The Government’s National Health and Hospital Reform Commission, announced by the Prime Minister on Monday, has a bit to do between now and mid-2009 – nothing less than “design a health and hospital system capable of dealing with the challenges of the 21st century”.

This is, Rudd declared, a “root and branch” review: Commonwealth-State inefficiencies, better integration and coordination of care, more preventative health care, better rural health and more effective health workforce planning.

Then again, that’s pretty much what thousands of health bureaucrats and their Ministers at the both levels of government are supposed to have been working on for the past few years. And the Commission’s work won’t be quite as “root and branch” as the Prime Minister suggests. He explicitly ruled out changes to the private health insurance rebate, one of the costliest pieces of industry assistance outside the automotive industry.

But presumably Dr Christine Bennett, the Chief Medical Officer of MBF, wouldn’t have agreed to chair the commission if it was going to review one of the critical components of her employer’s profitability.

A healthcare system capable of dealing with the challenges of the 21st century should be capable of dealing with rather older challenges, like the laws of supply and demand, first. But the Commission will also be ignoring the fundamental issue of the lack of price signals in health services.

You don’t have to be a rightwinger obsessed with “socialist medicine” to see that in Medicare, Australians have accepted a command economy model for healthcare. What they don’t accept is that in command economies, queuing is, in the absence of prices, the only means of balancing supply and demand. That’s why there are endless complaints about emergency ward mishaps and hospital waiting lists from a public that wants free, high-quality healthcare and no delays in accessing it.

Not even the world’s smartest health economists could deliver that, let alone the incompetents in the NSW ALP.

The Commission also needs to grapple with the self-interested agitation of various sectoral representatives. Health, like every other industry, is full of rent-seekers and logrollers, all of them chasing the tens of billions in taxpayer dollars available. But because most of them are medical professionals or groups thereof, the normal scepticism that should be applied to their barrow-pushing tends to go missing. They’re doctors – surely they have the good of the public at heart?

Well, maybe. Take a look at the Oxford Health Alliance conference in Sydney this week, which warned of the threat of chronic diseases to civilization as we know it. There’s no doubt that chronic disease is the Next Big Thing in health, and forms a critical element in the preventative health care agenda that offers governments the lure of significant long-term savings in health care costs.

But the “Sydney Resolution” offered by this group is heavy on government regulation and funding for the academics, activists and healthcare groups who make up the Alliance. It urges “screening populations”, “monitoring and enforcing responsible marketing”, “establishing government led incentives and disincentives to align business practices”, “encouraging equitable funding for chronic disease prevention and control programmes” and “training doctors and nurses”. The Resolution is a call not merely for massive social and economic regulation, but also for a major shift of funding to chronic disease specialists and their associates.

The question is whether Dr Bennett’s commissioners, most of whom are career health professionals, will rise above such blatant touting for business, or whether a “system capable of dealing with the challenges of the 21st century” will look a lot like the system that couldn’t handle the demands of the 20th.

Peter Fray

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