HEALTH LEGISLATION AMENDMENT (HEALTH CARE AGREEMENTS) BILL 1998
MAY 1998
© Commonwealth of Australia 1998
ISSN 1440-2572 |
MEMBERSHIP OF THE COMMITTEE
Members
| Senator Sue Knowles, Chairman |
LP, Western Australia |
| Senator Andrew Bartlett, Deputy Chair |
AD, Queensland |
| Senator Kay Denman |
ALP, Tasmania |
| Senator Alan Eggleston |
LP, Western Australia |
| Senator Michael Forshaw |
ALP, New South Wales |
| Senator Ross Lightfoot |
LP, Western Australia |
Former Members
| Senator Kay Patterson |
LP, Victoria |
| Senator Karen Synon |
LP, Victoria |
Substitute Members for the inquiry into the Health Legislation Amendment
(Health Care Agreements) Bill 1998
| Senator Meg Lees (for Senator Bartlett) |
AD, South Australia |
| Senator Ron Boswell (for Senator Synon from 8 April
to 29 April 1998 and
Senator Patterson from 30 April 1998)
|
NPA, Queensland |
Participating Members
| Senator Eric Abetz |
LP, Tasmania |
| Senator Bob Brown |
Greens, Tasmania |
| Senator the Hon Bob Collins |
ALP, Northern Territory |
| Senator Mal Colston |
Ind, Queensland |
| Senator Barney Cooney |
ALP, Victoria |
| Senator the Hon Rosemary Crowley |
ALP, South Australia |
| Senator Chris Evans |
ALP, Western Australia |
| Senator the Hon John Faulkner |
ALP, New South Wales |
| Senator Brenda Gibbs |
ALP, Queensland |
| Senator Brian Harradine |
Ind, Tasmania |
| Senator Sue Mackay |
ALP, Tasmania |
| Senator Dee Margetts |
GWA, Western Australia |
| Senator Shayne Murphy |
ALP, Tasmania |
| Senator Belinda Neal |
ALP, New South Wales |
| Senator Kay Patterson |
LP, Victoria |
| Senator the Hon Margaret Reynolds |
ALP, Queensland |
| Senator Sue West |
ALP, New South Wales |
| Senator John Woodley |
AD, Queensland |
1. THE INQUIRY
1.1 The Health Legislation Amendment (Health Care Agreements) Bill 1998
was introduced into the House of Representatives on 12 March 1998
and passed with amendments on 26 March. The House of Representatives Message
transmitting the Bill to the Senate was reported on 31 March 1998. On
1 April 1998, the Senate, on the recommendation of the Selection of Bills
Committee (Report No. 4 of 1998), referred the provisions of the
Bill to the Committee for report by 18 May 1998. The reporting date was
subsequently extended to 1 June 1998.
1.2 The Committee considered the Bill at a public hearing on 5 May 1998.
The Health Ministers from New South Wales, Victoria, South Australia,
Western Australia and Tasmania appeared at the public hearing. Details
of the public hearing are referred to in Appendix 2. The Committee
received eleven submissions relating to the Bill and these are listed
at Appendix 1. Additional information provided to the Committee either
at or following the public hearing is also listed in Appendix 1.
2. THE BILL
2.1 The Health Legislation Amendment (Health Care Agreements) Bill 1998
establishes a legislative basis for the Commonwealth to enter into agreements
with the States and Territories, to be known as Australian Health Care
Agreements, for the provision of designated health services for eligible
people over the period 1 July 1998 to 30 June 2003. [1]
2.2 The definition of `designated health services' is intended to cover
the range of services that are provided in public hospitals and funded
under the present Agreements, as well as services that used to be provided
as hospital services but are moving or have moved outside the hospital.
[2]
2.3 The Australian Health Care Agreements will replace existing agreements
under section 24 of the Health Insurance Act 1973, known as Medicare
Agreements, which expire on 30 June 1998.
2.4 The Minister in the Second Reading Speech stated that:
This legislation is a concrete demonstration of this Government's commitment
to retain Medicare as a system ensuring universal access to necessary
health services. The Bill provides the basic framework for agreements
between the Commonwealth and the States for the provision by the States
of acute health services to public patients free of charge in return for
Commonwealth financial assistance…Every Australian resident eligible
for Medicare is to be given a choice to be treated free of charge as a
public patient. Access to such services is to be based upon clinical need
and is to be provided within clinically appropriate periods, regardless
of the geographical location of the patient. [3]
2.5 While the Bill provides for money to be appropriated on the basis
set out in Agreements, it does not specify amounts of money to be paid
under Agreements. However, the Commonwealth offer to the States and Territories
is for $2.9 billion over the period 1998 -99 to 2002-03. Also, the
Bill does not include details of the range of services to be provided
by the States. These and other details will be negotiated bilaterally
in the Agreements. [4]
2.6 The legislation provides special assistance for national health development
initiatives and a mechanism, through the establishment of a Health Care
Information Commissioner, to address the issue of cost shifting between
levels of government.
2.7 Each State and Territory Health Care Agreement will be negotiated
bilaterally and therefore may differ in detail. However, all Agreements
will:
- set out the basis on which the Commonwealth will provide financial
assistance to the State for the provision of designated health services,
on a public patient basis, to residents of the State, and the terms
and conditions on which the funding is provided;
- set out principles about access to designated health services, the
standard of services and consumer rights which the parties agree should
be applied within the State;
- establish mutually agreed objectives for the ongoing reform of health
service delivery arrangements within the State;
- establish protocols for adjustments to Commonwealth/State health service
financing arrangements to facilitate implementation of reforms;
- establish arrangements to facilitate routine exchange of a wide range
of de-identified patient level health service data between the commonwealth
and the State; and
- set out the basis on which health care restructuring projects proposed
by the State will be considered for National Health Development Special
Assistance funding by the Commonwealth. [5]
Health Care Agreement Principles
2.8 The legislation provides for Health Care Agreement Principles for
the provision of services as set out in section 29 of the Bill:
- Principle 1: Eligible persons are to be given the choice to receive
designated health services free of charge as public patients.
