Labor's Longman Mediscare adds to chronic patient pain - The Centre for Independent Studies

Labor’s four from four victories in the Super Saturday byelections signal that health will feature heavily at the next federal election, which is shaping up as a Mediscare 2.0 poll.

In the Queensland seat of Longman, the Labor Party’s campaign centred around the local Caboolture hospital, with voters being urged by Labor activists to reject the Turnbull government’s so-called “cuts” to public hospital funding.

The claim that hospital funding has been cut is a myth.

In the name of fiscal repair, the Abbott government’s 2014 budget rightly abandoned the Gillard government’s unaffordable funding deal with the states – a deal that would have increased federal funding for public hospitals from $14 billion in 2013-14 to $40 billion by 2024-25.

Before the 2016 election, the Turnbull government reversed most of the Abbott “cuts” up to 2020, and federal health funding is destined to increase in real terms under the new funding agreement being negotiated.

Nevertheless, Bill Shorten is sure to continue to campaign hard against the Coalition’s recent record in health. The byelections were clearly Labor’s trial run of a “Gonski-for-health” style campaign, copying a tactic whereby Labor and the unions successfully defined extra cash for schools as the sole criteria by which to judge education policy.

It might be smart politics for Labor to promise to always spend more on hospitals than the Coalition. But such a commitment is terrible health policy.

Need for innovation

Promising to pour ever-higher sums into public hospitals is financially unsustainable. Focusing solely on the level of hospital funding ignores the need for innovation and for modernising Medicare to deliver the up-to-date, and more affordable, healthcare needed today.

We already spend more than we should on expensive hospital care because Medicare is ill-suited to meeting the major health needs of Australians in the 21st century: the effective treatment of chronic disease in an ageing and sicker Australia.

Under the current system, Medicare principally pays doctors for delivering one-off episodes of either GP, specialist or other and hospital care. This traditional “craft style” model of healthcare was more suited to last century when the bulk of the community’s health needs involved short-term treatment for acute illness.

However, due to the “gaps” in the fragmented, doctor and hospital-centric Medicare framework, many chronic patients with complex conditions do not receive all necessary and beneficial care – because they cannot access the full range of services such as community-based nursing or allied healthcare.

In practice, this lack of access to non-hospital based primary care – which could keep chronic patients well – results in higher spending on potentially avoidable hospital admissions.

These avoidable trips to the hospital make up 10 per cent of all admissions each year.

The failure to deliver the right care at the right time and place is even more significant, given that an estimated 5-10 per cent of chronically ill patients account for 50 per cent of the cost of health services.

More efficient chronic care

The solution to these problems – conservatively estimated to waste around 11 per cent of health spending a year – have been canvassed in countless reports and inquiries: redesigning healthcare payments and services to provide better quality and more efficient chronic care that delivers the best and most cost-effective health outcomes.

Ideally, the current provider-centred Medicare payment system – which funds inputs not outcomes by paying providers based on the volume of services delivered – needs to be supplemented with capitated payments for chronic disease.

Capitated funding allocates a set amount of money on a per-person basis to a healthcare provider. Because providers would be financially responsible for funding all the care of patients from the one funding “bucket”, capitation payments would spur the development of innovative (and lower cost) services to care for chronic patients outside hospital.

Unfortunately, the vested interests in health, led by the Australian Medical Association, are determined to ensure Medicare keeps funding the same services in the same old way.

Altering a system considered the jewel in Australia’s social policy crown is thus a huge political challenge, especially given how politically effective Labor’s “Mediscare” was at the 2016 election.

But this doesn’t mean simply giving up on making Medicare fit for contemporary purpose.

Consumer concern about skyrocketing private health insurance premiums has led Bill Shorten to commit to the Productivity Commission inquiry into the private health sector.

Politically viable pathway

If Labor extended this inquiry to include Medicare, it would create a politically viable pathway to health reform, and create an opportunity to apply the lessons learned from recent reforms in sectors facing similar policy and political challenges.

Reforms in both aged care and disability services – which have replaced traditional provider-centred funding models with individualised, needs-based funding – have been driven by the dissatisfaction of consumers frustrated by systems failing to meet the needs of older and disabled Australians.

A comprehensive review of Medicare would be the right forum to mobilise the latent support of chronic disease sufferers and patient groups for overdue innovation in health.

The findings of a frank and independent inquiry into the future of Medicare would awaken policymakers and the public to the benefits of modernising an outdated system so this “jewel” can meet the complex chronic healthcare needs of Australians in a patient-centred and outcomes-focused way.

Dr Jeremy Sammut is director of the Health Innovations Program at The Centre for Independent Studies and contributing editor of the book, The Future of Medicare? Health Innovation in 21st Century Australia (Connor Court), released this week.