Prime Minister Kevin Rudd says there will be no decision on health reform in the next six months, after a Federal Government health review recommended sweeping changes in a landmark report released today.
The National Health and Hospitals Reform Commission report, entitled A Healthier Future for All Australians, called for a major shake-up of the country’s health system, with the Commonwealth taking over the funding of most services.
It recommended a Commonwealth takeover of primary care and outpatient services, as well as the establishment of a public dental system.
You can read the report in its multi-megabyte PDF glory here.
Whatever the outcome of the debate that follows the release of this report, the cost of health care is almost certainly going to continue to rise, both in absolute terms and a fraction of GDP. That’s despite the undoubted potential for efficiencies coming out of reforms. But in his essay in the weekend Fairfax papers, Kevin Rudd has reiterated a commitment to “…on average, keeping tax as a share of the economy below the level we inherited.”
How does this circle get squared?
This sounds like a way to make far more people dissatisfied but all for the exact same reason. I’m thinking of 000 and Telstra like success stories here.
Picking on just one aspect for the mo’
I just did a calculation on the ATO website and worked out that a 0.75% increase in my Medicare levy would work out to a max of $80. I don’t know about others, but I would gladly pay $80/year for access to a proper public dental health scheme. Hell I’d damn near beg for such a chance.
As the report pointed out, providing public dental would be cost effective, given the cost to the general health system at the moment from dental emergencies ending up in hospital, etc.
I have to say the reforms suggested are very good to this layperson’s eye. I really hope Rudd & Labor have the guts to implement them.
myriad @ 2 – don’t they mean by a 0.75% increase in the medicare levy that people will pay – ie. 2.25% instead of 1.5%. So someone on about $50,000 will pay about $375 more in tax? Which still may be a good deal depending on what the queue lengths are like.
Ah! Well I completely misunderstood that one Chris – thanks for pointing it out.
I’d still say that was a very good deal. An annual checkup including full dental x-rays costs about $150 – $250 alone.
Obviously that’s going to be a harder pill to sell, given the general Australia loathing for up-front costs etc. Who knows, I’d love to be proven wrong and people to actually see and understand the value of paying a couple of hundred a year in return for proper public dental.
I’ve always thought it would make the Medicare levy a lot more palatable if it came up with your PAYG. Something to consider perhaps.
myriad @ 4 – yes it does sound pretty good and I think many would drop private health cover if dental was covered by medicare so they would save a bit there.
Perhaps I’m being pessimistic, but it almost sounds too good to be true which leads me to wonder if they’re underestimating the real costs, or banking on many people not doing annual checkups even if its free, or planning on reasonably high co-payments to discourage people or just limit the cost by having long queues (or a bit of each of the above).
“How does this circle get squared?”
Simple, taxes will ultimately have to increase as a share of GDP. If Rudd wants to ignore that reality during the course of his premiership, then the task will simply fall to whomever follows him.
The last intergenerational report, which was written in the midst of a commodity boom that we now know somewhat inflated the Commonwealth’s structural revenue position, estimated that Australia faced a fiscal gap related to aging/health of between 3 and 4 per cent of GDP by 2040.
On top of that, the government wants, over time, to expand public investment in health, education and basic infrastructure.
I have no problem with that broad agenda, but unless this and subsequent governments find ways to cut deeply into other expenditure programs (which I doubt they have the courage to do), the tax share of GDP is going to have to rise noticeably over time.
Putting on my soothsayer’s hat for a minute, I reckon that within 5 to 10 years we will be facing up to having to significantly increase the rate of GST….
“on average, keeping tax as a share of the economy below the level we inherited”
I wonder how long before he starts to define the tax share so as to exclude the medicare levy? The above was always a dumb committment to make as it is basically either a promise to underinvest in public spending or not address longer term fiscal problems. Australia’s tax share isn’t even high by developed country standards.
Let’s assume Kevin Rudd was courageous. Is there anything you’d put on the chopping block?
Most of the things that come to mind are either satisfying but don’t save a lot of money, or are on the revenue side of things anyway.
For a start, I’d get stuck into the system of family payments and ensure it was much more targeted at low-income households….And payments to the auto industry would quickly become a thing of the past….And I’m not sure that the private health insurance rebate would remain….Then there is the peverse funding formula for private schools….And that is just off the top of my head….
We can quickly see though that none of those things are going to be candidates for significant reform….so, it will be taxes that have to lift….which doesn’t phase me so long as the revenue is raised efficiently…
Cuts to Defense spending. Cuts to overseas trade missions and consular services . then extending freezes to the salaries and benefits of all civil servants apart from the above.
Hmmm. Even with those cuts, by the sound of it you’d still need more tax revenue in the long term.
Yeah, I don’t think it is realistic to think that the share of government spending could be reduced to entirely meet the short fall, or even half, given that there are other gaps in public spending that probably need to be filled. Taxes will simply have to increase.
This ’share of GDP’ thing is such a red herring. The fundamental preferences of human beings, increasing wealth and the nature of the modern state basically guarantee increases in public spending relative to GDP. Forever. The real battleground is how the money raised through taxation is applied – in re-distributive but sensibly de-centralised and economically rational ways (e.g. neoliberal ideas like education vouchers, or neoliberal-influenced concepts like managed competition in healthcare, etc.) or in dumb ways (e.g. monolithic government bodies, facilities and services).
