The Alcohol and other Drugs Council of Australia (ADCA) has served Australia for 50 years. It has worked collaboratively – but honestly – with all governments from Menzies to Rudd. But last week the Abbott government cut off funding.

Compared with the costs of alcohol and drugs, alcohol alone costing $36 billion per year (Foundation for Alcohol Research and Evaluation commissioned study), the annual costs of $1.5 million to run ADCA is peanuts. Despite this it has a nation-wide constituency of 350 organisational, association and individual members – almost all being front-line agencies.

When questioned about his daughter’s drug problem on TV Prime Minister, Bob Hawke was very distressed. The drug problem of the 80s had truly struck home in a most dramatic way. He then called the Premiers and Chief Ministers to the Drug Summit. It was the first time a social crisis, other than war-time, had galvanised such action.

The Commonwealth Minister responsible, Dr Neal Blewett, turned to ADCA to organise a week-long national meeting to set the directions for the Summit. Thus was born Australia’s multi-sector campaign to reduce the harms of all drugs – alcohol, tobacco, prescribed and illicit drugs. It set the stage for pharmacotherapy treatment, clean needle and needle-exchange programs and other measures which shaped our response to the HIV/AIDS epidemic.

ADCA started in 1967 when parents, clergy, judges, health professionals, researchers, journalists, union leaders and those directly affected by substance abuse came together to create a national voice, to promote research, education and training on alcohol problems and the emerging illicit drug problem. Around the planning table were people such as – “Weary Dunlop” of POW fame, Sir William Refshauge – Director General of Health and formerly of Army Medical Services, Dr Nan Waddy a community psychiatrist, (later Justice) Michael Kirby and others. The current president of the Board is former Liberal MP Mal Washer.

When the Howard Government took the hardline stance, “Tough on Drugs”, it was ADCA which led that Government into new directions: programs to divert young people from courts and prison to education and treatment; persuaded the Government to have an alternative pathway of advice in the PM’s office through the Australian National Council on Drugs; and, pushed for grants to NGOs for diversion and treatment of illicit drug users.

When no-one took up the devastating impact of alcohol and other drug use on Aboriginal and Torres Strait Islander communities, ADCA was there. It is still there. From the very beginning Aboriginal leaders have been integral to the leadership of ADCA and to the research, education, training and resource provision for Aboriginal communities.

As the peak body, ADCA has advised governments on policy and directions, run programs for government and done what governments have not been prepared to do – confront the commercial interests of tobacco, alcohol, pharmaceutical and illicit drug industries. ADCA’s stand has always been based on rigorous analysis, feedback from its member front-line agencies, the research it has sponsored, the data collated in its world-class resource centre and on input from professional bodies.

Its training programs and resources have led to a viable drug and alcohol workforce. It has stimulated research from when there was none at all to now with Australia being recognised at the top end of international league tables for drug and alcohol research. ADCA’s Drug Information Service is accessed from around the world and is integrated into the research centres of excellence in addiction and drugs and alcohol in the major Australian universities. No other country has such a network of information sharing.

More significantly ADCA is a broad church encompassing and reconciling competing views about the nature of alcohol and drug problems and how they should be dealt with.

I am proud of its achievements and contribution to our society and I am especially proud of the ADCA Board which said to me, “We are NGO people, we know how to survive, and we can change the world!” I am sure they can with the active support and engagement of all in civil society.

Emeritus Professor Ian W Webster AO

Patron of the Alcohol and other Drug Council of Australia and Emeritus Professor of Public Health and Community Medicine at the University of NSW

In this election the Coalition has provided dollar promises for worthy projects but no new health policy initiatives while only two of note have been forthcoming from the government; a long-term investment in stem cell research and the threat to remove family tax benefits from parents who put their children and the community at risk by not immunising them. Both are laudable but of greater interest to Australians would be our politician’s plans for solving the many problems that compromise the delivery of sustainable quality health care in our country. In a   recent survey “Research Australia” found that funding for health and medical research is a higher priority for Australians than immigration policy and border control.

