JOHN MENADUE . Heath ministers may be in office but they are seldom in power

Feb 13, 2019

The Rudd/Gillard governments muddled through on health policy. There was very little  to show in the way of useful reform,with one exception. That was plain packaging of cigarettes. 

  The record is not encouraging, and will not be  better in future if the next health minister spends her time smoodging  powerful providers . Necessary health reforms are hard.  Without  determined  Prime ministerial and health minister leadership  nothing much will change.

The major reason  for reform being hard is the power of “insiders” and the way they exercise that power. At one level there are those insiders that administer health services. Health is a highly technical, large and complex field that is difficult for outsiders to come to grips with. This gives disproportionate power to health administrators on the inside. Then at another level are the vested interests or rent seekers who batten on the health service and dominate the public debate. It was the same type of vested interests who so selfishly led the opposition to Medicare in 1975. They are still with us today but in a different guise.

.These vested interested who can delay or veto reform must be recognised for the power they exercise.– the AMA and the various specialist colleges and associations, the Australian Pharmacy Guild, the private health insurance funds and Medicines Australia .

The AMA is opposed to reform of the perverse incentives of the fee for service system of remuneration. FFS is not appropriate for chronic care; it encourages over servicing, over referrals and over prescribing. The financial incentives should be to keep people healthy through contracts and capitation in general practise and not financially reward doctors when  patients are sick. The financial incentives are all wrong..

The AMA is turning a blind eye to the growing corporate takeover of general practise and the associated vertical integration into radiology and pathology. The health sector is seen as easy picking by business, if only the government would get out of the way.

No government will lightly challenge the AMA and the specialist lobby groups like the Society of Anaesthetists.

The Australian Pharmacy Guild stands in the way of competition and the need for pharmacists to become more health professional and less like shopkeepers. The APG’s political lobbying never stops. It donates to both major political parties.

The private health insurance companies are expensive financial intermediaries who benefit from a $12 b annual taxpayer subsidy. PHI’s benefit the wealthy and most importantly weaken the power of Medicare to control prices. Gap insurance has underwritten an enormous increase in specialist fees. Government subsidised PHI is a major threat to health care in Australia as it has become so disastrous in the US. PHI sees governments as an  easy pushover.

Medicines Australia, that represents the manufacturer and distributor of drugs charges Australians $2b per annum more pa than New Zealanders for equivalent drugs. It is a powerful lobby group.

We have 8 state and territory health bureaucracies supported by their ministers that are very concerned to protect their own turf at the expense of an integrated national system. The federal government is reluctant to stare down the parochialism of the states. The states see hospitals as the first resort when thy should be the last resort. A good health scheme should be designed to keep people out of hospital.

Unless we take the health debate to ‘outsiders’ and break the power of the insiders-the  rent seekers and vested interests-, we are unlikely to see significant progress in health reform. The vested interests invariably win out over the public interest. Does Bill Shorten understand this?

There has been incremental change in response to political and budgetary pressures, but that has produced a patchwork set of arrangements that lack guiding values or principles. The debate is about ‘managing’ the health system and not about the values and principles that should drive it.

Eight years ago, Ian McAuley and I  suggested some key reform that we believed were necessary to ensure universality and the improvement in both the equity and efficiency of our health sector. Those suggested reforms included.

  • To focus program delivery in primary healthcare which can provide an integrated range of services?  But the debate is focussed on iconic hospitals.
  • To move to a single, universal insurer and to avoid going down the US path.
  • To organise healthcare programs around the needs of users rather than in response to providers.
  • To rationalise and reduce out of pocket payments by patients  so as to achieve equity and not distort resource allocation.
  • To retain Commonwealth responsibility for funding and standard-setting and deliver programs through joint Commonwealth/State administrations.
  • To involve citizens in healthcare to counter the strong lobbies of service providers/vested interests.
  • To focus ministerial concern on health rather than health services because many of the key services to advance the health of the population are outside the health portfolio. E.g. poverty, diet and distance.In this blog Ian Webster has pointed out that in indigenous communities the problem is not so much depression but despair. And a lot of that is due to our political failure .

The public ‘debate’ on health is between the powerful rent-seekers with their well-funded public relations machines and the minister. The public is excluded from the debate and the media is ill-equipped to undertake the important examination of key policy issues. Under-resourced journalists  rely increasingly on handouts by the rent-seekers.

Commonwealth  Ministers  for Health are very dependent on the Department of Health and Ageing, particularly, as is often the case with ministers who are not across the issues and don’t have a clear policy program themselves. Unfortunately ministers who rely on the DHA will be disappointed. The Department is ill-equipped .It is structured in ways that reflects the interests of providers, e.g. doctors and pharmacists, rather than structured on the basis of community interests, such as acute care, chronic care or demography.  DHA has little economic expertise. One very senior Commonwealth official said to me, DHA does not have any strategic sense in health policy. It doesn’t effectively integrate the Commonwealth’s own expensive programs, let alone make any real progress in bridging the Commonwealth and State divide. During the difficult negotiations with the states on health reform during the Rudd Government period, the Department of Prime Minister and Cabinet effectively had to step in because DHA was not up to the job. That is still the case.

The role-out of e-health by DHA is an expensive mess.

The Ministerial/Departmental model in health has failed. It is incapable of contesting the power of the rent seekers.

Governments are invariably captured by  health insiders. Take the example of the appointment in 2008 of the National Health and Hospital Reform Commission.  by the Rudd Government with Nicola Roxon as health minister. The Commission was overwhelmingly composed of health insiders with their limited horizons. The Chair was a senior executive of BUPA. Not surprisingly NHHRC produced very little worthwhile reform. Labour governments as well as Coalition governments like to smoodge the powerful vested interests and avoid political trouble.

I have been urging for many years two ways to overcome the problem of the powerful insiders and vested interests.

The first is to bring the Productivity Commission and Departments of Treasury and Finance into active involvement in health policy. The rigour and the outside view that they can bring is essential.

Secondly, because of the failure of the ministerial/departmental model which is intensified by the poor performance of DHA I have proposed the establishment of a Commonwealth Health Reform Commission composed of professional and independent people to take responsibility for leading health policy debate, policy development and administration, subject to government policy guidelines.  The Law Reform Commission has been successful in leading the public debate on law reform and implementation of reforms. The Reserve Bank has shown the value of an independent and professional body that can lead public debate on important issues and implement government policies. And not get waylaid by powerful vested interests.

Unless the governance problem in health is addressed we can forget serious reform. As part of this governance reform we need to drastically cut the power of lobbyists, both third party and in house lobbyists. Secret discussions and deals by vested interests with politicians and senior public servants must be stopped-like the secret deal between PHI and Kevin Rudd in 2007.

Health  cannot be left to the health insiders and vested interests. It needs independent ,professional and community people to lead the public debate and facilitate reform

Hopefully Bill Shorten understand this.? If he doesn’t health reform will go the way it went under the Rudd/Gillard governments..nowhere much.

Post Script:  The ALP is proposing to establish a health reform commission if it wins the next election. See report on this below in The Guardian today.

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