The National Health and Hospitals Reform Commission report released today proposes an historic structural and policy reform of Australia’s healthcare system, but one that stops short of the full Commonwealth takeover mooted in its interim report and flagged as an option in the 2007 election by the Prime Minister.

The Commission’s report is based on three keys areas of reform

  1. Better access and equity for people receiving sub-standard health outcomes now
  2. An improved healthcare system capable of responding to emerging challenges
  3. A sustainable system over the long-term

Fixing current problems

The report identifies indigenous health, mental health, health in rural and regional communities dental care and emergency department access as in need of immediate reform.  It proposes a new indigenous health authority that will be responsible for all indigenous health care, whether by direct funding or as a purchaser of services.  There should also be a push, the report says, to significantly improve nutrition amongst indigenous people, and there is a serious need for more indigenous healthcare workers.

As well as proposals for better access to mental health services and services for rural and remote communities, the report also proposes a universal dental health scheme, “Denticare”, available as either a publicly-funded service or privately, which would cost $3.6b a year and require a 0.75% increase in the Medicare levy (or appropriate private health insurance cover).

Emerging challenges

As expected, the report strongly emphasis preventative healthcare and proposes a new National Health Promotion and Prevention Agency to drive “a fundamental paradigm shift” on health amongst Australians.  It embraces the now well-established drive for greater coordination and continuity of primary healthcare across a range of services to ensure more comprehensive health care and better health outcomes, including the integration of current State-funded primary services under Medicare, which would move to a wider variety of funding mechanisms.

The report also recommends the effective separation of emergency and elective hospital services, with the Commonwealth taking greater funding responsibility for growth of hospital admissions, and greater provision of outpatient services in homes rather than hospitals, as well as the ramping up of sub-acute care (health services between primary care and acute care provided by hospitals).   The report also urges an overhaul of both Medicare safety net arrangements and the Medical Benefits Schedule, in effect proposing they be re-developed from first principles to overcome years of ad hoc accretions to both.

Long-term sustainability

The most predictable sections of the report are in relation to health consumers.  The well-worn rhetoric about the need to empower health consumers and use e-health is rehearsed, but the report also proposes a fundamental overhaul of reporting to provide greater transparency for health consumers (and voters).  The Commission also recommends a fundamental shift away from payment based on consultations or visits, toward a model focussing on payments for outcomes, including, possibly, episodic payments to address areas such as chronic disease where ongoing continuity of care is needed. This would be complemented by a shift to activity-based funding for hospitals.

The report recommends the Commonwealth take full responsibility for primary, dental, aged and indigenous health care, and provide full (activity-based) funding for outpatient services, and 40% of funding for elective and emergency hospital admissions (which, incidentally, would create an incentive for States to move in-patient services to outpatient status where possible).

The report also envisages a new Medicare system fundamentally different from the existing one, but at this stage only recommends it be investigated by the Government.  “Medicare Select” would provide universal health care but give consumers a choice of using a Government-funded health care plan such as is provided under current arrangements, or one provided by a private or not-for-profit healthcare provider, in effect moving the choice between private health insurance and Medicare to the heart of health funding for all consumers.

The expected big bangs of this report — full Commonwealth takeover of health, the move to choice in universal health care — aren’t centre stage; instead, the Commission has adopted a more conservative, but arguably more effective, focus on identifying what isn’t working now, especially in indigenous health, what emerging issues threaten the system, and how to ensure a single Australian healthcare system is viable for the long-term.

While the focus of coverage will be issues like referenda and demands for takeovers, the strength of this report is in the logic of its analysis of and recommendations on our current healthcare structures.  The political issues are less important here than the policy issues.