Going back to the NHHRC report: the inclusion of serious proposals in the shape of the former – i.e. the clearly Scotton-influenced ‘Medicare Select’ – is encouraging. The long term stance is clearly going to be: competition, consumer choice and getting price signals into the block purchasing of health services. In many ways the report is a rejection of social democratic ideas about how to deliver healthcare. So it’s nice to see that even in the midst of the GFC you can still rely on an ALP-commissioned report into health to incorporate elements of the neoliberal agenda.
BBB
Here’s how to save a few bucks to pay for some much needed reforms:
1. Organise a patient-free day (like they have pupil-free days at school).
2. Get all the hospital staff together in the car park.
3. Ask for a show of hands over who has worked with a patient in the last seven days.
4. Dismiss those who don’t put their hands up.
5. Have a vote among the core staff over which cooks, cleaners and pay staff they should invite back.
6. Ban anyone with the word facilitator or anyone who has ever used the word ‘client’ from coming withing a mile of the hospital.
7. Fine all managers 10c for every form that clinical staff have to fill in.
8. Send the bill for all alcohol-related illness to the brewers and Hotels Association.
9. Ditto for tobacco and fast food.
10. Abolish all taxpayers subsidies for private insurance companies.
michael2 – getting rid of “administrators” is a favourite throw away line of many.
I’m curious as to how many people, like yourself, want their favourite heroic heart/brain/kidney surgeon/nurse spending hours filling in the spreadsheets to send to government departments so that “performance can be monitored”, “clinical safety standards upheld”, “accountability” for taxpayers monies and “transparency” throughput or survival rates all can be documented and explained.
No10 is a must.
When looking at government revenue, why not look at getting rid of the big tax exemptions used by the wealthy? Look at trusts, capital gains tax … all that stuff – billions could be raised.
I was pleased about the dental plan, but also suspicious because I don’t think there are many dentists with loads of time to see more patients. Maybe dental technicians will become providers of ‘basic’ dental care … sort of like nurse practitioners?
When I was last in Oz (3 years ago), dental, optical and physio insurance that covered all but 20% of most treatments was $15 a month for an individual. So I think the 0.75% increase in the levy will more than cover it, especially when one considers that dentists being paid on the public purse tend not to overtreat. In fact, I suspect that the 0.75% increase is a bit of a cash grab…
To square the circle we have: productivity gains (being discussed much in the NHS at the moment); improved public health investment in the short term (think of Needle/syringe programs as a classic example of spending now to save later); rationalisation of the state/federal divide so there is less double-spending on these programs; and ditching the private health rebate. Strengthening the PBAC to pre-Howard govt levels would help; greater investment in public R&D (think of the CSL development of the HPV Vaccine as an example). There are potentially large gains from people dying at home, better social care spending and more efficient aged care/health sector interaction. Better geriatric medicine in general is a good way to save – abolishing or tightening up the rules on benzodiazepines alone would have significant benefits for A&E wards, for example. Also, attacking inequalities which have large downstream effects in secondary care (e.g. improving diabetes management in poor people, to prevent their clogging up A&E with avoidable admissions) is another easy way to control costs. All these types of interventions reduce costs while improving patient care.
Also, the idea that healthcare costs should always increase or should increase at greater than the rate of economic growth is not necessarily true, but depends a lot on the way in which the growth occurs (they grow much faster in the US than here, for example); and all this ageing population stuff is a little overrated in my view.
Michael2, when I worked in a hospital I didn’t meet patients every week, so I would be sacked in your model. And yet in just 2 years I achieved:
- a computerised system for methadone dispensing which greatly reduced the risk of costly adverse events
- a direct data entry system for routine clinical visits which significantly reduced paper-based data entry costs (i.e. other administrative staff costs) and reduced the clinical staffs administrative burden
- major improvements in the ability of staff to access pathology results immediately on their computer rather than having to wait minutes or hours to view them
- a computerised system for monitoring excluded clients’ access to the clinic, with significant safety gains for all staff.
Not to mention my involvement in every aspect of public health planning, and of course all the reactive stuff I had to do every day. There is very little fat left to cut in the Australian public hospital system, and administrative staff work just as hard as clinical staff to ensure the smooth functioning of a very complex system. This administrative/clinical divide doesn’t exist in practice and we have to think a lot smarter than “no cuts to frontline staff!” if we want to contain costs and improve health in a modern hospital system.
As always, BBB, well said.
Plan to increase marginal tax by 8.5% on low-income workers
http://blog.libertarian.org.au/2009/07/28/plan-to-increase-marginal-tax-by-8-5/
I think the self-imposed constraint on government expenditure growth is silly, but there are a number of cuts that could be made.
Trade offices could go. They don’t seem to work. Most rural & industry subsidies don’t make much difference.User charges could go up a bit eg the $30 for general beneficiaries for pharmaceuticals could go to $35. Reduce private school subsidies as mentioned. Get rid of benefits for the rich retired like the health care card. Some benefits could be converted to tax rebates. (I know its a fiddle, but silly promises require creative accounting to get out of). Lot’s can be done on tax side. Higher alcohol & tobacco taxes. Cut into super tax benefits. Get rid of tax concessions for cars. It should also be possible to cut a lot of state costs by having uniform food, labelling, consumer, OH&S etc regulations