- Principle 2: Access to designated health services by public patients
is to be on the basis of clinical need and within a clinically appropriate
period.
- Principle 3: Arrangements are to be in place to ensure equitable access
to designated health services for all eligible persons, regardless of
their geographic location. [6]
2.9 The principles are based closely on those in the existing legislation,
which was endorsed by Health Ministers as part of their Vision for
the Health of Australians at their 23 May 1997 meeting.
Public Patients' Charter
2.10 The legislation retains the need for States to continue to make
available a Public Patients' Charter and an appropriate complaints mechanism.
[7] The Charter is a document for the dissemination
of information about the provision of designated health services and the
mechanism for submitting and having complaints about the services dealt
with.
2.11 Each State is required to specify minimum standards for the content
of the Charter and the structure and operation of the complaints body
and for public access to the Charter, and a date by which the State will
have in place a Charter meeting the standards. [8]
National Health Development Special Assistance
2.12 The legislation also provides special Commonwealth support for major
projects to enhance and improve the acute care system, improving the efficiency
and effectiveness of the delivery of designated health services, improving
patient outcomes in relation to the delivery of these services and addressing
the factors that lead to unnecessary hospitalisation.
2.13 The Minister in the Second Reading Speech stated that `the Commonwealth
will not be imposing uses for this money on the States, but will instead
be inviting proposals from the States as to how the money might best be
spent'. [9] Detailed arrangements for the selection and funding
of projects will be set out in Agreements. [10]
Health Care Information Commissioner
2.14 The legislation establishes a Health Care Information Commissioner
as a statutory authority responsible for the collection, analysis and
dissemination of deidentified patient level data from the Commonwealth
and the States. The Commissioner is also to carry out functions conferred
on him/her under Agreements between the Commonwealth and the States. The
Minister in the Second Reading Speech stated that `the Commissioner will
identify the movement of services around the health system and report
on how these services are funded'. [11]
2.15 The Information Commissioner will be appointed by the Commonwealth
Minister for Health, after consultation with State Ministers for Health.
The Bill specifies that the Commissioner must have regard to resolutions
of the Health Ministers' Conference when performing functions and exercising
powers, and that the Commissioner's reports will be made available to
all parties. [12]
3. ISSUES
3.1 It is worth noting, as per the aforementioned paragraphs, that the
legislation does not deal with the specific offers that have been made
to the States and Territories.
3.2 Therefore one needs to view the reference of this Bill to the Committee
by the Opposition in context. Clearly the only reason for the reference
was to highlight the variation of views between the States, the Northern
Territory and the Commonwealth. It is not surprising that the States and
the Northern Territory took such an opportunity to present their arguments
surrounding the impasse in negotiations over the Australian Health Care
Agreements even though, they too were aware that their `claims' had little
to do with the specifics of the Bill and everything to do with continuing
the negotiations.
3.3 Unquestionably there were many issues raised and discussed in the
Committee hearing about the impasse however that does not create a foundation
upon which a Senate Legislation Committee formulates its report on a Bill.
3.4 A Report of a reference of a Bill is designed to specifically report
upon the issues that were raised in relation to various clauses of the
Bill and the effects, either positive or negative, of those clauses.
3.5 As stated previously, the Bill does not include details of the range
of services to be provided by the States and while the Bill does provide
for money to be appropriated it DOES NOT specify amounts. These have been
previously, and continue to be, negotiated bilaterally.
3.6 Some matters raised in submissions that do relate to the Bill and
the Departmental response follow.
Health Care Agreement Principles
3.7 Commonwealth Financial assistance is conditional on adherence by
the States and Territories to the Health Care Agreement Principles. The
States and Northern Territory raised issues relating to the Principles.
With Principle 1 they argued that the definition of `designated health
services' was `too vague and ambiguous' and that it was unclear how such
services not provided at a hospital would be funded. The issue with Principle
2 related to the level of funding required to ensure that access to services
was provided `within a clinically appropriate period'. In relation to
Principle 3, the issue was that in ensuring equitable access regardless
of geographical location, it may not be feasible for States and Territories
with widely dispersed populations to provide rural and remote areas with
the same services provided in cities. [13]
The Australian College of Health Service Executives raised similar issues.
[14]
3.8 The Principles were supported in a number of submissions. For example,
the Council on the Ageing noted that `these principles are fundamental
to consumers and reinforce the important message of a universal health
system'. [15]
3.9 DHFS advised that the Commonwealth intends the new Agreements to
be focussed on funding acute health services rather than simply public
hospitals. Such a change in emphasis should encourage improved integration
of care between hospitals and other service providers, and support developments
in providing acute care outside the hospital setting. The definition of
`designated health services' is intended to cover the range of services
that are provided in public hospitals and funded under the present Agreements,
as well as services that used to be provided as hospital services but
are moving or have moved outside the hospital.
3.10 DHFS continued that the Commonwealth's intention is to ensure that
free access is provided to services that were hospital services but can
now be provided in other settings. However, patients should continue to
receive these services without charge. The Commonwealth also intends that
the scope of the definition of `designated health services' will be spelt
out in Agreements, and modified to meet the particular circumstances of
particular States and Territories. [16]
Cost Shifting
3.11 DHFS informed the Committee that the Commonwealth believes, on the
basis of widespread anecdotal evidence and some statistical evidence,
that services previously provided as a part of public hospital services
funded by the States have been provided in a way shifting them onto the
Medicare Benefits and Pharmaceutical Benefits programs that the Commonwealth
alone funds. In the 1996-97 and 1997-98 financial years, the Commonwealth
imposed a cost-shifting penalty on the States based on an analysis of
the available data. [17] The penalty imposed
was the withholding of $152.5 million from the Medicare Agreement Hospital
Funding Grants over the two financial years. [18]
3.12 The States and Territories strongly opposed the imposition of this
penalty, criticising it as being arbitrary and unfair. They claimed that
the Commonwealth has not provided empirical evidence of alleged cost shifting
practices to justify these financial penalties, strongly disputed the
assertion that they have deliberately directed services away from the
public hospital system into the private sector, and argued that there
are many areas where Commonwealth policies and practices have resulted
in the Commonwealth shifting costs to State and Territory Health Services.
