Long-term vision needed if Australia wants to keep universal healthcare

Wednesday, July 22, 2015

“For Australians to have an accessible, equitable and efficient universal healthcare system our political leaders need to consider sustainable and durable long-term funding arrangements that support an efficient and holistic health system, rather than just short-term fixes,” said Alison Verhoeven, Chief Executive of the Australian Healthcare and Hospitals Association (AHHA).

The Commonwealth has cost-shifted to the States and Territories $57 billion over eight years in expected funding for public hospital services, which the States and Territories do not have the capacity to replace.

"In raising revenue it is critical that Australia's First Ministers commit to progressive taxation systems.  For too long the middle and lower income earners have been subsidising wealthier Australians," said Michael Moore, Chief Executive Officer of the Public Health Association of Australia.

Current public debate is focused on the merits of increasing the GST over the Medicare Levy as a way to cover this funding shortfall, and issues of equity and the effect on the disadvantaged are being discussed.

Less prominent, but just as important, is the role the private sector has in the provision of health and hospital services along with the associated increase in out-of-pocket costs. Since 1999, a number of Commonwealth initiatives—financial carrots and sticks—have incentivised Australians, particularly the better off, to purchase private health insurance with the aim to relieve pressure on the public system.

But international experience shows that private health insurance buys more expensive healthcare than tax‑funded care, and the quality is not necessarily better. The OECD’s most recent figures show health spending in the United States reached 16.4% of GDP in 2013, well above the OECD average of 8.9% and the Australian rate of 8.8%. As for quality, the Commonwealth Fund consistently ranks the United States last when compared against the health systems of other advanced economies. Australia was ranked fourth.

Public hospitals are obliged to provide free emergency services, equitable access to all persons regardless of geographic location and have a major role in developing the health workforce through clinical training and research. Hospitals in rural and remote communities are also almost entirely in the domain of the public sector. In contrast, private hospitals exist in response to patient’s willingness to pay with around three-quarters of private beds being located in capital cities and tending to specialise in a limited range of surgical procedures and provide more elective procedures than public hospitals. Few private hospitals have emergency departments.

The AHHA will be analysing these issues in a Think Tank on Sustainable Funding of Public Hospitals being held on 15 September 2015. This event is bringing together a number of health sector leaders to discuss sustainable funding of public hospitals in the context of the Commonwealth Government’s white paper processes on reform of the Federation and reform of the tax system.

“Any reforms considered by the First Ministers at the COAG Leaders’ retreat this week must consider the impacts on funding for public hospitals and consumers’ already significant out‑of‑pocket expenses, particularly for the most vulnerable low income Australians and those with chronic and complex conditions. Equally, they must be patient-centred with a focus on safety and quality of care that is affordable for all Australians.

“A focus on efficiency is also a practical and sensible approach to addressing sustainability of the healthcare system rather than shifting costs and increasing out-of-pocket expenses. Any reform proposals considered by the First Ministers must focus on improving effectiveness, efficiency and value‑for‑money,” said Ms Verhoeven and Mr Moore.

The Australian Healthcare and Hospitals Association is the national peak body for public and not-for-profit hospitals, community and primary healthcare services, and advocates for universal, high quality and affordable healthcare to benefit the whole community.

Media enquiries:

Alison Verhoeven                                                                               Michael Moore

Chief Executive,                                                                                  Chief Executive Officer

Australian Healthcare and Hospitals Association                     Public Health Association of Australia

0403 282 501                                                                                        0417 249 731