Medicare’s founding promise is failing millions as jurisdictional division leaves patients stuck on waiting lists and priced out of specialist care. A shared federal–state hospital system is the missing reform.

With the introduction of Medibank in July 1975, the Whitlam Government made a core and solemn promise to all Australians: no-one would be denied essential, timely medical care due to the cost involved. As the data now show, for millions of people, that promise is dying, if not already dead.

On 13 November 13, ABC journalist Stephanie Dalzell reported on the unconscionable waiting times for specialist consultation at public hospital outpatient clinics. Nothing had improved since her 2023 analysis of the same data and none of the causes addressed. The mother of a deaf toddler being told that an appointment at a paediatric ENT clinic would be three critical years away exemplified millions of human stories of unrelieved suffering and avoidable death by people unable to afford the high and rising out-of-pocket costs of private specialist referral. All too often, specialist care delayed is care denied.

Inequity of access to specialist consultation is part of a trifecta of critical dysfunction along with Emergency Department (ED) exit block with ambulance ‘ramping’ and waiting times for elective surgery.

At the heart of these large and growing holes in the Medicare safety net is a jurisdictional divide, with the states taking responsibility for in-hospital patients whilst the commonwealth funds all out-of-hospital care. It is a divide that ensures a system that is no longer fit for purpose, not least because it encourages cost and blame shifting.

The current model puts pressure on the states to prioritise funding for acute, in-hospital care, their prime responsibility. With resources severely stretched, hospital managers underfund out-patient services despite the availability of specialists willing to provide first class care without charge to the patient. After all, out-of-hospital care is the commonwealth’s responsibility.

ED exit block with ambulance ‘ramping’ is due to inadequate numbers of in-patient beds to meet demand. In New South Wales alone there are 1,200 people in state public hospital beds who are awaiting a commonwealth-funded aged or disability care facility placement at half the daily cost. It is equivalent to closing two major hospitals.

If the commonwealth was paying for those very expensive acute-care beds, it would have a strong financial incentive to move the patients to where their needs would be best met. As it is, they’re saving a lot of money at the expense of the states. Simple cost shifting with a shabby human face.

Examples abound of poor inter-agency co-ordination with serious outcomes. In 2006, the Commonwealth initiated free faecal occult blood tests to all over 50 years of age – a sensible national public health program. If positive, for those able to afford the out-of-pocket cost for a private colonoscopy, it can be done immediately. For those who can’t, the burden falls on the already stretched state public hospitals with waiting times counted in years. In June this year, gastroenterologists at Westmead Hospital, frustrated by denial of frequent requests to enhance the public endoscopy service, started documenting cases where delayed colonoscopy led to adverse outcomes, people with cancers that got away.

The Commonwealth must take over 100 per cent funding of all public hospital outpatient services. This obvious first step was recommended in the 2009 report of the National Health and Hospital Reform Commission. It could be achieved by 2030.

Meeting the unmet medical need will require the expansion of public hospital outpatient departments, the current facilities being inadequate in size and mostly suboptimal in design. It will also require funding for the clinicians who will staff, design and and provide care.

In addition to extra consultation rooms, purpose-built for modern models of care, the new facilities should have spaces for ambulatory diagnostic and treatment services, including for endoscopy, giving the commonwealth top-to-tail responsibility for the early diagnosis of bowel cancer. The extent of day-only procedures would be a major issue for negotiation for which bringing down waiting times for elective surgery would be a goal.

Equally important is a unique management structure that fully engages the medical specialists who will lead the clinical teams and aligns their authority with the responsibilities they carry. Simply giving extra funds to the state health bureaucracy to expand outpatient services would be a recipe for failure. There has to be a new model of authority, shared between state and commonwealth managers and medical specialists. There are many young specialists who would be pleased to give back to the institution that trained them by staffing public clinics and performing day-only procedures but an appropriate management structure will be vital to recruitment.

Clinically appropriate waiting times for public hospital specialist consultation will put significant downward pressure on fees charged in the private sector shown, in a Grattan Institute report, to have grown 73 per cent in real terms since 2010.

An expanded public hospital outpatient service can provide more than just access to consultation and procedure. Modern models of care for the epidemic of severe chronic disease include multidisciplinary clinics, highly specialised clinics and chronic care coordinators, rarely achievable in the private sector.

They are the best environment for teaching medical students and play a major role in clinical research and clinical trials, each the responsibility of the commonwealth. They are also essential for training young specialists, with colleges requesting more out-patient care experience than the hospitals can currently provide. A larger out-patient workload can also justify more accredited trainee positions to address deficits in the specialist workforce.

With commonwealth-funded out-patient services well established and three-way management tested and refined, the states and commonwealth would then need to agree on the best model that eliminates cost and blame shifting as joint managers of the full public hospital system.

It should be overseen by a permanent Australian Health Reform Commission (AHRC). This was foreshadowed by shadow health minister, Catherine King in a national press club speech in February 2019 stating that the AHRC “will initially focus on increasing access to public hospital specialists and addressing the rising burden of chronic disease in an aging population.”  Again, the policy framework has been already done.

Medicare is arguably the ALP’s greatest gift to the Australian people of all times. It has currently lost its way with its core promise now broken for millions of people for whom cost is a barrier to timely care for serious illness. The pathway back includes joint federal/state public hospital systems in every state. What appears to be lacking is commitment to act. Such a major change needs to be led from the top.

Whitlam, if here today, would know what to do and would do it, taking all with him. Not for the first time, the nation needs the hand of Gough.

The views expressed in this article may or may not reflect those of Pearls and Irritations.