[19] The States and Northern Territory contend
`that the issue of cost shifting is a result of current structural arrangements
in the health system'. [20]
3.13 As noted above, the Department's action over cost shifting was based
on `widespread anecdotal evidence and some statistical evidence'. At the
hearing, the Department explained that `the problem that we have faced
in the past, and continue to face, is that there are instances of changes
in the way people do things in the hospital system that result in increased
expenditure for the Commonwealth through the MBS and PBS. Sometimes those
probably reflect better practice and they may be better for patients.
Sometimes they reflect decisions that are being made without regard for
improvement of treatment of patients and constitute a deliberate attempt
to shift costs… It is getting that precise measurement that is difficult
without doing a lot of the data matching work that we hope the [proposed
Information] commissioner could do'. [21]
3.14 The Department acknowledged that the penalty `was a contribution
towards what cost shifting had occurred on the basis of its broad analysis'
[22] and subsequent to the hearing provided
the Committee with examples representing what it believed to be the most
common forms of cost shifting which included:
- Billing of outpatient services to the Medicare Benefits Schedule;
- Reclassifying patients' election status for the purposes of charging
services to the Medicare Benefits Schedule and/or the Pharmaceutical
Benefits Scheme;
- Referral of public patients to General Practitioners for prescription
drugs with consequent charges to the Medicare Benefits Schedule, the
Pharmaceutical Benefits Scheme and possibly the patient; and
- Change of election status during an admitted patient episode for the
purposes of charging to the Medicare Benefits Schedule. [23]
3.15 The Department also provided an explanation of how the $75 million
cost shifting penalty for 1996-97 was derived. Over the period 1995-96
on 1994-95, `the difference between total actual Medicare Benefits paid
and total adjusted Benefits paid (ie adjusted for high growth States (Victoria
and Western Australia)), is assumed to be the value of cost shifting'.
[24] DHFS conceded that this was `by no means
an accurate calculation' but was `a very conservative estimate'. [25] Subsequent cost shifting penalties have been
calculated using this base figure, adjusted for indexation.
Health Care Information Commissioner
3.16 The States and Northern Territory noted that the establishment of
a Health Care Information Commissioner formalises in legislation recognition
of cost shifting. They believe that it is clear that the impetus for the
Information Commissioner is Commonwealth concerns about cost shifting
by the States and Territories, with, what they claim to be, no due recognition
of substantial cost shifting by the Commonwealth to the States and Territories.
As noted above, the States and Northern Territory argued that cost shifting
is a result of current structural arrangements in the health system. They
consider that `instituting a legal solution to cost shifting is not the
answer – it lies in fundamental structural reform of the roles and
responsibilities of jurisdictions'. [26]
3.17 The States and Northern Territory also argued that if they agreed
to support the establishment of the Information Commissioner, the position
should be `independent from the Commonwealth and should be constituted
to report to Parliament rather than the Minister'. [27]
3.18 The Bill provides that the Information Commissioner would have the
independence accorded a statutory authority and is to be appointed after
consultation with State Ministers for Health. As noted earlier, the Bill
also specifies that the Commissioner must have regard to resolutions of
the Health Ministers' Conference when performing functions and exercising
powers, and that the Commissioner's reports will be made available to
all parties. DHFS noted that, subject to the agreement of the States and
Territories, it is possible that the functions of the Insurance Commissioner
could be assumed by the Health Insurance Commission, in which case the
stringent privacy requirements pertaining to the HIC would apply to the
Commissioner. [28] DHFS suggested that the
HIC could be able to adopt a bipartisan approach given the recent changes
to the HIC which gave it greater independence, including the appointment
of State representation on its Board. [29]
3.19 The establishment of the position of Information Commissioner was
seen by a number of organisations as a `positive innovation' and one `to
be applauded'. Indeed, it was submitted that the Commissioner's role and
functions could be enhanced. The Australian College of Health Service
Executives suggested that it would be remiss if the Commissioner `was
just another layer in the monitoring spiral'. They proposed that `what
is needed is a genuine expert working for the entire health care system,
analysing and reporting on how the system is used, by whom, for what and
where. The benefit of the [Commissioner] could be as an analyst on an
integrated health care system'. [30]
National Health Development Special Assistance
3.20 The National Health Development Special Assistance funding is provided
for health system restructuring. The States and Northern Territory noted
that the funds are not recurrent and projects will be effectively `demonstration
projects' that will provide data to enable the Commonwealth to measure
possible future savings. They claimed that `the Commonwealth has already
proposed a number of substantial projects for this funding including improving
information technology, integrated care models for the aged and meeting
transitional costs to enable hospitals to access the Pharmaceutical Benefits
Scheme. As such, these types of projects are not direct funding to the
States and Territories but are effectively Commonwealth own purpose programs'.
[31]
3.21 The Department responded that it was the States and Territories,
particularly South Australia, who had `highlighted to us that there are
urgent needs to restructure the hospital system to facilitate more effective
use of day surgery and step down facilities and to use information technology
to support clinical decision making and improve integration of care. These
changes will have immediate impacts on the cost effectiveness of public
hospital and related care'. [32]
Public Patients' Charter
3.22 A condition of funding requirement is a continued obligation on
States and Territories to provide a Public Patients' Charter. The concept
of such a charter was supported by the States and Territories, and also
in other submissions. [33] The States and Northern
Territory believed that further clarification was needed to assess the
implications of this requirement, particularly as the charter will extend
coverage to all designated health services, which will also encompass
services outside of the traditional hospital sector. [34]
Protection if Agreements not signed
3.23 The current Medicare Agreements are due to expire on 30 June 1998,
with the new Australian Health Care Agreements to commence on 1 July 1998
and operate for a period of 5 years. Queensland and the ACT have already
reached in-principle agreement with the Commonwealth. [35]
3.24 Following the Premiers' Conference on 20 March 1998, the Prime Minister
committed the Commonwealth to provide funding to the States and Northern
Territory for health care in 1998-99 if they have not signed an Agreement.
