4B-1 Appendix 4B Proposals to Transfer the Health Function, or Part Thereof, from the States and Territories to the Commonwealth Appendix 4B has four sections. The first briefly examines calls for national approaches to health and related functions in Australia, with an emphasis on proposals to transfer all or part of the health function from State and Territory governments to the Commonwealth government. The second summarises several qualitative estimates of the benefits possible through national approaches to health. The third presents a compilation of recent media reports, in Table 4B-1, describing calls for national approaches to health and qualitative and quantitative claims and estimates of the financial benefit of such national schemes, some of which have already been described in Chapter 4. The fourth section, in Table 4B-2, then presents a subset of the media reports presented in Table 4B-1 which provide very recent examples of the manner in which Commonwealth-State and party political divisions have significantly impeded otherwise sincere efforts to improve Australia's health systems and outcomes. Proposals for National Approaches to Health The Commonwealth government already has significant constitutional powers with respect to part of the health function in Australia, as Swerissen and Duckett (1997: 14) explain: The Commonwealth derives its main powers for direct involvement in health policy through section 51(xxiiiA), section 51(ix) and section 96 of the Constitution. Section 51(xxiiiA) provides the Commonwealth's broad power to provide health services and benefits directly to the Australian people through programs such as Medicare and the Pharmaceutical Benefits Scheme. The Commonwealth also has quarantine powers through section 51(ix), and Section 96 gives the Commonwealth power to make grants to the states for specific purposes, such as health, as it sees fit. These tied grants or Specific Purpose Payments (SPPs) are usually made as part of a Commonwealth-state agreement. But Palmer and Short (1994: 18), and many others, observe that the division of health care funding and provision in Australia, among Commonwealth, State and Territory governments, and the private sector, is quite unique in its complexity: As compared with other areas of major activity in the Australian economy, the health care system is characterised by a very complicated mixture of government and private initiatives, with governmental responsibilities being divided between the States and the Commonwealth. The health care systems of several other countries with a Federal structure of government, 4B-2 including the United States and Canada, share these characteristics, but Australia may be unique in terms of the extent of both the public-private and the State-Commonwealth interaction. Numerous studies have highlighted the complexity of Australia's health care system, and the waste, duplication and inefficiencies among Australia's separate and often poorly coordinated Commonwealth, State and Territory health administrations, and associated problems of cost- shifting, blame-shifting and risk-shifting (Scotton 1978; Jamison 1981: 31-84; Madden 1984: 37-48; Whitlam 1985: 343; Richardson 1987; Sax 1990: 164-165; Butler 1991; Owens and Duckett 1991: 87-99; Palmer and Short 1994: 18-21; Duckett et al. 1995: 3-10; Rydon 1995: 15- 16; Rydon and Mackay 1995: 216, 224, 227, 234-235; Anderson 1997: 133; Gardner 1997: 4,6- 7; Lin and Duckett 1997: 58; Swerissen and Duckett 1997: 36-43; Wyn Owen 1997: 650, 653; Butler 1999: 51-55, 61-64; Donato and Scotton 1999: 35-39; Duckett 1999: 134-136; 2002: 24- 26; 2004: 104-123; Mooney 1999: 18; 2004; Mooney et al. 1999: 260-262; Richardson 1999: 194-195; August 2002; Kilham 2002; Productivity Commission 2002; 2003; 2005a; 2005b; Gittins 2004: 48; Bracks 2005: 8,33; see also Gray 1991). In an attempt to address these problems, many of these studies have recommended that the Commonwealth assume full powers and responsibilities for health care, or at least become the sole public funder of health care, or other national approaches to the health function or part thereof (see, for example, Sax 1984: 165-167; 1990: 164-165; Whitlam 1985: 343; Palmer and Short 1994: 328; Rydon and Mackay 1995: 234; Opeskin 1998: 337-369; August 2002; Duckett 2002: 24-26; Swerissen 2002: 88-93; Mooney 2004; Productivity Commission 2005a; 2005b). In recent years – especially since 2003, reform of Australia's health care system has been close to the forefront of Australia's political agendas, at both Commonwealth and State-Territory levels. Table 4B-1 below contains extracts from 192 media reports from 1996 through to 2006 (177 from 2003 to 2006) which describe support for national approaches to the health care function, or part thereof, with or without formal constitutional reform. These reports show that the idea of transferring all health functions to the Commonwealth is widely supported by senior politicians at Commonwealth and State level and across the political party spectrum, as well as academics, doctors and other health workers, various medical and health organisations, the media, and others. Table 4B-2 contains a subset of the media reports shown in Table 4B-1 which document specific proposals to transfer the entire health function to the Commonwealth. When read in sequence, these reports provide an example of sincere concern and effort on the part of several senior politicians on the one hand, but almost childish blame-shifting and theatrical political 4B-3 point-scoring on the other. Such displays might be amusing and genuinely entertaining on an apt stage, and if health care wasn't a matter of life and death gravity, but many observers over many years have lamented that significant reforms and improvements in Australia's health system have all too often been thwarted by the very behaviours captured in Table 4B-2. Typical criticisms of Australia's current health arrangements, and associated calls for reform, now follow, beginning with a conspicuously well detailed proposal announced by the Australian Democrats in April 2000. The Australian Democrats' 'Delivering a Remedy' Health Plan In April 2000, the Australian Democrats (2000; see also National Rural Health Alliance 2000: 1,3) released an extremely comprehensive plan for reform of Australia's entire health care system, including aged and community care. The plan, titled 'Delivering a Remedy', centred on a new 'integrated regional funding' model, described as follows (Democrats 2000: 12, emphasis as in original): The Democrats are proposing a new funding model which strengthens the existing Medicare system by including all Federal and State government funding for health, aged care and community care into a single pool of Medicare funds. This system would require a restructuring of current funding arrangements to bring together all current funding, including the Medicare hospital grants, state hospital funding and specific programs, such as HACC (home and community care) under the one umbrella. The Medicare levy would continue as one mechanism for raising a proportion of health revenue. The funding would be allocated on a per capita basis directly to large regional areas. These regions would use the funding to provide medical hospital, allied health, aged care and community care for their populations. Regions would include a large enough population base (at least 300 000) to sustain most of the health services required on a day to day basis, with some sharing between regions of highly specialised care. Regional health authorities would be governed by representatives elected by the community and include service providers, health professionals and consumers. They would be answerable to the community as well as State and Federal governments for their decisions and clear accountability mechanisms would [be] put in place to ensure that this occurs. The Democrats (2000: 16) believe that "there is significant potential for better health outcomes and significant cost savings if we adopt an integrated regional funding system". The costly waste, duplication, fragmentation, cost-shifting and coordination problems that arise under current arrangements are highlighted by the Democrats (2000: 5): Current funding and structural arrangements for health and community services cause significant wastage throughout these sectors. Different levels of government and different vertically structured health programs have a financial incentive to shift responsibility for providing appropriate care elsewhere to save their own costs. This results in the misdirection and inappropriate use of health care resources and costs the community millions of dollars a year. 4B-4 There has been insufficient research conducted into the many ways in which resources in the health sector are wasted through duplication of function, cost-shifting and inappropriate use. However, there are some key examples of where the costs of these practices can be considerable, for example the use of acute care beds for patients requiring aged care when a more cost- effective alternative, such as a nursing home bed could be provided. ... Politically driven changes in the organisation of health care services can be very expensive without any gains in access, quality or cost effectiveness of care. Central health department bureaucracies have grown exponentially as they try to second guess the managers of health services to reduce political risks rather than concentrating on policy development, strategic planning and purchasing services