SPEECH TO THE ECONOMIC AND SOCIAL OUTLOOK CONFERENCE

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This conference as always provides an opportunity to debate some of the core economic and social challenges that are facing us as a nation.

 

As a social policy practitioner, I think the growing understanding of the complex interdependency between economic and social policy and its impact on political outcomes is a very welcome one. 

 

Bill Shorten and Chris Bowen in their contributions to this conference talked about the need for inclusive growth or growth with purpose. Chris cited Ben Bernanke’s recent Brookings Institute speech ‘When Growth is Not Enough’.  Much of the focus of that speech was on the impact and consequences of inequality - socially, economically and politically.

 

It is my view that the topic of today’s session ‘The Future of Medicare’ must be firmly fixed in this context. Medicare forms alongside our tax and transfer, superannuation and public education systems a central plank in tackling inequality.

 

Some of you will know Margaret Chan, who was the Director-General of the World Health Organisation until three weeks ago. I keep coming back to something she said in 2015 – and I quote:

 

When Medicare - our universal public health insurance scheme - was introduced 33 years ago it was in response to the fact that some 40% of Australians were not covered for medical or hospital expenses by existing private health insurance or government schemes. Medicare added patient rebates for GP and specialist care (the MBS), as well as universal free public hospital treatment, to the existing PBS.

 

Australia’s health care system has undergone some reform in the last three decades, most recently through Labor’s Health and Hospitals Reform Commission process and the work started under Labor with the Menzies School of Health Policy that has now evolved into the MBS Review. But Medicare has largely remained in substance and structure the same.

 

33 years after its introduction, does Medicare need reform? Of course. Everyone here understands that Medicare should evolve in response to an ageing population, the chronic disease crisis, and other challenges. Broader health system reform and reform of Commonwealth-state relations in Health have to also be part of any reform narrative. 

 

But Margaret’s words are a powerful reminder that we shouldn’t throw the baby out with the bathwater – for example, by ending free treatment in public hospitals, or undermining the universality of the scheme.

 

We got another reminder of that this week, when the Commonwealth Fund ranked our health system second of 11 high-income countries. In particular, they found that our health care outcomes and our administrative efficiency were the best in the world.

 

So my firm view is that while we do need to reform Medicare, we should not reinvent it, or (God forbid) ‘repeal and replace’ it.

 

Ahead of our discussion today, I want to propose three reforms in particular.

 

First, the federal government needs to re-focus on prevention, including both public health and preventive care. If we are concerned about chronic disease, and the strain it is putting on our health care system and our budget, then the obvious answer is to keep people as well as possible.

 

Second, we need to respond to the evidence that many Australians now struggle to access primary and secondary care. The bad news in the Commonwealth Fund report was that Australia performs poorly on measures of equity – 7th of 11 countries, again compared to 2nd overall.

 

Some population groups, including Indigenous Australians and people who live in rural Australia, face particular challenges. For many others the basic issue is cost.

 

When Australians are not bulk billed, they now pay an average of $37 to see a GP and $82 to see a specialist. As a result, one in 12 people who need to see a specialist delay or avoid care because of the cost. That can only lead to sicker patients, greater pressure on hospitals and higher costs.

 

Part of the answer is simply not to make more cuts to Medicare. In spite of the Budget, parts of the Government’s freeze will remain in place for another three years – putting downwards pressure on bulk billing and upwards pressure on out-of-pocket costs.

 

Another part of the answer is to organise and fund care in different ways. We need to incentivise the right types of care, including no care at all where patients and providers can prevent the need for it. We may get a chance today to discuss the Government’s Health Care Homes trial – but suffice to say that I think it has over-promised and will under-deliver, leaving a lot of work to do in this space.

 

Finally, we need to invest in our public hospitals and build on Labor’s reforms, including activity-based funding.

 

I think of activity-based funding as necessary but not sufficient. Before the Commonwealth could fund outcomes, it needed to fund outputs – not just throw block grants at state treasuries. Activity-based funding gives us a national platform for further reform – like encouraging quality and safety, preventing re-admissions, and shortening waiting times in emergency departments and for elective surgery.

 

But again, that can’t be done while making cuts, or without giving states and hospitals long-term certainty. So the Commonwealth-state agreement that will govern public hospitals from 2020 could not be more important.

 

I’m conscious of time, but I want to finish where I started – with Margaret Chan. In the same 2015 speech, she said:

 

 

She’s right, and I look forward to discussing those with you today.