The Bill was subsequently amended in the House of Representatives so that
if a State or Territory has not signed an Agreement before 2 June 1998,
the Commonwealth will provide funding through an annual appropriation,
rather than using the standing appropriation authority contained in the
Bill, on condition that the State adheres to the Health Care Agreement
Principles and to any other terms and conditions determined by the Minister.
[36] DHFS indicated that:
At this stage the Commonwealth intends that these terms and conditions
should relate to elements of the grants relating to mental health, palliative
care and quality enhancement. For mental health this would be endorsement
of the Second National Mental Health Plan, for palliative care this would
be agreement to the National Palliative Care Strategy, and for quality
this would be implementation of an approved quality enhancement program.
[37]
3.25 The States and Northern Territory argued that the implications of
this amendment still require clarification. In particular, there was uncertainty
around access to the $120 million waiting list incentive funding for those
who do not sign, and that some elements of the Commonwealth's current
offer may not be available, such as funding to cover any decline in private
health insurance coverage. They also noted that the amendment does not
detail arrangements for States and Territories in the event that an Agreement
is not signed until after 1 July 1999, or in fact at all. [38]
Bill as Enabling Legislation
3.26 The States and the Northern Territory argued that as the Bill, the
draft agreements and the funding offer constitute the three elements of
the Commonwealth's Health Care Agreements proposal, all three need to
be considered together as a package. They suggested that the legislation
should only be enabling legislation at this stage for the purpose of allowing
the flow of grants to States and Territories. [39]
3.27 DHFS responded that `in a sense the legislation is precisely that
– it is enabling special appropriations to be made about agreements'
and drew attention to previous parliamentary concerns over legislation
`that was as broad based as the States seem to be intimating'. [40]
4. RECOMMENDATION
4.1 The Committee reports to the Senate that it has considered the Health
Legislation Amendment (Health Care Agreements) Bill 1998 and recommends
that the Bill proceed.
Senator Sue Knowles
Chairman
May 1998
MINORITY REPORT - AUSTRALIAN LABOR PARTY
HEALTH LEGISLATION AMENDMENT
(HEALTH CARE AGREEMENTS) BILL 1998
INTRODUCTION
The primary purpose of the Health Legislation Amendment (Health Care
Agreements) Bill 1998 is to allow the Commonwealth to enter into agreements
with the States to provide funding for public hospitals and related health
services over the next five years.
The agreements, to be known as Australian Health Care Agreements, will
replace the existing Medicare agreements under section 24 of the Health
Insurance Act 1973. The current Medicare Agreements are due to expire
on 30 June 1998.
In considering the legislation it is necessary to examine the current
offer by the Federal Government to the states and territories, the response
of the states and territories, and the progress (or lack of progress)
of the negotiations.
These issues were extensively canvassed in the submissions, particularly
in the joint submission by the Health Ministers from NSW, Victoria, South
Australia, Western Australia, Tasmania, and the Northern Territory.
The response of the Government Senators is to assert that because the
legislation “does not deal with the specific offers that have been
made to the States and Territories” means that this Committee should
effectively ignore the serious issues raised by the States and Northern
Territory during evidence to the Committee They argue that the report
should be confined to “…issues that were raised in relation
to various clauses of the Bill and the effects, either positive or negative,
of those clauses.” (see Majority Report, Paras 3.1 and 3.4.)
We reject this narrow approach.
As noted earlier the purpose of the legislation is to enable the establishment
of Agreements for the funding of the public hospital system and related
health services over the next five years. This is an extremely serious
issue involving billions of dollars of federal and state expenditure.
Consequently the legislation has very little, if any, meaning if the Agreements
are not finalised. Given the current impasse between the States/Northern
Territory and the Commonwealth it is incumbent upon us to report to the
Senate on the substantive issues to which the legislation is ultimately
directed.
THE COMMONWEALTH OFFER
The Commonwealth claims their offer to the States provides for an additional
$2.9 billion over five years. This additional funding is said to
include:
- $682 million for quality and access programs;
- $479 million for mental health and palliative care;
- $500m for a National Development Program to support projects and programs
to reform the acute care health system; and
- $750m for veterans hospital care.
Significant concerns about each of these components are at the heart
of the dispute about the Commonwealth's funding offer.
Quality and Access
The States point out that there is no guarantee that the full amount
of funding for quality and access will flow to the States as the draft
agreements make explicit allowance for this funding to flow to other parties,
such as universities.
Mental Health and Palliative Care
This money is nothing more than continuing funding for existing services.
It is misleading for the Commonwealth to claim otherwise.
National Development Program
This program which the Commonwealth originally claimed was for capital
works funding on a project basis is now under a cloud following revelations
at the committee hearings that Queensland was granted money from this
fund for recurrent services and without any formal criteria having been
agreed. The status of this program appears to have been completely undermined
by this deal. It is no longer clear on what basis this money will be provided.
Veterans Hospital Care
The first point to be made in relation to this package is that veterans'
hospital care has not been previously included in the Medicare Agreements.
Its inclusion in this offer appears designed to increase the apparent
generosity of the Medicare Agreements offer.
The second point is that less than half of all veterans receive hospital
care in public hospitals and the proportion is declining. Therefore all
of the money to be spent cannot be claimed as increased funding to public
hospitals. Indeed evidence given to the committee indicated that officials
from DVA had agreed that the offer was significantly overstated.
The Commonwealth claims it's offer to be an increase of $2.9 billion
or a 15% `real' increase. It seems there are very few who agree:
- the States estimate that the offer guarantees them an increase of
only $69million;
- Dr John Hewson believes the offer represents only a 1% increase; and
- the AMA agree that it is only a 1% increase and that it will lead
to a doubling of waiting lists.
Even the Minister admitted recently (on Channel Seven's Face to Face,
17/5/98) that,
“if you take age out; if you take population out; if you take
out any drop in private health insurance out; the increase is 1.5% per
year, so that's 7.5% over 5 years …”
Age and population have always been built into the base.
