Gonski for Health won’t save public hospitals

The debate over the rising cost of private health insurance has dominated the headlines so far this year.

However, the focus this week has also shifted to the public health sector. This follows the leaking of COAG papers that indicate the Turnbull government will play hardball with the states over a new five-year health funding agreement.

The leak of government’s so-called ‘tough line’ suggests the stage is being set for a repeat Gonski-style campaign; this time over funding for public hospitals rather than for public schools.

A ‘Gonski for Health’ — backed by state governments, the AMA, and the powerful nurses and other health sector unions — may well successfully extract a few billion dollars more for state hospital systems that already consume in excess of $40 billion of taxpayer’s money annually.

But regardless of whatever additional federal funding is provided, this will not make public hospital systems sustainable in the long run.

Because — to paraphrase the words of a former state treasurer (uttered privately after he had safely departed politics) – “No government, federal or state, has enough money to fund the projected cost of ‘free’ hospital care in an ageing Australia.”

The scale — and political impossibility — of the funding challenge is suggested by the policy previously proposed to the NSW government: a 50% increase in the rate of the GST from 10% to 15%; which would represent the largest peacetime tax hike in Australian history.

The blame game between the federal and state governments over hospital funding is therefore likely to intensify in coming years, once financial realities bite, and when states are forced to more severely ration access to hospital care — via waiting times — to ease the health cost pressure on their budgets.

There are no easy financial or political solutions to the ‘hospital funding crisis.’

But if policymakers want to truly fix these problems they must exercise some enlightened foresight — and systematically tackle the difficult issues surrounding Medicare and federal financial relations for the reasons that are stated here.