The current government has not focused on health system reform but rather reform of hospital financial arrangements with the States reinforcing the inappropriate hospital centric priorities of our health system. In reality financially sustainable quality hospital services are dependent on policies that will reduce the demand for those services. This will require real system reform. The National Press Club debate with Tanya Plibersek and Peter Dutton found them in furious agreement on most issues such as hospital funding, the importance of medical research and the need to emphasise prevention.  One was left with the impression that whoever wins the election it will be “business as usual” for our health system. That’s disappointing.

Healthcare in Australia is beset with structural inefficiencies, inappropriate models of care for our times and cost increases that are producing major inequities that deny many the care they need and are promised by Medicare. This is particularly obvious in rural communities. Their problems did not get a mention in the debate. The major barriers to real change remain the opposition from those with vested interests in maintaining the status quo and the lack of political leadership to take us on a necessarily long (ten years or more) reform journey that doesn’t sit comfortably within current short election cycles.  If we take that journey its important to have a clear vision of what an appropriately reformed healthcare system should look like?

Australia 2023. The Commonwealth has become the single funder of our public health system. An independent statutory authority has been established to fund a number of “Regional Health Authorities” (RHAs) charged with delivering the model of care the Commonwealth (Australian people) have embraced. It is described thus; Our health care system should be characterised by its resourcing of strategies to prevent avoidable illness and provide in a timely manner to those who are ill, cost effective quality care based on an individuals need not personal financial well being.

These RHAs are funded on a per capita and local needs basis. No longer are state boarders a barrier to efficient health care. RHAs contract with a series of providers in their region to supply patient focused integrated hospital, community and primary care services. Quality and safety data are collected and published.

A new model of primary care has been established with a strong focus on disease prevention. Australians are encouraged to enrol in a primary health care practice. Enrolment is significant in that it signals the creation of a partnership and shared responsibilities between patient and the practice’s health professionals.

In the new model, primary care practices work under the umbrella of Primary Health Care Organisations (PHO). These support local GP led services wherein teams of RHA funded health professionals from a variety of disciplines work collaboratively to deliver a range of services to enrolled patients. (“Integrated Primary Care”) No longer do people only visit a medical practice when they are ill, they attend to work with appropriate health professionals to help themselves and their families stay well.  There is no more efficient use of health care dollars that ensuring that children get a healthy start to life. An obese 4-year-old child is very likely to be an obese adult. Continuity of care provides us with the best chance to detect early signs of mental illness when serious problems can still be avoided. Such team-based practices are not doctor centric. Nurses and allied health professionals deliver much of the prevention program. Most doctors dissatisfied with the “turnstile medicine” approach fostered by “fee for service” payments have accepted the opportunity for payment by contract with an RHA. GPs who, after all, are highly trained specialists but were not previously paid as such, are financially much better rewarded in this system. This, plus the attractiveness of working in the team environment, is attracting more medical graduates to primary care, in 2013 very few medical graduates were interested in such careers.

Unlike the “old fashioned” Medicare Locals of 2013, PHO’s act as central service providers for linked, local and clinically autonomous practices. They themselves offer clinical services including acute services that do not require the facilities of a hospital sparing local emergency departments from inappropriate attendances and provide associated practices with business skills, bulk purchasing, continuing education, the collection of outcome data (now a mandatory requirement), and IT services including help with the further development of now popular patient controlled electronic health records. Primary, community and hospital care provided to an individual is seamlessly integrated.

Also important has been the major revision of clinical training in the nation’s universities. “Inter-professional learning” wherein students of Medicine, Nursing, Dentistry and the Allied Health professions spend time learning together has produced a mutual appreciation of the specific skills of each group and how combining these skills in the “Team Medicine” approach can be so much more satisfying for professionals and patients alike. How different from the professional “silo” mentality of a decade ago. Medical schools in rural based universities with programs focussed on educating students with a strong rural affiliation and a desire for a rural based career are seeing significant numbers of graduates helping rural Australians. We are, at last, becoming less dependent on overseas trained doctors, many of whom are badly needed “back home”. Medical education has been shortened without any damage to required learning and is much less focussed on hospital-based rotations with more student time spent in community settings. The old mandatory Internship program has been abandoned in favour of immediate post graduation entry into vocational training programs.