The Commonwealth also makes no acknowledgment in its offer of the massive
cuts made to Commonwealth contributions to State health spending ($800
million from public hospitals and $400 million from dental services) in
the 1996 Budget.
The real value of the Commonwealth's offer is the key issue in achieving
new Medicare Agreements. It is disappointing that the Commonwealth is
continuing to misrepresent the size of its offer and as a result negotiations
over the Medicare Agreements have broken down.
THE ATTITUDE OF THE STATES AND TERRITORIES
Initially, all the State and Territory Governments disputed the Commonwealths
claims as to the level of real increases and rejected the Federal Government's
offer. This stance has been consistently maintained during the negotiations,
which commenced over 12 months ago, with two recent exceptions.
In January 1998, just prior to their elections, the ACT Government signed
an in-principle agreement. Similarly in April, the QLD Government signed
an in-principle Agreement. Prior to these sudden changes both Queensland
and the ACT were strident in their criticism and rejection of the Federal
Government's proposals.
The NSW, Victorian, South Australian, Western Australia, Tasmanian and
the Northern Territory Government remain strongly opposed to the Federal
Government's funding offer and draft agreements. They have refused to
sign the agreements.
The opposition of these States and the Northern Territory was outlined
in detail to the Committee, The following extracts from the evidence of
the Honourable Robert Knowles, Victorian Minister for Health, summarises
their position:
The bill, the draft agreements and the funding model need to be considered
together as a package. We have two basic concerns with this package: the
funding offer is not enough to cover the required service levels, and
the bill and draft agreements do not address structural reform. The Commonwealth
claims that it is offering the states an additional $3 billion over the
next five years, but this offer includes funding increases for population
growth and ageing, and for inflation –increases which have always
been included in the Medicare agreement. It is also counting the continuation
of funding for mental health and palliative care, which was part of the
current agreement as additional money. So we are essentially arguing that
that is not new money; from the state perspective, it is simply a continuation
of the funding that the Commonwealth had been providing.
The Commonwealth is also counting $750 million over five years for veterans
as part of the new health care agreement. The Commonwealth and the states
have always dealt with veterans as separate from Medicare funding. In
any case, we have not yet received an offer in writing from the Commonwealth
for veterans funding. From our perspective, this cannot be counted as
real money on the table.
The Commonwealth intends to increase the role of the private sector in
the provision of veterans' services by allowing veterans to choose whether
they use the private or the public sector. While we have no difficulty
with that choice being given to veterans, it does represent for the public
hospital system the possible loss of funding while the public hospitals
still have to maintain the costs. There is only a benefit to the states
if we actually close public beds and in fact reduce the overall cost in
that scenario.
Money for quality and access and for capital funded under the proposed
national development fund will require Commonwealth approval and is, in
any event, for one-off projects. We cannot count that as recurrent funding
for the treatment of patients.
We believe the negotiations have not been conducted in good faith. There
has been no opportunity to comment on the bill before it was tabled in
the House. The Commonwealth's proposed framework for agreements was sent
to ministers one day before the 19 December meeting last year. Despite
repeated requests by the states, the Commonwealth did not provide copies
of the draft agreements until about three weeks after the bill was tabled
in the House, yet it is impossible to make sense of the bill without looking
at the draft agreements as well. The Commonwealth, by asking parliament
to look only at half the story, is in our view not opening up for proper
scrutiny its proposal for an Australian health care agreement.
The states are seeking a partnership approach, which must be embodied
in the agreements and legislation. States have significant concerns about
some of the directions of the key documents, around which there has been
almost no consultation. The Commonwealth seems to be proposing to radically
extend the definition of public hospitals by introducing a new concept
of `designated health services' without defining in the bill exactly what
this means. The services covered under Medicare must be universally available,
not subject to bilateral arrangements between the Commonwealth and each
state to decide what the designated health services are. (Committee
Hansard, 5.5.98, pp.46-47.)
The states argued that the Federal Governments offer was insufficient
to meet the growth in public hospital demand over the next 5 years. The
states expect to treat approximately 20.26 million patients over this
period but claim that the Federal Government's offer will only contribute
to the cost of 18.83 million patients thus leaving a gap of 1.43 million
patients unfunded by the Commonwealth.
They also note that this position has been, and will be further , exacerbated
by the ageing population, the continuing decline in private health insurance
coverage, as well as changing clinical practice and new technology.
Two states, Western Australia and Tasmania, stated that they would actually
be worse off under the proposed agreements than under the existing Medicare
agreements.
The Honourable Kevin Prince, WA Minister for Health stated:
As far as the Medicare funding offer is concerned, the joint bid by the
states is well justified. The current offer – as my colleague Mr
Knowles has said – is vastly inadequate for a whole series of reasons.
And some of the claims that have been made about the offer are, frankly,
misleading. What Mr Knowles has not discussed is how the Commonwealth
offer would impact differently on different states. Under the most generous
interpretation of the offer that was put on the table on 19 December
last year, which has been reiterated this year, my state will actually
receive $149 million less in hospital funding grants over the next five
years than if the current Medicare agreement between the Commonwealth
and Western Australia continued. There is no way that I can agree to that;
it is simply not possible. One hundred and forty-nine million dollars
less is not on when we have –and everybody knows that we have –
this huge increase in demand that is trending upwards. (Committee Hansard,
5.5.98, p.51.)
In respect to Tasmania the Honourable Peter McKay, Minister for Community
and Health Services stated:
Mr McKay–We find the current Medicare negotiations frustrating.
I think probably best described as belittling. I think that the operation,
as Dr Refshauge was saying, of the press media release type negotiation
is astounding. I never cease to be amazed about how they can utilise this
one-off funding of $120 million to try and get us to sign up to an agreement
that would devastate our hospital system over the new five year agreement.
It depends on which press release you read from the Commonwealth as to
whether it is $4 million or $9 million. Today it was $9 million from Dr
Wooldridge as far as what the state was entitled to. Not long ago it was
only $4 million, so it has changed a little bit in that time. But that
relates to something like about nine days of operation for our hospitals.
