There’s not a great deal of new thinking in the National Health and Hospitals Reform Commission’s interim report. That’s not a criticism — many of the key directions in health policy are already well-established, even if they remain at odds with the complex structure and funding arrangements of the Australian health system.

Better coordination of care, greater focus on patients, preventative health, e-health records, dealing with the burden of chronic disease, more effective targeting of Aboriginal and Torres Strait Islander health and ways to address the lack of a regional and rural health workforce are all ostensibly priorities already for the States and the Commonwealth. It would be surprising if a commission composed of senior health sector figures suddenly took health policy in an entirely novel direction.

One group not directly represented on the Commission was the Australian Medical Association. Mukesh Haikerwal, ex-AMA head, is a member, although his involvement was curtailed by his injuries last year. The current AMA head, Rosanna Capolingua, is effectively persona non grata with the Government given her predisposition to criticism of the ALP and her Liberal Party connections. It takes a lot even for political conservatives to get offside with this government (for example, Rob Knowles is a member of the Commission), so Capolingua’s effort to get herself excluded from the most significant health policy forum in decades is impressive.

That may or may not be the reason why the interim report steers in directions guaranteed to upset the AMA. It expands upon the current Government “superclinic” policy, pushing, in effect, super superclinics, or “Comprehensive Primary Health Care Centres” that would include numbers of GPs, diagnostic services, other health professionals and maternal and child health services as well as working with home and community care and aged care providers.

It proposes that the shortage of doctors in rural and regional communities be partly addressed by allowing nurse practitioners and other professionals to order MBS services and prescribe PBS-approved items, as well as bill for some MBS services. There’s also a proposal to “enrol” patients with chronic diseases with a single provider.

As usual for an AMA president and Capolingua in particular, she responded to the interim report by reflexively saying it might threaten patient safety. Whenever the AMA mentions “patient safety”, just replace it with “GPs’ incomes” and you’ll get a more accurate picture of what they’re saying. It’s an old union trick.

The Commission also lacked a senior health economist, which may account for the relative lack of an economic dimension to the analysis. The basic economic analysis that should underpin the report is that non-indigenous Australians are the second-longest lived people on the planet and that we already spend nearly 10% of GDP on health. In the absence of another resources boom — remember this report was commissioned prior to the financial crisis really setting in — our capacity to devote more public resources to health is limited.

That suggests two things. First, given how healthy the rest of us are, any additional funding or efficiencies generated should — both on the basis of morality and good policy — be prioritised for those sections of the community that need them most. The report does a good job of identifying the key groups that require additional resources: indigenous Australians, Australians with mental illness, regional and rural communities, and lower-income Australians unable to maintain dental health.

Given the enormous gap between indigenous and non-indigenous health, there’s probably no case for not directing every extra cent into Aboriginal and Torres Strait Island health. But convincing Governments to direct resources to these groups in the face of constant headlines about metropolitan hospitals being unable to provide middle-class Australians with the level of emergency services they expect by right will be extraordinarily difficult — as will convincing Australians of the merit of copping a 0.75% tax increase to fund dental health.

Secondly, in the absence of more public funding, Australians will need to pay a greater portion of their health care costs (and aged care costs) themselves. The report has a chapter on the mix of health funding and considers whether households are paying “too much” for health (which is a “how long is a piece of string” question), but concludes Australia’s current mix of government, private health insurance and individual expenditure funding is appropriate, although it could be re-balanced. Intriguingly, that statement is almost immediately followed by the observation that “Australia does not have systematic ways for tapping the views of consumers about levels of health spending, and the purposes for such spending.”

The main reason for that is that there are few price signals for health services. Price signals are the traditional, and most reliable, way of tapping the views on consumers about spending. They’re hardly the be-all and end-all in health — most health expenditure is non-optional, at least in the short-term, which pretty much voids the whole idea of consumer choice. But according to the report, only one six of health expenditure is made directly by individuals themselves.

The report does make an effort — particularly in relation to its “Denticare” proposal, and its Option C for a Commonwealth takeover of all health services — to argue the merits of greater contestability of health services through choice of health insurers, which would introduce a new level of consumer choice. It also considers the issue of whether financial incentives or penalties are effective in driving individual health outcomes (the former, it concludes, but not the latter).

But it fails to grapple with the current skewed funding structure that charges higher-income earners a one-size fits all public health levy regardless of usage, provides a tangled web of cross-subsidies between taxpayers, health insurance funds and heavy users of health services, but which in many cases does not charge people for direct consumption of services, regardless of their capacity to pay.

The debate about a Commonwealth takeover, or re-allocation of roles between Canberra and the States (which the Commission seems to prefer), is a distraction from the real issue that the quantum, sourcing and allocation of health funding in Australia is a problem requiring a political as well as a health policy solution.

Like any good review, the Commission Report has given the Government a reason to delay considering such vexing issues. There’s still some months to go before the final report, but eventually this Government will have to decide whether to come to grips with the difficult politics of health economics, or squib it like every other government has.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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