State governments are no longer receiving Commonwealth funds to run their hospitals but they do continue to own and operate them.  Funding required is supplied through a contract with a Regional Health Authority. The services to be offered by a particular hospital will be negotiated with emphasis on the quality rather than the number of services on offer. “Role delineation” for all hospitals within a given region will avoid duplication and avoid the old system where individual hospitals tended to be islands in an ocean of health care doing there own thing. Many private hospitals offer services to RHAs

Back to August 2013.

Given health care is one of the top three issues of concern for Australian voters, it’s disappointing that health system reform has so far received so little attention in the election campaign.

We could reasonably expect our politicians in the last week of the election campaign to be seriously challenged to provide a detailed and clear vision of the health reforms they would pursue to create a more equitable and cost-effective health system that will met our future needs.

But we will almost certainly not get this. And perhaps that says as much about the demise of decent journalism as it does about our politicians.

This article was first published in The Conversation on August 30, 2013.

We have little to see for six years of “reform” under the Rudd/Gillard Governments. What was that about ending the blame game in health? It has been mainly muddling through with hopes dashed for significant reform in many key areas

Health costs are rising rapidly, through lack of coordination and waste. Doctors provide too many services. Vested interests are rampant Mental and Indigenous health are in a serious position. Services are being delivered less equitably. Progress has been made in prevention. However, the high expectation raised by the first Rudd Government has not been realised.

In our view the key failures have been as follows.