Our hospitals cost around about $350 million to run acute care in Tasmania
so it is roughly $1 million a day. He is trying to make us sign up to
an agreement that gives us nine days of paradise and five years of absolute
bloody hell. I really think that I am not that encouraged to sign.
One issue has been raised. I thank my local senators in Tasmania for
distributing the information to the public about the cut in our health
care grants. In 1997-1998, our base funding was $147 million. In 1998-1999,
under this agreement, our base funding would be $118.7 million.
Senator FORSHAW—Could you say that again?
Mr McKay – In 1997-1998, our base funding from our health
care grants is $146 million and what we have been offered in this 1998-1999
year is $118.7 million – a drop of $30 million. I cannot see how
that is an increase. However, I am told it is an increase. The issue here
is that they have put extra funds into the general purpose payments and
tried to say that they have given the extra money to the states for health.
(Committee Hansard, 5.5.98, p.54.)
Whilst the Federal Minister and the Government have attempted
to dismiss the complaints of the States and the Northern Territory as
just the usual posturing in Commonwealth-State relations there is no doubt
that the states and territories are facing significant funding pressure
in their public hospital systems.
The current impasse is clearly detrimental to the viability of our public
health system recognised as one of the best in the world. As Mr Knowles,
Victorian Health Minister said “Further consultation is required
between the Commonwealth and the states to develop a partnership approach
to delivery of health care and to agree on the appropriate way to embody
that approach in the legislation and agreement.”
THE BILL
The following aspects covered by the Bill are discussed separately hereunder.
- Changes to the Medicare Principles;
- Cost-shifting
- The public patients charter;
- National Health Development Special Assistance ; and
The Medicare Principles
Universal coverage and access to services on the basis of health need
are the key Medicare principles that underpin both the present and the
proposed agreements.
Section 29 of the Bill sets out the Health Care Agreement Principles
as follows:
29 Financial assistance conditional on adherence to Health Care Agreement
Principles
(1) Financial assistance is not payable to a State under this Part unless
the agreement with the State provides for adherence to the Health Care
Agreement Principles.
- (2) The Health Care Agreement Principles are as follows:
- Principle 1:
- Eligible persons are to be given the choice to receive designated
health services free of charge as public patients.
Principle 2:
Access to designated health services by public patients is to be on the
basis of clinical need and within a clinically appropriate period
Principle 3:
Arrangements are to be in place to ensure equitable access to designated
health services for all eligible persons, regardless of their geographic
location.
The State and Territory Ministers expressed concern that the words “recognised
hospital services” in the Medicare Agreements have been replaced
with the term “designated health services.” In their submission
the States and Northern Territory argued that the definition of “designated
health services is too ambiguous:
8.32 The definition of designated health services contained in Schedule
A of the draft agreements includes services provided by hospitals to both
admitted and non-admitted patients and also emergency services. This definition
includes hospital services that:
- may not actually be provided at the hospital; and
- services that are not provided by hospitals but are of a kind that
were historically provided by hospitals.
8.33 The definition of designated health services is critical and the
States and the Northern Territory have a number of concerns with this
broader description. Firstly, it is far too vague and ambiguous given
the requirement that States and Territories must ensure a full range of
designated health services are made available on a public patient basis.
The definition could be interpreted to include community health services
or any other services that have at any time been provided by hospitals.
The definition as it currently stands, is therefore so broad as to be
meaningless.
8.34 Secondly, it is unclear how the designated health services not provided
at a hospital will be funded. The Commonwealth funding model provides
output based funding for public weighted separations from public hospitals.
There does not appear to be any mechanism within the agreement to determine
Commonwealth funding for designated health services that are not provided
at hospitals.
8.35 A much clearer definition of the services covered by the agreement
is therefore required. While the States and the Northern Territory prefer
funding not be tied to specific levels of output, if this is to be the
case, the agreements must specify how designated health services that
do not result in hospital separations will be incorporated into the funding
model. (Submission No.10.)
The States and Northern Territory also expressed concerns with Principle
2 and Principle 3. In particular they were concerned that the use of terms
such as “within a clinically appropriate time” (Principle 2)
and “regardless of their geographic location (Principle 3), if interpreted
as strict legal conditions, could lead to Commonwealth funds being unfairly
withheld.
Cost Shifting
The States and Northern Territory rejected the Commonwealth's allegations
of cost shifting and strongly argued for a consensual approach to this
issue. Whilst the Commonwealth alleged that the states were engaging in
cost shifting the only example provided by the Commonwealth at the hearing
turned out to be wrong.
The Commonwealth has withheld funding of $153 million since 1996/97 and
proposes a further withholding of $81 million from the base grant for
the first year of the new agreements as a penalty for alleged cost-shifting.
The States and Territories assert that this will result in a total reduction
of funding of more than $400 million over the next five years. They argue
that this is a deliberate cost cutting exercise by the Commonwealth, without
any justification such or proper analysis of relevant data and empirical
evidence.
Further, in a counter argument, the States and Northern Territory submit
that financial responsibility of Commonwealth funded programs have shifted
from the Commonwealth to the States and Territories without adequate funds.
For example the abolition of the Commonwealth Dental Health Program and
changes to Aged Care services have resulted in increased pressure on public
hospitals without any corresponding funding adjustment.
The States and Northern Territory are concerned that the proposed Health
Care Information Commissioner (Part IIIA of the Bill) “formalises
in legislation recognition of cost-shifting.” Further, the lack of
clarity in either the Bill or the draft Agreements on the role of the
proposed Commissioner means that the Commonwealth's interpretation in
disputes over cost-shifting and funding will inevitably prevail.
If cost-shifting is to be addressed in any meaningful way it must be
done consensually and if this position is to be established it has to
be totally independent.
Public Patients Charter
The Opposition welcomes the Commonwealth's continuing commitment to the
Public Patients Charter.
National Health Development Special Assistance
Division 3 of the Bill provides for special financial assistance for
projects and programs that are designed to
- improve the efficiency and effectiveness of, or reduce the demand
for, the delivery of designated health services ; or
- to improve patient outcomes in relation to delivery of such services.
