Prime Minister Tony Abbott has played down a Federal Government discussion paper that includes the idea of stripping more than $16 billion a year in hospital funding from states and territories.

But the Government will today publish the document in full, after successive days of leaks from it.

The green paper on federation reform, prepared by the Prime Minister's department, suggests states and territories could fund and operate the hospital system themselves.

Labor labelled it a "secret plan" to force states into charging a "hospital tax".

But Mr Abbott said Labor "would obviously rather run a scare campaign than have a serious discussion about how we can deliver better public hospital services".

"What matters is what actually is concluded from this process, not what goes into this process," Mr Abbott said.

"I can assure the Australian public that this Government will only propose things that are good for the public hospitals and the public schools of our country."

The idea is one of five options suggested in the paper:

The Commonwealth establish a benefit scheme similar to the Medicare Benefits Schedule for all hospital treatments in public and private hospitals

The Commonwealth establish a benefit scheme similar to the Medicare Benefits Schedule for all hospital treatments in public and private hospitals The Commonwealth and the states jointly fund individualised care packages for people with (or at risk of) chronic or complex conditions

The Commonwealth and the states jointly fund individualised care packages for people with (or at risk of) chronic or complex conditions The establishment of regional agencies to purchase health services for people in their areas

The establishment of regional agencies to purchase health services for people in their areas The Commonwealth becoming the single funder of health services

The Commonwealth becoming the single funder of health services States taking full operational responsibility for public hospitals

Under the last option, the paper said "the states and territories would be free to make decisions about the level of investment in, and delivery of, public hospital services".

"The ongoing financial durability of this option is likely to be challenged if the level of avoidable hospital admissions cannot be reduced, or if failures in the primary care system lead to public hospitals picking up the slack," the paper warns.

"Durability will also be challenged if the states and territories do have access to adequate revenue."

The same discussion paper earlier this week raised the prospect of charging wealthy parents for their children to attend public schools.

Labor said the paper exposed the Government's intentions for health.

"It's now crystal clear Mr Abbott is shaping up for the biggest attack on our schools and hospitals ever seen in Australia," Opposition acting health spokesman Mark Butler said.

"After huge cuts imposed by last year's budget, to the tune of $80 billion over 10 years, the Commonwealth is now proposing to take a paper to the states that sees them walk away entirely from historic responsibilities.

"Today Mr Abbott's secret plan to handball responsibility for funding hospitals to states has again been exposed."

But the Prime Minister said a mature debate on the issues is important.

"This is officials talking to officials about what they think are interesting ideas for the future of our Commonwealth," he said.

"In the course of that discussion a whole lot of issues will be raised, a whole lot of possibilities will be canvassed."