1. Primary care Australia has an obsession with hospitals. They should be the last resort rather than the first. Countries such as the UK and NZ have high quality care in part because of the philosophy underlying their healthcare arrangements, but also because they are grounded in primary care which is the most efficient and equitable way to deliver health services. It is where care is best integrated. Fee for service has encouraged ‘turnstile medicine’, excessive treatment and increasingly the corporatisation of general practice. FFS is a major barrier to reform in primary care.  FFS may be appropriate for episodic or occasional care for walk-in patients but it is not appropriate for chronic and long term care. The government should pursue contractual arrangements with general practice as an alternative to fee-for-service.  NZ pays episodic care by doctors on a FFS basis but chronic care is paid on an annualized basis. The Australian Government has failed in this key area. It is frightened of the AMA. The misnamed Medicare Locals offer considerable reform opportunity, but we are not clear if this will be realised. Are they really only re-named Divisions of General Practice? The Super Clinics also offer considerable potential, but again we are not sure about how they are performing.
2. Workforce reform. Health is the largest and fastest growing sector of the Australian economy. Its structure and workforce are riddled with 19^th Century demarcations and restrictive work practices, e.g. there are several hundred nurse practitioners in Australia when there should be thousands. We must also train assistant physicians. About 10% of normal births in Australia are delivered by midwives. In NZ it is over 90%. We don’t have a shortage of doctors so much as a misallocation of doctors. Nurses, allied health workers and ambulance staff are denied opportunities to upgrade and realise their professional potential.  Pharmacies, rather than being primarily retail enterprises, should be better integrated with primary care.  Our historical demarcation between GPs and pharmacies is seeing valuable skills going to waste. There will never be adequate delivery of service to people, particularly the aged, without radical workforce reform, mainly within primary care.
3. Structure of health services. Health services are structured and funded around providers – medical services by doctors, pharmaceuticals through big Pharma and the Pharmacy Guild, and hospitals through State governments and private agencies. The structure of the Department of Health and Ageing reflects this provider focus rather than a focus on consumers. The Consumers Health Forum of Australia funded by the Commonwealth seems more like a marketing arm of the Department of Health and Ageing. We need to progressively change the focus to serve the community rather than providers. One possible structure would be around types of users – acute, chronic and occasional. It would help reduce the competition between different provider areas for limited resources. DOHA shows no serious interest in consumers but together with the Minister always seems to have an open door for the rent seekers like the Pharmacy Guild.
4. Governance. The current traditional Minister/departmental model allows vested interests to dominate the debate and the allocation of resources. The public ‘conversation’ is not about health policy, but rather is about how the minister and the department respond to vested interests that set the agenda. The public is excluded. The media is heavily dependent on special interests for stories. The Reserve Bank provides a useful model of the direction in which we need to move – an independent and professional commission with economic expertise that funds and directs health services subject to government policies and guidelines. The Reserve Bank has proven to be immune from special interests and their pleading. It is respected for being professional and serving the public interest. It effectively informs the public on key issues. This does not happen in the health field. The government shows little interest in combatting the special interests.
5. Private health insurance. The Commonwealth Government subsidy of about $7 b p.a. ($5.6b in direct subsidies and $i.4b in in income tax foregone) should be progressively eliminated and the funds used to directly fund other health services, e.g. private hospitals and dental care.  While the government, through means testing the rebates  has removed some inequities, its decision to increase the Medicare Levy Surcharge and to strengthen the “lifetime rating” incentives are weakening social inclusion, as those who are well off are corralled into their own facilities, leaving public hospitals  at risk of becoming residual services for the “indigent”. It penalises country people because there are few private hospitals in the bush. PHI is inefficient with administrative costs about three times higher than Medicare. The subsidy has not taken pressure off public hospitals. Private gap insurance has facilitated enormous increases in specialist fees. Most importantly, the expansion of PHI progressively weakens the ability of Medicare to control costs. The evidence world-wide is clear that countries with significant PHI have high costs. The stand-out example is the US.  President Obama may have substantially achieved universal coverage, but private health insurance in the US with its lack of cost control will ultimately cripple and finally destroy his reforms. Warren Buffett has described private health insurance companies as the “tape worm” in the US health sector. The Commonwealth already has a sound model of a single payer operated through the Department of Veterans Affairs – a model which retains the strong control of a single payer accountable to the community whilst allowing private practise involvement in service delivery. The Commonwealth has failed to understand the damage that PHI is already doing in Australia.
6.  Medicare. This great ALP monument needs a review. Medicare has become a passive but efficient funding mechanism rather than the public insurer it was intended to be. After all, it is called the ‘health insurance commission’. It is now nothing of the sort. It is not even within the health portfolio. Why can’t Medicare offer policy options beyond a default available to all? Medicare has a remarkable database which should be used to highlight and inform policy concerning over and underutilisation of services across the country. Medical services should be subject to the same rigorous cost-benefit examination as pharmaceutical services. Medicare is not doing it. And the Government shows little interest
7. Co-payments. They are a mess, with the level of government subsidies varying enormously. Medical and pharmaceutical co-payments have little in common. The safety nets are unfair and lead to abuse. We believe that people with high incomes should pay more for health services through efficient and defensible co-payments. A ‘universal service’ does not necessarily mean it should be free. Subject to a means test, there needs to be more discipline by consumers in their use of health services. Jennifer Doggett at CPD has proposed workable means-tested reforms in this area. There is no sign the Commonwealth is concerned about the problem.
8. The Blame Game. Attempts to resolve the Commonwealth/State blame game have been largely unsuccessful and certainly expensive. We believe that the Commonwealth should offer to set up a Joint Commonwealth/State Health Commission in any state that will agree.  That Commission would be jointly funded by the Commonwealth and the State; it would also plan the delivery of health services in the State and so provide more cohesive hospital and non-hospital health services. It would be a small planning and funding commission with little or no net increase in bureaucratic overheads. Delivery of health services would continue through existing health agencies, Commonwealth, State and local government. The new Commission would be jointly appointed by the two governments and with agreed dispute resolution arrangements. In the event of a disagreement, the Commonwealth position should prevail as it would be the chief funder. Tasmania should be an obvious starter given its precarious financial position. Hopefully success in one State would then encourage other states to swallow their pride and improve their health services by cooperating with the Commonwealth. The Commonwealth dolls out more and more money to the states without fixing the blame game as Kevin Rudd said he would.
9. The Productivity Commission should be commissioned to report on the need for long-term and meaningful reform. That was the main recommendation in the 1997 Industry Commission Report on Private Health Insurance. Enquires by ‘insiders’ such as the National Health and Hospital Reform Commission tend to be timid and designed to appease sectional interests. Just think of the audacity of that Commission proposing Medicare Select to a Labor Government We need an enquiry by professional and impartial ‘outsiders’ who are detached from present systems and structures.  The Department of Health and Ageing is incapable of doing it.

Apart from plain packaging and increased excise on tobacco products is there any really memorable heath reform from six years of Labor governments What a disappointing story this all is for the party which created Medicare!

This article was published in Croakey on 19 August 2013.