Originally the parties had agreed to jointly develop the criteria for
the assessment of submissions. There is no recognition of this in the
Bill or in the draft agreements provided to the states. Further, apparently
funds under this proposal have already been provided to Queensland in
advance of agreement with all the states and territories and without the
assessment criteria being in place.
CONCLUSION
Medicare Agreements are central to Australia's world leading health care
system. Through meanness, incompetence or malevolence the Howard Government
appears determined to sabotage them.
The real value of the Commonwealth's offer is the key issue in achieving
new Medicare Agreements. It is disappointing that the Commonwealth is
continuing to misrepresent the size of its offer and as a result negotiations
over the Medicare Agreements have broken down.
Similarly, it is disappointing that the Government reports seeks to avoid
this issue.
Without binding Medicare Agreements between the States and the Commonwealth
the principles of universal access to free public hospital care is seriously
threatened.
We call on the Government to rethink its position on these issues and
re-open negotiations with the States in the interests of all Australians
who rely upon our public hospital system.
Senator Michael Forshaw
(ALP, New South Wales)
Senator Kay Denman
(ALP, Tasmania)
Senator the Hon John Faulkner
(ALP, New South Wales)
DISSENTING REPORT BY THE AUSTRALIAN DEMOCRATS
Health Legislation Amendment (Health Care Agreements) Bill 1998
The Democrats support the general objectives of this Bill which articulates
the Government's commitment to Medicare and its underlying principles.
However, the Democrats have concerns with a number of aspects of the Bill
as outlined below.
The Democrats strongly recommend that this Bill should be considered
in conjunction with the draft Medicare/Health Care Agreements and the
associated funding offer from the Commonwealth to the States and Territories.
We believe that these documents together reflect the Government's true
commitment to the public health system and that therefore the Bill should
not be considered in isolation.
Health Care Agreement Principles
The Democrats support the Health Care Agreement/Medicare Principles.
We believe that it is important to articulate the rights of all Australians
to obtain free and clinically appropriate treatment in public hospitals.
However, we also feel that articulating principles will not, on its own,
ensure that these rights are upheld.
The Democrats believe that through under-funding the public health sector,
encouraging people to use private health services, offering financial
incentives for people to take out private health insurance, enforcing
penalties on high income earners who choose not to take out Private Health
Insurance, the integrity of the Medicare Principles has been undermined.
We believe that the Government cannot claim to fully support the Medicare
Principles while it provides inadequate funding to public health services
and makes policy decisions that unfairly advantage private health services
and private health insurance funds.
The Democrats are also concerned that insufficient consideration has
been given to the financial implications of the changes to the Medicare
Principles. For example, the expansion of their application to `designated
health services' could impose substantial additional costs on State and
Territory governments. While the Democrats support the encouragement of
day surgery and community and home-based treatments, where these are cost-effective
and clinically appropriate, we feel that this should be supported by adequate
funding.
Similarly, the Democrats support the principle that all people have access
to treatment within `clinically appropriate periods, regardless of geographical
location'. However, we recognise that adherence to this principle imposes
a disproportionate burden on those States/Territories that have a large
proportion of people in rural and remote areas.
The Democrats are concerned that the specific problems associated with
health care delivery in rural areas have not been considered by the Government
in this Bill. The Democrats recognise that there is significant un-met
need for health services in rural areas, particularly in Aboriginal communities,
and believe that a cooperative Commonwealth and State/Territory approach
is the best way of addressing this serious issue.
We are not confident that the Government has adequately assessed the
level of un-met need and believe that the funding offer to the States
and Territories underestimates the costs of providing health services
in rural and remote areas. The Democrats believe that Indigenous Health
and health service provision in rural and remote areas are critical health
issues which should be recognised and addressed in this legislation.
We are concerned that the lack of recognition in the Bill of the specific
needs of Indigenous people and people in rural and remote areas and the
under funding of Indigenous and rural health represents a lack of Government
commitment to the Medicare Principle of equal access to treatment.
The Democrats are also concerned that penalties for failing to adhere
to the Medicare Principles could adversely impact upon consumers. We believe
that there should be appropriate procedures in place to ensure that funding
disputes can be resolved between the Federal and State/Territory governments
without resulting in decreased services or additional expenses for consumers.
Lack of Consultation
The Democrats are concerned about the lack of consultation by the Federal
Government in the development of this Bill. We feel that the Bill has
significant implications for Australia's health system over the next five
years and therefore that all stakeholders, including consumers, State
and Territory Governments and service providers should have had some input
into its content.
The Democrats support a cooperative approach to the development of Australia's
health system and believe that stakeholder involvement at all stages is
vital to ensure the accountability of governments. Given that this legislation
makes significant changes to the previous conditions of the Medicare Agreements,
it is particularly concerning that the Government did not seek input from
consumers and service providers about the impact of these changes.
Health Information Commissioner
The Democrats support the need for more information on health care expenditure
and utilisation. However, we are concerned that the roles and responsibilities
of the Health Information Commissioner (HIC) as proposed in this Bill
have not been discussed with the States and Territories.
The HIC will, to a large extent, rely on the co-operation of the States
in providing their data. Given the current breakdown in negotiations between
Federal and State governments this expectation might be unrealistic. The
Democrats suggest that consultation on this issue with the States may
be necessary to develop protocols for the operation and function of the
HIC, particularly since the States and Territories may be required to
provide funding for this position.
The Democrats question the ability of the HIC to provide independent
information given that s/he is to be appointed by the Minister for Health.
The Democrats believe that the HIC should be independent of the Commonwealth
and in addition to monitoring cost-shifting from the States and Territories
to the Commonwealth, should investigate cost-shifting practices from the
Commonwealth to the States and Territories and from all levels of government
to consumers. It is important that any attempts to address cost-shifting
also take into account current practices of cost-shifting to individuals
and that decisions made in relation to cost-shifting between governments
do not result in adverse financial or other impacts on consumers.
Public Patients' Charter
The Democrats support the development of a public patients' charter,
however we are concerned that the Bill does not specify the minimum standards
that the charter must meet. This leaves the situation open to States and
Territories developing different charters, although consumers in all States
and Territories have the same rights to access public health services.
