In Search Of Health Reform

Newcastle Herald

Wednesday February 27, 2008

LEADER

HEALTH spending in Australia is growing faster than inflation. It's growing so fast that governments are having trouble keeping up. Hospital systems are showing severe stress and people are finding it hard to get timely access to medical care.

With Labor governments in power at the federal level and in every state, Prime Minister Kevin Rudd has a golden opportunity to fix some of the flaws plaguing a notoriously complicated and inefficient system. By appointing a National Health and Hospitals Reform Commission to investigate problems and recommend solutions, Mr Rudd has begun a long-overdue process that promises immense benefits.

Demand for health services is practically infinite. In the western world people are living longer than ever, but their healthcare expectations are also unprecedented. Every new breakthrough creates more potential patients. Previously fatal ailments become curable, but the price tag is usually high.

Ultimately the chief difficulty in health funding is one of resource rationing. Different systems use different methods to ration the limited supply of services.

The United States, for example, typically relies on market forces to establish prices and determine which people can access services. This favours the rich and also encourages cartel-like behaviour by service providers.

The United Kingdom's national health system, at its peak, depended on queuing, which offers rich and poor similar access but creates long delays.

Australia's hybrid system has offered uniformly high quality care for both rich and poor. In recent years the strain has begun to show, however. Money being spent on the system is not necessarily being used efficiently and there are some structural issues to blame.

One problem is the practice of cost-shifting, such as when state administrators encourage health workers to bill Medicare for services provided in public hospitals, effectively making the Commonwealth pay twice for the same service.

The ultimate cure for cost-shifting would be a federal takeover of public hospitals and the removal of the state-based paymasters. Mr Rudd has explicitly ruled that question out of bounds for the new commission, but left the possibility open as a last resort. The potential efficiency gains would be significant, but whether the Federal Government wants to shoulder the political risks that come with taking responsibility for hospitals is another question.

Coal loader benefits

THE Hunter is looking forward to an employment bonanza from the imminent construction of Newcastle's third coal loader. About 300 Hunter companies attended an information session at which the group building the loader gave details of more than $500 million in contracts to be signed over the coming months.

Potential economic benefits for the region include jobs and paypackets to be spent locally, opportunities for training and skills improvement and the prospect of significant expansion of the coal chain when the loader is complete.

© 2008 Newcastle Herald

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