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06 Jul 2015

The deliberate leaking – followed by the official release - of the Federation reform green paper in the final sitting week of Parliament in June has set up a possible heated exchange between the Commonwealth and the States at the COAG Leaders’ retreat, which is to be held next week in Sydney.

One of the five options proposed in the paper is that the States and Territories could fund and operate the hospital system themselves.

The idea that the Commonwealth would walk away from any responsibility for public hospitals would send a chill through State Treasuries, especially the smaller States and the Territories.

It also goes against the central theme of most health reform processes of recent years, including the National Health and Hospitals Reform Commission (NHHRC), which undertook considerable community and professional consultation on the subject of public hospital funding.

This option looks like another clever economic or tax policy, not a health policy. It looks like a catalyst for a GST debate.

The priority is shifting the cost, not sharing the health care responsibility across governments.

It is cost shifting writ large. It is the ultimate blame game – shifting the blame totally to the States.

There are four other options flagged in the green paper, three of which are complex and untested.

One is for the Commonwealth and States to jointly fund individualised care packages for people with chronic and complex conditions. Another is the establishment of regional agencies to purchase health services for local populations. And another is to establish an ‘MBS’ schedule for public and private hospital treatments.

The fourth, of course, is for the Commonwealth to be the single funder of health services. Sound familiar? We have been down this path before without satisfactory resolution. But it is an option that remains very much alive for many health commentators.

The Federation green paper for health has not progressed much from the NHHRC recommendations.

Regardless of green papers and commissions, the fact remains that there is a funding crisis facing the States and our public hospitals.

The Government spent the last week of Parliament before the break denying that it had stripped funding from public hospitals. But the Government’s own Budget papers from 2014-15 tell a different story. The AMA has been pursuing this funding cut since Budget night last year.

The Federal Government may be denying it, but the States know it is a frightening truth.

NSW Treasurer Gladys Berejiklian has acknowledged that NSW would lose about $300 million in 2017 because of projected Federal budget cuts. She said there is no doubt this is a very serious issue for the future of her State. And this warning comes from a State with a Budget in reasonable condition.

The Federal cuts to public hospital funding will hit other States much harder. The Premiers and Chief Ministers know it.

There was talk that the Premiers, led by NSW’s Mike Baird, would go hard at the most recent COAG meeting, but the confrontation did not eventuate. The Prime Minister cleverly took the heat out of the situation by calling the special COAG Leaders’ meeting to discuss Federation reform, primarily health and education.

Will the States go on the attack at the retreat? Stay tuned.

Published: 06 Jul 2015