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Paying the piper. So what’s the tune (and how good is it)?

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Healthcare funding challenges us as a nation on three levels.  The most obvious and basic is: Where does the money come from?  The second is: How can we be certain that the money is being well spent on health gain?  The third is: How does our funding of health care match our values as a society?  While these challenges interlock, looking at each separately can help us determine if we are on the right track. Let’s look at values first.

How much do we value health care?

Most advanced economies agree that funding health care should be a major call on public money and hence paid for through taxation. This is a political response to social attitudes that see illness as capricious and accidental and hence not something for which the individual can be held to be responsible.  Even when groups engage in risky behaviour – smoking or drinking for example – what happens to an individual remains very much a matter of chance. 

Who pays?  The individual or all of us?

Which smoker develops lung cancer is currently unpredictable.  You cannot hold the sufferer responsible for their illness.  As a reflection of social solidarity, most societies like ours choose to defray costs for health care by spreading them across all of us.

This approach is not universal: when money is scarce health care costs are sheeted home to the individual.  The proportion of government expenditure going to health care is lower as a proportion of GDP in low- and middle-income countries.

The slow slide to privatising health care

Gradually, since the inception of Medicare in 1984, a decade after Medibank, successive Australian governments have sought to contain health care costs by shifting more of them to the individual. This matters – for equity and fairness.

The New York-based Commonwealth Fund ranks health care in eleven economically advanced nations every two years.

It compares health care on 72 indicators in five domains: Care Process, Access, Administrative Efficiency, Equity, and Health Care Outcomes. Australian health care comes second overall but has lost its top-ranking on the dimension of equity.  This is because of rising co-payments that now rival those of the US. 

Although this “privatisation” was not the focus of the Mediscare furore before the 2016 federal election, it could have been.  Rather, it passes almost without comment.

The latest survey can be found here: http://www.commonwealthfund.org/publications/fund-reports/2017/jul/mirror-mirror-international-comparisons-2017

Funding for activity and outcome

Other strategies to ring-fence the amount of public spending employed in Australia include payments made by the Commonwealth to the States and Territories based on hospital activity as measured by the volume of services they provide. 

Efforts put into this approach were mentioned recently in an article in The Australian by Sean Parnell.  Parnell wrote that: “Before the last federal election, Prime Minister Malcolm Turnbull struck a deal with the States that the Commonwealth would fund 45 per cent of the growth in activity-based funding, capped at 6.5 per cent nationally each year.”  The problem, of course, will be whether growth can be limited to this figure.

This move has liberated us from complete ignorance of what it is that we are paying for and opens the door for the next step – to find out not just what we are doing but what it is achieving.  This requires better information about clinical outcomes and this may follow from improved IT systems. 

Getting more value for what we spend is a necessary corollary of capping activity.  We must rearrange our processes of care to match the decades-long needs of people with chronic problems in the community rather than in hospital. 

We can do better with programs of prevention – directed at nutrition, activity, alcohol and tobacco use for example and the commercial forces that determine these.  We should continue our efforts to sort through the lengthy Medical Benefits Schedule to remove those items we now know do not work. We are fortunate to live in a country that enjoys good health and high-grade health care.  Ensuring that this remains the case for the future would be fine legacy.