At some stage in our lives, most of us will rely upon a public hospital. The Federal Government’s cuts and broken promises on public hospital funding will take a human toll, and have “serious implications” for patients and health services, warns Alison Verhoeven, Chief Executive Officer of the Australian Healthcare and Hospitals Association. *** Alison Verhoeven writes: The […]

At some stage in our lives, most of us will rely upon a public hospital.

The Federal Government’s cuts and broken promises on public hospital funding will take a human toll, and have “serious implications” for patients and health services, warns Alison Verhoeven, Chief Executive Officer of the Australian Healthcare and Hospitals Association.

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Alison Verhoeven writes:

The old adage that there’s more than one way to skin a cat certainly rings true when talking about health budgets. In the past fortnight, Australians have listened to politicians and health commentators telling two very different stories – there’s more money in the health budget, and there’s less money in the health budget.

While each side of the equation has produced billion dollar bottom lines, either positive or negative, what is at play, once again, is the shifting of costs, responsibilities and blame between the Commonwealth and the states and territories.

And once again, it is those who rely most heavily on our public health system who will suffer.

A quick reference to the Budget Papers reveals the scale of cuts that the States contend will seriously compromise their ability to deliver public hospital services.

One line reads “The Government will achieve savings of $201.0 million over three years from 2015-16 by ceasing reward funding under the National Partnership Agreement on Improving Public Hospital Services.”

Another line says “The Government will achieve savings of $1.8 billion over four years from 2014-15, by ceasing funding guarantees under the National Health Reform Agreement 2011, and revising Commonwealth Public Hospital funding arrangements from 1 July 2017. From 2017-18, the Commonwealth will index its contribution to hospitals funding by a combination of the Consumer Price Index and population growth.”

The sweetener bottom line for both cuts is that savings will be invested in the Medical Research Future Fund.

The states and territories argue that this reduction in funding from commitments previously agreed in the National Health Reform Agreement is a cut. Specifically the Government has walked away from the commitment that no State would be worse off, and for guaranteed funding of at least $16.4 billion over 2014-15 to 2019-20, and the provision of 50% of growth funding from 2017-18.

The Commonwealth says that notwithstanding this reduction, there is still increased funding being directed to Australia’s public hospitals.

It is yet to acknowledge that it has backed away from the explicit promise made in its health policy statement, released prior to the 2013 election, that “A Coalition government will support the transition to the Commonwealth providing 50% growth funding of the efficient price of hospital services as proposed.”

The losers in this political stoush are the Australian public – and most of us, at some stage in our lives, will rely on a public hospital, regardless of whether we have private health insurance. This is because emergency department services and highly complex medical and surgical services are largely provided via the public hospital sector.

Prime Minister Abbott has argued that the states and territories run public hospitals, so funding them is their problem. This simplistic notion overlooks history and the legal and formal arrangements which underpin federal-state financial relations.

Taxpayers rightly assume that the taxes they pay contribute to services delivered by government in the public good. Historically, some of our income taxes have been transferred to the states to deliver services such as hospitals.

To argue that the Commonwealth should no longer be funding public hospitals in the way it has in the past because it doesn’t own hospitals, aside from the Mersey Hospital, is contentious to say the least. It also poses an immediate challenge to the states and territories to find funding either from their own taxes, such as payroll tax or stamp duty; or to push for an increase to, or broadening of, the GST.

A Federation White Paper is flagged to explore these issues further – but the cuts are being implemented from 1 July, long before that paper is prepared and debated. To resolve the shortfall by finding efficiencies will not be achievable in the short time frame available, nor in the quantum required to meet the gap.

As the states and territories have indicated, the cuts will have an immediate effect on their ability to achieve service delivery standards, and will have a negative impact on the improvements made in elective surgery and emergency department waiting times.

Certainty around sufficient funding to meet current and future health needs is critical to a well-performing health system. The dissent being expressed by Premiers and Chief Ministers across the country demonstrates the serious implications of this decision for patients and health services.

The Australian public not only expects its governments at all levels to manage budgets effectively, but it has a right to expect good and honourable behaviour from its leaders.

This should include an expectation that the Commonwealth and the states and territories will keep their word when they sign 9-way agreements, even where one or more of those jurisdictions has a change in political leadership.

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