The Australian Medical Association Limited and state AMA entities comply with the Privacy Act 1988. Please refer to the AMA Privacy Policy to understand our commitment to you and information on how we store and protect your data.



08 May 2017


Health financing is Health Financing and Economics Committee’s (HFE) principal responsibility and central to HFE’s terms of reference. As HFE members will attest, health financing is the largest, most complicated, and all pervasive topic that the committee has the privilege of dealing with.

At its meeting on 1 April 2017, HFE considered the critical elements of current health financing arrangements and the developments and trends likely to impact on those arrangements.

HFE discussed how to build a framework for long term health financing arrangements that are fair, robust and sustainable, and deliver certain and sufficient funding for health care, now and into the future.

This is a challenging task. Health financing is a very complicated policy area. There have been a number of reviews into the system over the years which have discussed (with varying rigour and results) issues surrounding managing costs within components of the health system, with a view to sustainability over the longer term. The overall success of these reviews in terms of lasting, positive improvements has, however, been limited and there have been both overlaps and gaps in their terms of reference.

Public understanding of health financing issues, and the public’s preparedness to consider changes to arrangements for health care, are also limited. Many commentators took this as a key lesson of the 2016 Federal Election. They considered that governments will find it difficult to develop, legislate and implement significant reforms in health without public suspicion of potential impacts on basic Medicare arrangements. Framing a new approach to health financing is clearly not a task for the short-term.

HFE agreed the long-term health financing conversation should be framed in terms of the future health system in 2035. The conversation will need to include all significant stakeholders – organisations and people with a direct interest in the financing of health care, with a view to arriving at a broad consensus on a fair, affordable and sustainable system, and one that takes into account predicted changes in health care needs, advances in medical technology and new information and health management platforms.  Consumers should be involved in the conversation.

As a starting point, HFE decided that the AMA could facilitate a discussion around the health system, which could include signalling a number of possible pathways but would not singularly propose a solution.

HFE members noted there is a need to create a space for this discussion that is free of the usual criticisms and stakeholder-positioning that have plagued other reviews and policy processes. 

This conversation needs to focus on cost management and obtaining value. It could canvas issues such as whether the health system needs to provide all possible health care to all people at vast and accelerating expense, or should it manage costs by some method.

There needs to be an understanding of the cost drivers going forward, particularly technology and the ageing population, and a national conversation about the level of service we want our health system to deliver in the future.

The conversation should also encompass specific issues identified by HFE members.

These include the need to not only consider efficiency in clinical settings such as hospitals, but also consider efficiency within administration departments, given the growth in these departments within the hospital sector.

Primary health care needs an increased investment, with an understanding of where future pressures and the value of future primary care interventions could be.

The contribution of private health insurance to the overall health system and health financing arrangements also needs to be considered as part of this discussion, particularly given the increasing amount of Government and private spending propping up the industry.

Supporting this work, it would be useful to have a review of the programs run by Government to ascertain which ones are producing good outcomes.

HFE recognised that large-scale change is not likely in the near future. The vision for the future health system must be beyond the three year election cycle. Support from all political parties will be necessary to prevent undermining of solutions.

An important overall outcome of this work should be a ‘vision’ for health financing arrangements that should allow the AMA to be able to hold any Government into the future to account.

The vision also needs to speak to AMA members (and other health care providers) that may be disillusioned or feel abandoned by current arrangements, whether working in general practice, public or private hospitals.

If you have views on how health financing arrangements should change, please contact me. HFE will welcome your input.



Published: 08 May 2017