Ian McAuley

John Menadue

I have spoken and written many times about the inefficiency and inequity of the taxpayer subsidy of $3.5 billion annually to the private health insurance funds in Australia. These funds favour the wealthy; enable some people to jump to the top of the hospital queue; they have administrative costs  three times those of Medicare; they weaken Medicare’s ability to control costs and through gap insurance they have facilitated the largest increase in specialists’ fees in a quarter of a century in Australia.

They have not taken the pressure of public hospitals .In fact they have made it worse by helping private hospitals pay vastly higher salaries to bid specialists away from public hospitals.

Yet the vested interests and private sector ideologues want to extend PHI and take us down the disastrous US path.

Taiwan however has shown the best way to go. It is so confident and proud of what it has achieved that it has taken advertisements in the latest edition of Foreign Affairs. Taiwan is about the same size as Australia with a developed capitalist economy.

The Taiwan Government has consolidated all health insurance into a single payer. The plan has improved the quality of health care with rising life expectancies and falling infant mortality rates. The public rates the success of the Taiwan Health Service at 80%.

Like all health systems, Taiwan has faced rising costs with new technology, new drugs and ageing, but it has contained costs effectively. Total health expenditure in Taiwan is only 6.5% of GDP, much lower than the median for OECD countries and Australia at 9% of GDP.

Based on the core principles of equity, quality and efficiency, Taiwan is showing that a single payer is the key to a top-class health service and is the best means to control costs. The worst course for Australia to take would be to encourage the proliferation of taxpayer subsidised PHI funds that fail on both efficiency and equity grounds. But if the PHI industry has its way Medicare will be under threat and we will start journeying down the US path of multiple private health insurance funds that are unable to control costs and ensure equity.

John Menadue

Excuse me for dropping names but at a round table discussion with Maggie Thatcher in the late 1980s that I attended in Sydney she was asked “Now that you have fixed the work practices of the miners and the printers in the United Kingdom what are you going to do about the restrictive work practices of the doctors?” She replied. “I will leave that to the last session in my last term as Prime Minister” She never got around to it. And neither have we in Australia.

The politically partisan Business Council of Australia has been campaigning for increased productivity through labour market reform. But it does not mention the health sector which has the most archaic work practices in the country.  They are a major economic burden and cost.  Based on Productivity Commission figures six years ago I estimated that workforce reform could save $3b per annum. I think that is a very conservative estimate.

The Health sector is rife with demarcations and restrictive work practices. The waterfront 20 years ago was a model of efficiency compared with the work practices today in the health sector. Health is our largest industry, with about 600,000 employees or 7% of our civilian workforce. About two thirds of health expenditure is labour cost. More efficient workforce practices are essential. The problems arise not because of individual failure, but because of unwillingness to address the structural inefficiencies. Archaic work practices deny career opportunities, particularly for nurses and allied health workers.

We need role-renewal and the creation of new types of health workers. We need up-skilling, multi-skilling, broad-banding and teamwork. Blue-collar workers have been fair game for workforce reform, but not professionals in health and the law. By comparison with countries like New Zealand, Canada, USA and the UK, we don’t have so much a shortage of doctors but a refusal of doctors to allow other qualified people to share their territory. The specialist colleges protect their territory in the name of quality of care. Only about 10% of normal births in Australia are delivered by midwives and 90% by obstetricians. In the UK midwives deliver 50% and in New Zealand it is 90%. We have only a few hundred nurse practitioners when we should have thousands. Many specialists treat public hospitals like a cottage industry in 19^th Century England, coming and going at their convenience.

Former Health Minister Nicola Roxon has shown that the Medical Benefit Schedule can be a lever to promote workforce changes. She commendably pushed the door slightly open for midwives and nurse practitioners. But the opportunities for much wider reform are enormous, There is a whole range of necessary changes e.g. nurses undertaking greater responsibility for prescribing, diagnosis and triage in hospitals, nurse anaesthetist complementing and  substituting for medically qualified anaesthetists, assistants in almost all specialist disciplines, enrolled nurses taking on some of the tasks presently performed by registered nurses, midwives substituting for obstetricians, practise nurses undertaking some of the work currently performed by GP’s. Pharmacies should provide basic health care as well as being shop keepers dolling out drugs. What about a nurse practioners in many of our 5000 community pharmacies? What about assistant physicians?  The highly skilled and experienced ambulance officers should be fully integrated into health services and expand their role. Why can’t they make home visits as they do in France?

