Kevin Rudd says he has a “positive” plan to fix health care. Many people have welcomed his plan for a takeover of public hospitals by the federal government, desperate for something to be done about the state of the health system.
But Rudd’s plans continue the economic rationalist model that has seen our health system deteriorate, and fail to address the basic need for more funding in the system. Hospitals will receive no new funding for four years under the plan—despite rising costs every year.
At the core of his plan is a new funding formula, designed to deliver “efficiencies” in the sector. This is code for cost cutting. The “case-mix” formula, under which hospitals would be allocated a set amount of funding for each operation, was first introduced by notorious Liberal Premier Jeff Kennett in Victoria.
It was claimed as a success for driving down hospital costs in the state. How? Through forcing hospitals to cancel surgery, leaving patients waiting months for operations.
When Latrobe regional hospital ran through its budget in 2008, it responded by cancelling 500 hours of elective surgery and closing 20 beds, according to an investigation by Stateline.
Peter Craighead, CEO of Latrobe regional hospital in Victoria told the program that the funding formula meant, “Our revenue’s increased by about 20 per cent over the last four years, but our costs have gone up by 32 per cent.” As he put it, “A number of our procedures actually cost more than what we get funded for.”
Dr Doug Travis, a Victorian urologist who has worked in the system for 30 years told The Age, “People have to accept that the hospital system is not meeting demand. We haven’t got enough facilities, doctors and nurses to deliver the healthcare the public expect and want. That’s the major crux of the problem and there’s only one solution for that and that is increasing services. That is going to cost money.”
But this is precisely the problem that Rudd has avoided in delaying any funding increases.
There are inefficiencies in the health system. Doctors have long complained that cost-cutting across the system ends up costing hospitals more in the long run. According to Con Costa of the Doctors Reform Society, “Policies that make short term and minor savings at one level prove to be enormously expensive to the system as a whole”.
As he explained “Australians are too often treated by their GP by prescription, blood test or radiological investigation—at very high cost to the system… Thousands of men are now having a simple blood test for prostate disease—called Prostatic Specific Antigen. The test is not reliable… Nevertheless, it has taken off and now de rigeur for diagnosing prostate disease amongst Australian GPs. [It] seems it’s much quicker to order a simple blood test than to wait for a patient to undress and perform an uncomfortable rectal examination. And time is of the essence for Australia’s GPs—where the waiting room is often over-crowded”.
But Rudd’s plan has ignored the need for a plan to integrate the total health system and eliminate these problems. This is because it would mean increasing the bulk-billing rate the government pays to GPs and undoing the privatisation of nursing homes.
Perhaps most alarmingly, Rudd has failed to target the private hospital system, which leaches money away from the public system and helps inflate hospital fees. As Ian McAuley noted in New Matilda, “private hospitals have their privileged stream of funding through heavily subsidised private insurance”.
The private health insurance rebate, paid by taxpayers, will remain at $3 billion a year, even if it becomes means-tested. This is money sucked out of the public system that the 56 per cent of the population that cannot afford private health insurance relies on.
Private health insurance exists to enable those that can afford it to skip the queue in the public system for treatment. But the result of this is to force up hospital bills across the board, because doctors can charge more in the private system.
The government claimed that offering the rebate would reduce its health costs by encouraging more people to take up private health insurance.
But as the architect of Medicare John Deeble has said, “Less than half of the [money] spent each year on the private health insurance rebate actually goes on hospital care and the same sum would have transformed public hospitals.”
The private health rebate is nothing more than a subsidy for the rich—and one that undermines the idea of an equitable health system where everyone gets the same treatment.
By James Supple