out some kind of deal that allows both leaders to sound like they’ve won. No doubt another dose of extra dollars from Canberra will sweeten that deal. Rudd was already hinting as much after the conclusion of the COAG meeting.

If this is reform, then it looks a lot like business as usual. But then again, that’s politics as usual under Kevin Rudd: incremental, cautious, bureaucratic — even a bit boring. The Prime Minister’s approach to reform is generally to compromise in order to achieve modest goals. When he encounters roadblocks, like Victorian Premier John Brumby’s opposition to this deal, he has remained patient and been prepared to put more money on the table.

Lindsay Tanner and Wayne Swan must be hoping there will be no more "reform" before they hand down the budget. Meanwhile, patients will see little real change.

Ben Eltham is New Matilda's National Affairs Correspondent.