Many doctors but not all will resist in order protecting their territory. That resistance will be all in the name of patient safety

There have been numerous enquiries on workforce reform including by the Productivity Commission and COAG but little progress has been made.

There are enormous dividends in patient care and reduced costs in a thorough overhaul and change in work practices in health in Australia. The opposition will come from powerful providers as Maggie Thatcher knew very well.

John Menadue

On Mar 14 John Menadue wrote, on this blog site “Does Catholic really want to destroy Medicare”.  Martin Laverty responded on 29 May.

This is a further response by Ian McAuley and John Menadue. Together we have written many joint articles on health policy. See publish.pearlsandirritations.com.

Catholic Health’s response through Martin Laverty identifies two problems with our present health care funding – inequities in health delivery and outcomes, and fragmentation of funding and care between Commonwealth and State Governments.

Catholics Health’s proposed solutions to the two problems  are well off the mark, however, and their response – tailored health plans for the most disadvantaged and adoption of “Medicare Select” does not address the core issue identified in the original article “Does Catholic Health really want destroy Medicare?”  The core issue is avoided in the Catholic Health response. That issue is that if the 50% of Australians who have private health insurance took up the option under Medicare Select to transfer their $30 billion  plus entitlements  per annum in Medicare to their private health insurance it would be goodnight Medicare There is no doubt about it. Even a withdrawal of a lesser amount would still be crippling.

It is understandable that Catholic Health should be concerned with the most disadvantaged. Martin Laverty must be well aware of what has happened in the USA, where hospitals under the umbrella of the Catholic Church, such as those nominally operated by the Sisters of Mercy, have become big profit-making enterprises with little if any connection to their original mission. http://livingwithmcl.com/BitterPill.pdf

But turning over Catholic hospitals and other facilities to provide care for the “most disadvantaged” www.theage.com.au/national/catholic-health-plan-for-disadvantaged-20090818-ep4u.html is fraught with the curse of unintended consequences.

There is an obvious appeal in directing such services to those most in need, but a system  reserved for the poor, or the “indigent” to use the US term, degenerates into a charity ward system. Catholic hospitals would become the hospitals for “losers”, for those without voice, and without the political influence to pressure governments to provide public facilities and public funding for all. The poorly funded US “Medicaid” provides a strong lesson we should heed.

Whatever our means, we can all retain our dignity when we come through the same door to the same hospital or clinic.  There is merit, also if we pay for those facilities according to our means. Means-tested co-payments are a far more dignified way of achieving equity than provision of separate facilities. Perhaps Catholic Health can take guidance from Pope Benedict’s encyclical letter Caritas in Veritae  http://www.vatican.va/holy_father/benedict_xvi/encyclicals/documents/hf_ben-xvi_enc_20090629_caritas-in-veritate_en.html  which stresses the virtue of civic solidarity, rather than segregation of society along a division between a supposedly self-reliant class and an indigent underclass.

We have examined Medicare Select each way and every way and are still at a loss to understand Catholic Health’s enthusiasm for it – a proposal which has far more to do with entrenching high-cost financial intermediaries in the health system than with providing care or meaningful choice.  As stressed in  the original article of May14, it involves churning funds once through the tax system and then again through private insurers, offering “choice” when we have hardly any idea what our future health care needs will be.

There is a strange contradiction in Catholic Health’s argument. It puts the case for a single funder – a strong case in our opinion – and then in an unexplained twist uses it to support a proposal where funding would pass through a plethora of financial intermediaries.

The problem with Medicare Select is not that it’s “too radical” as suggested by Martin Laverty. Rather, it builds on a method of health-care funding, private insurance, that has demonstrably failed to contain costs and is inequitable. Just look at the disaster in the US.

In defence of Medicare Select, Catholic Health refers to the Netherlands system, which, it is claimed, is operating successfully. The “success” of the Netherlands system has become an article of faith among those who see every retreat from public funding a success, regardless of the outcome.

