Federating health care would mend our health system

Before the health ministers meeting, representatives from 28 health related organisations met to discuss solutions to the above problems. These solutions were presented to the ministers who had invited the Australian Healthcare Reform Alliance to make a presentation at their meeting. The delegates represented rural, metropolitan and indigenous interests. Peak medical, nursing and allied health professional organisations as well as health policy institutes were all involved. Many consumer organisations participated. Significantly, these broadly representative and informed conferees have reached a unanimous conclusion:

“The quality and fairness we wish to see characterise our health care system can only be achieved by restructuring the system around a unitary source of funding.”

Such a conclusion did not, of course, represent instant revelation but was the result of years of looking at viable alternatives to the status quo. This is a carefully considered blueprint for urgent change from experts who expect their proposal to be taken seriously.

In essence, the proposal calls for the establishment by July 2006 of an Australian Healthcare Corporation (AHC). The corporation will assume all the health care responsibilities currently discharged by commonwealth, state and territory governments. All the taxpayer dollars used for hospital, community services and primary care would be “cashed out” by current stakeholders to be placed in the AHC “Pot”. The corporation would then use those dollars to create the integrated, fairer and more cost effective service we need.

Initial studies anticipate savings of at least two billion dollars annually.

The corporation will divide Australia into health care regions based on geography, population size and demographics. Each region will have a budget to run hospitals, nursing homes, hostels, community services and pay for GP and specialist services. Most importantly, the regions will be able to integrate the totality of their services. Blessedly, state and territory borders will become irrelevant (currently they are a major cause of the health-planning nightmare). Regions will be funded by a sophisticated Resource Distribution Formula (RDF) that importantly will address the correction of known poorer health outcomes. With much reluctance the funding model proposed does not place in the “pot” the tax dollars used to support wealthier Australian’s private health insurance. Neither major political party seems ready to abandon a policy that has not met its objective of relieving pressure on the public hospital system despite the fact that all Australians contribute to a benefit enjoyed by only 43 per cent of us.

The proposed funding model is linked to an important reality, namely the joint ownership of the AHC by state, territory and federal governments. Why would the NSW Treasurer, for example, give ten billion dollars to a corporation over which he had no control? To create a first budget, the AHC’s proposal for the division of Australia into health regions (areas) would need to be agreed to by all governments. All public sector money historically available to a region from both state and federal resources would then be pooled and adjusted for anticipated inflation and growth in demand to create a five-year budget.

Under this system no region could be less well resourced than at present. The flexibility to enhance funding to address inequities and inefficiencies would however, be vital to the success of the plan. Savings from a stream lining of the health bureaucracy and the elimination of duplication would be available for such purposes.

The Alliance’s call for an appropriate taskforce to develop the details associated with the proposed agreements and anticipate difficulties that would need to be addressed represents a vital first step in this reform process.

The AHC would replace state and commonwealth departments of health incorporating the existing bureaucracy it needed. It would have numerous and major central functions such as the setting, implementing and monitoring of standards for quality and safety and collecting and publishing equity of access and outcome data. The AHC would be in a position to negotiate directly with private hospitals to forge the necessary partnership between both hospital sectors so lacking in our current system.

What about Medicare in a system run by the AHC?

The current MedicarePlus package would continue to be available to GP’s and specialists but the AHC would be charged with the task of developing a new primary health care model.