We believe that the Bill should specify minimum standards for the development
of patient charters and that this should be driven by consumers and consumer
groups. We are concerned that consultation with consumer groups is not
specified in the Bill as a requirement and that this could result in the
States and Territories developing their charters without appropriate consumer
input.
National Health Development Special Assistance
The Democrats support the allocation of additional health funding to
the States and Territories, however, we have concerns about the details
of this scheme. We support the use of the scheme to fund pilot projects
which develop more efficient service delivery or more effective ways of
structuring funding mechanisms to avoid cost shifting and decrease financial
burdens on consumers.
The Democrats recognise that with the current under-funding of public
health services, these sorts of projects would be unlikely to be supported
financially by the States and Territories. However, we are concerned that
this scheme has the potential for pork barrelling as the Minister has
a large degree of control over where and how the funds are allocated.
We believe that the allocation of these funds should be overseen by a
committee representing all stakeholders, including the government, health
experts and consumers.
Recommendation
The Democrats recommend that the Bill proceed and be passed with amendment.
Senator Meg Lees
Australian Democrats Senator for South Australia
APPENDIX 1
Submissions and additional information received by the Committee
| 1 |
Consumers' Health Forum of Australia Inc. |
| 2 |
Health Consumers' Council WA (Inc) |
| 3 |
Council on the Ageing (Australia) |
| 4 |
Northern Territory Government- Addendum, dated 12 May
1998 |
| 5 |
Commonwealth Department of Health and Family Services-
Waiting times for elective surgery, tabled at hearing 5 May 1998
- Additional Information, dated 5, 6 and 11 May 1998
|
| 6 |
Australian Catholic Health Care Association |
| 7 |
Australian Consumers' Association |
| 8 |
Australian College of Health Service Executives |
| 9 |
Australian Nursing Federation |
| 10 |
States and Northern Territory Governments (joint submission)-
Draft Agreement and Letter from the Commonwealth Grants Commission
to DHFS dated 2 April 1998, tabled at hearing 5 May 1998
- Additional Information, dated 15 May 1998
|
| 11 |
ACT Government |
APPENDIX 2
Public hearing
A public hearing was held on the Bill on 5 May 1998 in Senate Committee
Room 2S3.
Committee Members in attendance
- Senator Sue Knowles (Chairman)
- Senator Ron Boswell
- Senator the Hon John Faulkner
- Senator Michael Forshaw
- Senator Meg Lees
Witnesses
State Health Ministers
- The Hon Robert Knowles MLA, Victorian Minister for Health
- Mr Warren McCann, Chief Executive Officer
- Dr Phyllis Rosendale, Adviser
- The Hon Andrew Refshauge MP, New South Wales Minister for Health
- Mr Mick Reid, Chief Executive Officer
- Ms Carmel McKeough, Adviser
- The Hon Dean Brown MLA, South Australian Minister for Human Services
- Ms Christine Charles, Chief Executive Officer
- Dr David Filby, Adviser
- The Hon Peter McKay MLC, Tasmanian Minister for Community and Health
Services
- Mr Ron Parker, Secretary
- Dr John Mulligan, Adviser
- The Hon AKR Prince MLA, Western Australian Minister for Health
- Mr Alan Bansemer, Chief Executive Officer
- Department of Health and Family Services
- Mr Andrew Podger, Secretary
- Mr David Borthwick, Deputy Secretary
- Dr John Loy, First Assistant Secretary, Health Services Development Division
- Mr Charles Maskell-Knight, Assistant Secretary, Health Care Agreements
Branch
- Mr Ian Bigg, Director, Health Care Agreements Coordination Unit,
- Health Care Agreements Branch
FOOTNOTES
[1] Explanatory Memorandum p.i.
[2] Submission No.5, p.4.
[3] Minister's Second Reading Speech
[4] Submission No.5, p.3.
[5] Draft Agreement tabled at hearing, 5.5.98.
See also Submission No.5, p.6.
[6] Health Legislation Amendment (Health Care
Agreements) Bill 1998, s.29. See also Submission No.5, p.1.
[7] Submission No.5, pp.1-2.
[8] Explanatory Memorandum, p.5.
[9] Minister's Second Reading Speech
[10] Explanatory Memorandum pp.6-7; Submission
No.5, p.2.
[11] Minister's Second Reading Speech
[12] Explanatory Memorandum pp.7-9; Submission
No.5, p.2.
[13] Submission No.10, pp.82-85.
[14] Submission No.8, pp.5-6.
[15] Submission No.3, p.1. See also Submission
No.6, pp.10-11 and Submission No.7, p.2.
[16] Submission No.5, p.4. See also Committee
Hansard, 5.5.98, p.96.
[17] Submission No.5, p.2.
[18] Committee Hansard, 5.5.98, pp.89-90.
Submission No.10, Additional Information 15.5.98, p.2.
[19] Submission No.10, pp.67-74.
[20] Submission No.10, p.9.
[21] Committee Hansard, 5.5.98, p.86.
[22] Committee Hansard, 5.5.98, p.90.
[23] Submission No.5, Additional Information
11.5.98, p.1 and Attachment A.
[24] Submission No.5, Additional Information
11.5.98, Attachment B.
[25] Committee Hansard, 5.5.98, p.89.
[26] Submission No.10, p.85.
[27] Submission No.10, p.86.
[28] Submission No.5, pp.2-3.
[29] Committee Hansard, 5.5.98, p.88.
[30] Submission No.8, pp.6-7. See also Submission
No.3, p.2.
[31] Submission No.10, p.89.
[32] Committee Hansard, 5.5.98, pp.84-85.
[33] Submission No.10, p.90; Submission No.3,
p.2.
[34] Submission No.10, p.90.
[35] The ACT reached agreement on 15 January
1998 and Queensland on 27 April 1998.
[36] House of Representatives Hansard,
26.3.98, pp.1220-29.
[37] Submission No.5, p.3.
[38] Submission No.10, pp.92-93.
[39] Submission No.10, pp.1, 10, 75. See also
Submission No.8, p.3.
[40] Committee Hansard, 5.5.98, p.104.