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Hospitals get just $1 more

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The Federal Government spent just an extra $1 for each man, woman and child in the country on hospital funding in 2013-14 as it screwed down hard on its health budget.

As the nation’s leaders meet for the last Council of Australian Governments meeting of the year, figures compiled by the Australian Institute of Health and Welfare show that Commonwealth funding for hospitals reached $892 per person in 2013-14, which was a $132 increase from a decade earlier but just $1 more than in 2012-13.

The miserly increase has contributed to a big shift in the burden of hospital funding from the Commonwealth to the other levels of government.

In the 10 years to 2013-14, spending by the states, territories and local governments on hospitals grew at virtually double the rate of the Federal Government.

Over that time, they expended an extra $10.3 billion on hospitals, after inflation – a 69 per cent increase.

During the same period, the Commonwealth’s contribution grew by just $5.7 billion – a 38 per cent increase.

The result provides a sobering backdrop to the tax reform debate.

Weak growth in GST revenues in recent years has intensified the strain of health spending on State and Territory budgets, driving calls by premiers and chief ministers for access to a more dynamic revenue base. One proposal has been to push the GST to 15 per cent and direct the funds to the Commonwealth. In return, the states and territories would get a share of income tax revenue.

But the Commonwealth flagged it is not interested in increasing the GST and is instead pressuring the states to change their own tax mix.

At the same the Federal Government has been paring back on hospital funding, it has been pulling back on its share of primary health spending, which dropped to 36.7 per cent in 2013-14 from 37.3 per cent the previous year.

Instead, it has picked up its spending on other health goods and services, particularly referred medical services, and to a lesser extent research and health administration.

In the 10 years to 2013-14, Commonwealth spending on these services jumped from $11.6 billion to $19.3 billion – including $12.2 billion on referred medical services alone.

Indicating the increasing importance of this type of spending, in 2003-04, it was 8.4 percentage points lower than Commonwealth spending on hospitals. Ten years later, it was just 2.3 percentage points lower.

The figures underline AMA concerns that the Commonwealth is dumping an increasing share of the health funding burden onto the states and territories, intensifying the strain on public hospitals, which have already reported a downturn in performance.

The Commonwealth’s backsliding on primary health funding also lends weight to fears that the reviews it has initiated into primary care, particularly the MBS Review, are being driven by a cost-cutting agenda.

Adrian Rollins