In fact, since the Netherlands compulsory private insurance system was introduced in 2006, health care expenditure has risen sharply – from 9.7 per cent of GDP in 2006 to 12.0 per cent of GDP in 2010 (the Netherlands Government is yet to provide later figures to the OECD). http://www.oecd-ilibrary.org/social-issues-migration-health/total-expenditure-on-health_20758480-table1.  That’s the second-highest in the OECD – only the USA, where private insurance has had a longer period to wreak its damage, is expenditure higher, at 17.6 per cent of GDP.  To put Netherlands’ rise into perspective, if our health expenditure were to rise by 2.3 per cent of GDP we would be outlaying another $35 billion a year. That would be a high price to pay for expanded overheads and a dubious “choice”.

Evaluations of Netherlands post “reform” health care arrangements point to anything but success. An evaluation published in the Journal of Health Politics and Law found opposition from both the public and health care providers, a failure by insurers to negotiate with providers (a common problem when providers can play off insurers against one another), and poor profitability among insurers, even though their premiums were rising steeply.  Another evaluation in the same journal found that while the new private insurance model offered more choice of insurers, the former Bismarkian system, to which 60 per cent of Dutch had belonged, offered more choice of providers. Kieke Okma of Leuven Catholic University says of the “reforms”:

Originally presented as a means to help contain costs, the government now seems to see competition in health care as a goal by itself. While earlier reform documents emphasize goals like improved quality of care, innovation, efficiency, cost-effectiveness, and patient satisfaction, those elements receive less attention as competition has taken the front seat.

If Catholic Health is seeking a European model of health care, it may turn its attention to Sweden, a country with strong traditions of Christianity and social solidarity, where the right-leaning Government has now wisely maintained the government as the single health insurer, but has introduced compulsory (and uninsurable) patient co-payments, and has encouraged the private sector to expand into service provision, including operation of private hospitals.

It’s not hard to see our Catholic hospitals fitting into such a model – a model which would secure their strong role in the community, and allow them to provide their distinctive services – not just to those who can afford private insurance, as is the case now, and not just to the poor, as is their other vision, but to all Australians

But Martin Laverty proposes something fundamentally different. Does the Stewardship Board of Catholic Health really want to go down the path he proposes?

John Menadue and Ian McAuley

References (not available on line)

Pauline Vaillancourt Rosenau, University of Texas, Houston and Christiaan J. Lako, Radboud University Nijmegen, the Netherlands “An Experiment with Regulated Competition and Individual Mandates for Universal Health Care: The New Dutch Health Insurance System” Journal of Health Politics and Law  Vol. 33, No. 6, December 2008

Kieke G. H. Okma, Catholic University, Leuven, and New York University “Learning and Mislearning across Borders: What Can We (Not) Learn from the 2006 Health Care Reform in the Netherlands?” Commentary on Rosenau and Lako Journal of Health Politics and Law Vol. 33, No. 6, December 2008

The Economist (Schumpeter column) “A hospital case: Sweden is leading the world in allowing private companies to run public institutions” The Economist 18 May 2013

Professor Stephen Duckett of the Grattan Institute has just reported that ‘Australians are paying too much for prescription drugs. The cost of this overpayment is at least $1.3 p.a.’

This is another example of the power of vested interests in the health sector and their ability to extract economic rents from the community. The other privileged players in the health sector include doctors, particularly specialists, and the private health insurance industry that extracts a $3.5 billion annual subsidy from the taxpayer.

The Minister for Health and her department spend much of their time placating and appeasing the vested interests in the health sector rather than developing policies and administering programs for the benefit of the community.

The Pricing Authority for pharmaceuticals makes recommendations to the Minister for Health. The authority is a non-statutory body established by the Minister. Of the six members of the committee, two are industry lobbyists from Medicines Australia and the Generic Medicines Industry Authority. It is not surprising with a headstart like that that the pharmaceutical sector is able to secure the sorts of privileges that Stephen Duckett has outlined.

