Health policy options in the wake of health pricing ideas
The Commonwealth Government focus so far on the use of a ‘price signal’ to make savings in health
expenditure entirely misses the nature of the problem with current and future health costs in
Australia – and the obvious options for improvement.
Without an aggressive focus on reducing the risks of preventable illness and improving the
management of chronic diseases, government fears of the increasing health costs of the growing
and ageing population will become a certainty.
Australia’s health policies, funding and service models are failing about one in four people living in
Australia. Preventable diseases and chronic conditions, like diabetes, heart disease and stroke,
affect a substantial and growing proportion of people living in Australia and this lies at the heart of
the current health cost debate.
Our funding and service models are principally geared towards treatment, rather than the
prevention; to be chronically ill seems to be an acceptable state for some people in our health care
system, and it would seem access to preventative health care is an optional extra for some
Australians.
Reducing the risks of preventable illness for everyone would deliver huge benefits on a population
scale, it would address the very real fear of escalating health costs and a growing, ageing and
increasingly sick population.
This idea is not new, and it is certainly one the current government has acknowledged as a real
problem. In its 2013 election policy statement, the Coalition said “The challenges facing the
Australian health budget and Australian health services are well known to be the increasing
prevalence of chronic disease, demographic changes with an increasing and ageing population, and
the 'tyranny of distance faced by many rural and remote communities”.
Given this, a focus on reducing funding for primary care services in isolation demonstrates a
remarkable lack of understanding of the available evidence of how best to address these challenges.
Medicare is one of three critical funding sources for health care in Australia – the others include
private health and public hospitals funding. Pulling one lever, to deliver savings in one area of the
system, without considering the other two, will have unintended consequences for the other two –
and for people and their health care, including the health care costs incurred by consumers –
currently 16 to 17% of all health expenditure.
These three levers are operated by three players – the Commonwealth Government, State and
Territory Governments, and private health insurers – but none of them act alone – two of each are
coupled in the delivery of the funds and of the services that are funded.
The complexity of our federated system and the funding contradictions that are created, coupled
with rising health costs, an ageing population and the growing impact of preventable chronic
diseases, means that unless we make changes, health will continue to be a blinding headache for
governments and individuals alike.
For Australia's health budgets and health services to begin to meet these challenges, policy and
funding needs to be based on the evidence of what works to meet these challenges. We need to
Calder R, Mitchell Institute. Feb 2015. Health policy options in the wake of health pricing ideas.
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reorient Australia’s health policy and funding to a network of health care services located across
Australia. There is strong evidence that this system of health care delivery is most effective when
delivered locally by primary care providers – both general practitioners and other health
professionals.
Similarly, it is very well known that the care of chronic and complex conditions, whether lifestyle or
age related, is most effective when provided through a range of health services at the primary and
community care level.
Encouragingly, the 2014 Budget’s introduction of primary health networks goes some way towards
potential improvement in the alignment between health services and how they are funded by
different levels of government. This offers the potential to better align GP primary care services that
are funded by the Australian government with hospital acute care services funded largely by state
and territory governments.
High cost health services - primarily acute hospitals - are increasingly overwhelmed by the
continuing rise in the incidence and burden of chronic disease on the Australian population across all
ages.
Reduction in funding to primary care services – the services of general practitioners and other health
professionals – in isolation from other measures to improve preventative health and chronic
diseases care can only accelerate these pressures.
The Commonwealth government has recognized the significance of the pressures emerging from the
traditional roles of governments within the Australian federation and has initiated a discussion
about Federation. The health measures that the government wants the Australian public and health
professionals to consider need to be considered in that context.
The Federation discussion offers Australia an excellent opportunity to construct an effective and
efficient national health system - one that maintains and sustains the best of its traditional
capacities whilst better focussing available funding and resources on prevention and early
intervention as well as treatment - to reduce the risk of avoidable diseases and better control the
growing impact of chronic diseases on high cost health services.
The 2014 Commonwealth Budget included a little recognized commitment to establish a national
health commission. Little if anything has been said about this by the government, and yet it offers a
critical opportunity to work with state and territory governments, and with health system experts, to
work collaboratively on “the challenges facing the Australian health budget and Australian health
services”.
Instead the entire political debate has focused on how to limit access to General Practitioners…with
a predictable furore from health professionals and health consumers alike.
The national health commission should comprise all governments as members, the Commonwealth,
State and Territory Governments, with independent experts from the health sector including
consumers, to enable an Australian health system to finally be the focus of health policy and funding
arrangements.
Realignment of the work of primary care practitioners through funding and service arrangements
should be considered in tandem with the role and funding of hospital services – they are both
central to the care of people with chronic diseases.
Calder R, Mitchell Institute. Feb 2015. Health policy options in the wake of health pricing ideas.
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Rosemary Calder is Director, Health Policy of the Mitchell Institute for Health and Education Policy,
based at Victoria University in Melbourne. She has extensive experience as a senior bureaucrat and
policy advisor in health and social policy, with particular expertise in health and aged care services
policy, planning, development, delivery and evaluation. Rosemary also has experience as an
independent consultant in health and social policy and research.
Prior to joining the Mitchell Institute, Rosemary was Chief of Staff to the Minister of Health in Victoria.
Previous roles have included First Assistant Secretary for Acute Care, and for Mental Health and
Health Workforce, with the Commonwealth Department of Health and Ageing to 2010; Head, Office of
the Status of Women (OSW) in Prime Minister and Cabinet, 2000 – 2003, and from 1990 to 2000,
Rosemary held senior executive positions with the Victorian health department with particular
responsibility for the development of state-wide health services for older people and those with
complex chronic care needs.
Calder R, Mitchell Institute. Feb 2015. Health policy options in the wake of health pricing ideas.
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