28/10/2010 - 00:00

Unhealthy business model needs changing

28/10/2010 - 00:00


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The cost of state-funded health care is simply unsustainable. We need a new model.

WHILE I understand Premier Colin Barnett’s resistance to a takeover of health funding and control by the Commonwealth, there is a part of me that wants to whisper, ‘Let it go Colin, let it go’.

As much of a state’s rights advocate as I am, and as much as I agree with the premier’s stance regarding the GST funding, health is a loser for Western Australia because the universal health care model we currently have has reached its use-by date.

Unless the Liberal-National alliance is prepared to face up to wholesale change, and lead the federation into a new era, Mr Barnett might be wise to jettison responsibility for health and let hospital waiting times and ambulance ramping become the domain of Prime Minister Julia Gillard.

Holding on to the current system is simply being stubborn and not facing up to the fact that health costs are rising unsustainably, to the point where they will bankrupt some state governments.

The Centre for Independent Studies recently released a series of essays on the subject of health costs, including an introduction by research fellow Jeremy Sammut, who pointed out the federal Treasury has predicted that, at current rates of expenditure growth, state health spending will outstrip state tax revenue by mid-century.

Presumably that cost growth will definitely outstrip any growth in the GST, which the federal government wants to carve-off to help pay for its new responsibility. With WA already crying foul over the GST carve-up, why not sacrifice a small part of a declining pool of funds to get rid of the fastest growing cost burden to the state?

To me, this is like identifying a cancer early in its formation and having it removed.

I haven’t done an accurate analysis of the time burden of health on government leadership but I would suggest the premier is spending more time hearing or dealing with health issues than is necessary for an issue that is, at present, unsolvable.

In many ways I’d rather see him focus on developing the state’s resources and dealing with its unique issues, rather than being one of numerous democratic leaders beating their head against a brick wall. Ask Barack Obama how hard it is; he might be moving in a different direction, but look how much political energy he has used up.

Successful businesses focus on what they are good at and outsource both the mundane and complex tasks that someone does better. I’d like to see proof that the public sector of WA can deliver health services better and more cost effectively than anywhere else. In the absence of that proof the state ought to get out of the business and just pay someone else to do it. If the federal government wants that task, so be it.

Of course, that is not a long-term solution. It is simply delaying the crunch time for health by allowing the Commonwealth, with its deeper pockets, to spend another fortune before it too realises that health is not the domain of the government.

Maybe Mr Barnett is aware of the danger in letting health go. WA may be better off in the short term by handing health over to the feds, but when Ms Gillard or her successors realise they now have the expensive monster they’ll end up seeking new ways to tax us to pay for the problem they so desperately wanted. That could prove costly to a resource-rich state such as WA, as we have already discovered with the advent of the resources taxes in various guises.

Of course at some stage in the distant future even that will prove ineffective as people continue to demand more for nothing and new taxes prove harder to conjure up.

So what should Mr Barnett do? If he’s not prepared to hand the health problem to someone else he must be politically brave and start pointing the health supertanker in the direction it ultimately needs to head. He should probably start by doing exactly what Ms Gillard and her rival Tony Abbott wanted to do in different ways – devolve power back to hospitals. He’s already started doing this with independent schools, so it’s not a complete leap into the unknown and it might even be as popular as it is proving in the education system.

Western Australians should also start paying for a greater part of the state health services they consume. We’ve bitten the bullet on the true cost of energy; we ought to follow that pathway when it comes to health.

Mr Barnett should also continue to outsource state functions. He’s battling the unions over the non-health services such as catering in hospitals, which is ridiculous. Nevertheless, it shows the type of ideology those wanting to reform health must deal with. Apparently, even the jelly and toilet cleaning products are part of universal health provided by the state.

Outsourcing medical services is a much tougher nut to crack – even though the federal government already does it through the general practitioner network via the Medicare reimbursement system, and parsimoniously in the aged care sector via its bed funding rules.

But when it comes to the hospital system, the medical unions seem to prefer a state-controlled system, where every time they want to strengthen their bargaining position they generate fear among voters.

They don’t want corporate bosses whose discipline would play a part in better rationing of the health dollar. That position is held even though the private sector pay is almost always better than the state, so what exactly are the unions protecting? Not their members, certainly.

And I can’t see that the unions are acting in the best interests of the community, either. The nature of universal health care means that every voter has free and unlimited treatment on offer whenever they want it. Why is it that those on the left of politics want everything to be sustainable yet they can’t see that health care as I just described simply isn’t.

As I stated before, I think we have reached the limit of this structure; we can no longer afford such largesse because it is unsustainable. The former federal government attempted to slowly change this by allowing the Medicare levy to be diverted into private health insurance, to encourage those who could afford it to shift away from the public sector.

But that is not enough.

At some stage voters need to realise that allegedly free health care comes at a greater cost, initially to the community, but ultimately to themselves as part of that community. It does this inefficiently by diverting their tax dollars away from other users.

By starting to pay directly for a bigger proportion of their health bills they will start to understand the true cost. Then they will realise that having services delivered by the private sector in competition with independent community-owned providers is in their interest.

• mark.pownall@wabn.com.au



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