The Australian Pharmacy Guild is also infamous in the privileges it extracts from Goverments. New pharmacies in urban areas must be at least 1.5 km from each other. One consequence of this restriction of competition agreed to by APG and Australian governments is that the number of community pharmacies has remained substantially unchanged at 5,000 since 1993, despite large increases in population and PBS prescriptions. The consumer organisation, Choice, in 2005 commissioned a study by the Allan Consulting Group on these location rules. Choice commented that ‘the location rules provide little consumer benefit and only advantage existing pharmacy operators’. The PGA has also successfully barred pharmacies from operating in supermarkets. Australians don’t have a great love for the Coles/Woolworths oligopoly but they would love to see more competition.

Canberra has over 900 full time lobbyists, many in the health field. They are seriously undermining good government Their power is exaggerated but politicians fall over themselves to oblige them.

The ministerial/departmental model in health is not serving us well. It provides a fertile hunting ground for vested interests – the health  providers- who hold all the important cards. They cling to the Department of Health like limpets. Even enquiries like the National Health and Hospital Reform Commission, are invariably timid and anxious to appease sectional interests. This Commission was chaired by a senior executive of BUPA.  After six years of the Rudd/Gillard Governments there is little to show in real health reform. The muddle continues.. But the sectional interests must be happy that their. position is secure.

Because of the failure of health governance to counter the lobbyists and sectional interests in health, I have proposed on many occasions that the Commonwealth Government should establish a permanent, independent, professional and community-based statutory authority, an Australian Health Commission, similar to the Reserve Bank in the monetary field. The Reserve Bank’s governance structure has made it almost impervious to lobbying. It is respected for its independence and professionalism. Just as the Reserve Bank is subject to guidelines determined by the Government, so an Australian Health Commission should operate within guidelines determined by the Government.

The power of vested interests in health must be tackled. The Grattan Report provides yet another example of why this must be done.

John Menadue

Public debate and the development of good policy are being steadily corrupted by the success of powerful lobby groups to quickly close down debate and force retreat by the government. This tactic is assisted by a timid government and a media that has little understanding of policy issues, and is only too prepared to recycle the handouts from powerful groups.

Last week we saw this bullying in full view. The government floated the suggestion that the concessions handed out to wealthy retirees in tax concessions by Peter Costello in 2007 should be reconsidered. The superannuation lobby went into immediate attack. Pauline Vamos, the CE of the Association of Superannuation Funds in Australia said that for people to have a really comfortable standard of living throughout their retirement, they should have at least $2.5 million as the balance in their superannuation account. Ian McAuley has estimated that this would give the retiree a tax-free pension of about $160,000 p.a. Such a retiree would normally not have a home mortgage and the cost of raising children and their education.  In the face of this nonsense by Pauline Vamos and others, the government quickly retreated and said that it had no intention of taxing any capital sums in superannuation. Tax avoidance won the day, quickly and comprehensively.

In the SMH last week, Ross Gittins wrote about the ‘four industries that rule Australia’ – superannuation funds, miners, bankers and the gambling industry.  I would have added the health industry.

In 2009, the miners ran a highly successful and cheap advertising campaign ($22 million) to defeat the Rudd Government’s resources super profits tax. They also helped to get rid of the Prime Minister! The industry saved itself an estimated $66 billion over five years. We have now been left with a wimp of a mining tax.

In 2011, under pressure from Independent Andrew Wilkie, the government undertook to introduce strong legislation to help addicted gamblers. But the licensed clubs and the gaming industry went to work and won the day.

Ross Gittins has pointed out that through acquisition the four major banks have increased their market share from 74% to 83%. They make record profits and continually trouser additional savings by not passing on fully to customers the cuts in official interest rates.  They ignore both the treasurer and the shadow treasurer. They have real power.

Then there is the health lobby – the AMA, private health insurance and the Pharmacy Guild who successfully restrict competition, protect restrictive work practices or secure increased government subsidies. The public debate is about what the government needs to do to buy off the specialists, the pharmacists and the private health funds.

The lesson is clear; the large and wealthy groups with their lobbying power can derail public debate and secure concessions for themselves at the expense of the public interest. Too often the government runs for cover at the first whiff of grapeshot.

There is a public register that lobbyists must complete. It is quite inadequate. As a starter, the public needs to know who the lobbyists and corporations are seeing, particularly ministers, parliamentarians and senior members of the public service, together with the nature of those discussions. That information should be updated weekly. It would be a small but important step in making transparent how corruption of good policy is occurring.

John Menadue