So Kevin Rudd has finally admitted what everyone else realised some time ago: fixing the health system is going to cost a huge amount of money and it’s no good pretending otherwise.

Ambitious reorganisations are simply not enough. Certainly they are useful and necessary, and Rudd’s plan to reform hospital funding and planning is by any measure a good start; the only real criticism is that it doesn’t go far enough.

But the cost of keeping abreast of new medical technology is rising much faster than the rate of inflation, and this means that an ever-increasing proportion of national revenue will have to be devoted to health simply to remain standing still. And this does not include the problems of an increasingly long-lived population and the inordinate demands the ageing make on health care.

The choice is stark and straightforward: if the system is to provide the level of service to which the public has been conditioned to believe it is entitled, someone is going to have to pay and in the end, as always, the buck stops with the taxpayer. A sensible government would already be explaining this dilemma and preparing the public for the inevitable; indeed, a really sensible government would have begun the process long ago. But because of the media-conditioned aversion to tax increases of any kind for any purpose, the problem has been allowed to fester away until fixing it has become a near-revolutionary task.

It is to Rudd’s great credit that he has at least embarked on the process; but the hard part — persuading the punters to abandon the habits of a lifetime and accept that there is no such thing a free health system — is yet to come. Perhaps he could make a gentle start by raising the Medicare levy — perhaps doubling it. If the voters believed that it would provide value for money, they might even accept it. But at present they are still being told by their respective premiers that Canberra is the source of unlimited wealth and that if the feds would only release it all would suddenly be well — all gain and no pain.

Victoria’s John Brumby is, as usual, the worst offender; until last week his health policy consisted entirely of insisting that Rudd should give him a gigantic bucket of money or he would refuse to play. This has since been refined into something a tad more sophisticated, but the core demand remains. The general view of the commentariat was that Brumby is just grandstanding for his local state audience and this is probably true; the standout was (of course) Dennis Shanahan in The Australian, who wrote admiringly that Brumby had raised some serious and relevant questions and was quite capable of sabotaging Rudd’s plan for the hospitals in the same way he sabotaged the national water agreement, and wouldn’t that be fun?

It used to be thought that the outlying states — Queensland, Tasmania and Western Australia — had cornered the market in parochialism. Brumby, egged on by Shanahan, has upped the ante considerably. Nonetheless, the likelihood is that despite some lukewarm support from Kristina Kenneally in New South Wales, he will finally be brought to heel when the crunch meeting of COAG begins next week.

Rudd has already started to hand out the biscuits: $500 million for emergency services of Saturday, $740 million for aged-care beds on Sunday, and there is doubtless more to come. The bribes will help, but the overriding issue is that the voters really want health and hospital reform, and are likely to inflict a horrible punishment on any politician who is seen to be standing in the way of it. This is a much bigger issue than the water rights of a few recalcitrant irrigators, and Brumby is smart enough to see it.

Incidentally this does not necessarily mean that Rudd’s fallback threat of a referendum would succeed; during a long campaign the premiers and others could muddy the waters considerably. But it does mean that no premier hoping for re-election will want to be the one who pulls the plug. Rudd’s plan — or a slightly amended version of it — will probably get past COAG. Then comes the hard bit.

It is to be hoped Rudd is up to it; his behaviour over the asylum seekers suggests that he is still finding the hard decisions a bit too hard. The announcement that processing of Sir Lankans and Afghans would be frozen for three months and six months respectively justifies Tony Abbott’s description as a quick election fix — being seen to be doing something about an apparently intractable problem.

Rather than taking Peter van Onselen’s counsel and showing leadership, Rudd has capitulated to the shock jocks and to the scaremongers of the opposition. Shanahan called it a populist response to a highly successful populist campaign waged by Abbott and his shadow minister Scott Morrison; Van Onselen accused Abbott and Morrison of trying to rabble-rouse their way into government.

But there was little doubt that it was a cop out, and one that is unlikely to provide the government with much relief. For starters it is a broken election promise: Rudd’s policy was that asylum seekers were to be fully processed within 90 days. Now the Afghans will have to wait twice that long before their first interview. The justification, if it can be so described, is that conditions have changed; the prospect that the boat people can be sent home without having a well-founded fear of being persecuted (the teat for a genuine refugee) are now brighter.

This assessment is highly dubious. Sri Lanka is certainly more stable, but then, the most ruthless dictatorships often are. The stability does not mean that the government will be any less brutal to what it sees as rebel Tamils, especially those who have attempted to flee its shores. And Afghanistan, of course, remains a bloody mess, as it always has been and probably always will be.

Manuel Jordao, an senior official of the United Nations High Commission on Refugees, may well have been right when he said that people smuggling, with the introduction of spotters’ fees and cut-price fares, was out of control. Rudd’s move does nothing to bring it under control; at best it buys him a little time. Given that his opponents are constantly accusing him of procrastination, this may not be the shrewdest of moves.