I have an op-ed in The Australian today talking about the Rudd health policy. Like Samuel J I am underwhelmed by the proposal and believe it to be fundamentally flawed.
Do we really want some Canberra bureaucrat (note the “no net increase in bureaucrats” promise) determining how much should be spent on our health? Do we really want to have health spending allocated on the same basis that the Commonwealth Grants Commission divvies up the GST?
This policy is to be financed by one-third of the GST revenue. People may think that to be sensible, but hang on to your wallets. Rudd promised further ostensible reform. He identified that the gap between expected GST revenue and demands on the health system is expected to increase.
That’s code for a future increase in the GST rate. No doubt, through time the commonwealth will find that it needs to spend more and more on health. “GST up” will become the new perennial budget headline.
The Commonwealth doesn’t need a constitutional amendment to change the GST formula, but probably does need one to implement its health policy if the States don’t cooperate. Bypassing the States to finance ‘regions’ is probably unconstitutional.
The Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another State or any part thereof.
Rudd has promised a referedum on this issue before or at the next election. That means no early double dissolution. It also means that the biggest health reform in Australian history is coming to be planned, negotiated and debated and explained and a constitutional amendment organised in less than nine months or so. Unless Rudd now plans to hang on beyond the end of this year.
What I said.
Rudd points to Australia’s high vertical fiscal imbalance as being part of the problem in health care. It is true that the healthcare costs are expected to grow rapidly in future and that the states have poor fiscal bases to meet those costs. It is not clear that greater centralisation is the solution to this problem. It is especially unclear whether Canberra is up to the challenge. The home insulation program was a locally managed, centrally funded program and that just didn’t go well.
The solution to high vertical fiscal imbalance is not stripping authority and funding from the states but ensuring that the states have a sound fiscal basis for service delivery. That means the commonwealth needs to collect less revenue and the states more revenue. It looks like the Henry tax review won’t be making that recommendation.
Effective service delivery requires that decision-making and funding be localised as much as possible. That means greater powers to the states and less to the commonwealth.
Rudd also spoke of directly funding regional areas and bypassing the states. That is a recipe for a huge boondoggle. He will also need a constitutional amendment to do so. Hopefully the states will refuse to co-operate and force a referendum.
This will be the largest healthcare reform in Australian history. The electorate deserves an opportunity to express an opinion of this reform separately and over and above considerations that come bundled up at elections. This policy isn’t only about health; it is about taxation and about the nature of our federation.
Sinclair, did Rudd ever threaten a DD? – I thought it was all media speculation.
A referendum is tricky, for it to succeed it needs to have a majority in every State.
It is messy politics and he may have over reached – a senate majority would have been the best option.
rog
4 Mar 10 at 8:03 am
As you say, cutting out the States opens up all sorts of problems
rog
4 Mar 10 at 8:05 am
Not sure about a DD.
Sinclair Davidson
4 Mar 10 at 8:31 am
Possibly the major problem in the NSW public health system is the number of layers of content-free managers in the Area administration that runs the hospitals. The professionals who actually deliver the service have been disempowered. The last thing they need is more (and even more remote) layers of content-free managers.
Would you trust a government that could not administer a relatively minor home insulation scheme to take over the biggest and most complicated chunk of infrastructure in the nation?
Rafe
4 Mar 10 at 9:15 am
I thought it was good that Rudd picked up on an idea of Abbot’s which is basically a laissez faire economics idea – fund the patient. I fear that every attempt to do this will lead to the exact opposite results.
Semi Regular Libertarian
4 Mar 10 at 9:40 am
another completely silly piece from Sinkers.
how is this in anyway comparable to the Grants Commission.
If it is an updated version of what the late John Patterson set up in Victoria ( after successfully implementing water reforms in the hunter) then it will be well and good.
the major issue is determining how each hospital gets money. As the last issue of the economist shows Health is a very strange sector with the private sector actually increasing costs.
Rafe makes an equally silly comment.
The government did not administer home insulation. They merely funded it. Rafe, like all the crackpots here is very silent on the lack of responsibility of the consumers as shown by our very own Snoopy.
As we observe from Overseas Health gobbles up more money but it does it more when the private sector is involved.
Butterfield, Bloomfield & Bishop
4 Mar 10 at 9:48 am
It’s good politics. Even if it doesn’t work, by the time anything is measurable, it will be well past the next election, and it takes away attention from all the other trivialities the government is wallowing in (like the insulation stuff).
conrad
4 Mar 10 at 9:53 am
Something that hasn’t been picked up in the commentary so far is the impact this deal will have on State budgets. The details of the deal are yet to be finalised, but on a rough estimate the States 40% contribution to the bigger spend on hospital appears similar to their current 60% on a smaller hospital spend.
These are my numbers and I’m happy for anyone to correct them. Currently State govts spend around $30b per year on hospitals with the Cwth contributing $12b. If the Cwth uses one third of the $42b GST revenue plus their current contribution to fund 60% of hospital costs, that will increase total spending on hospitals to $43b, with the States contributing $17b. This is $1b less than the States current contribution of $18b, but they have lost $14 b in GST revenue.
This is a big hit on State budgets and it will mean a combination of higher State taxes, higher State deficts and less police, schools, teachers, public transport etc etc.
If John Brumby signs up to this at COAG in April, it will make it a whole lot harder for him to get re-elected.
johno
4 Mar 10 at 10:04 am
Homer accuses someone of being silly before they can answer his query.
Homer has the credibility of a mangy cat so who cares.
Yes sure, Rudd only administered the funding. Which went straight to the installers. The Government had a light on a hill, illuminated by a big sign “FREE MONEY” and it is the fault of the industry that existed before such largesse that accidents occurred?
Clearly it is legally the responsibility of these two bit operations but politically Garrett correctly copped some of the blame.
“As we observe from Overseas Health gobbles up more money but it does it more when the private sector is involved.”
As you seem to have forgotten much of the economics that was allegedly taught to you, the average and marginal costs of private patient care are cheaper than the public sector. The US has crazy occupational licensing and it’s Medicare/Medicaid is funded by a regressive payroll tax.
Semi Regular Libertarian
4 Mar 10 at 10:06 am
Here is what I think we should do to reform health. Firstly I agree with the idea of giving management of hospitals to a hospital board but what I propose is agnostic regarding who owns and operates the hospitals. From a federal perspective it would treat hospitals, medical centres etc the same irrespective of whether they are state owned an managed, private, charitable or profitable.
Hospitals etc should be funded by the federal government with the Medicare card becoming a payment card that draws against a federal government account. The government would still set limits on what it would pay for different types of services as it currently does for GPs. Patients would need to make up any gaps with cash or credit or private insurance. The fees racked up by the federal government on behalf of the patient would be documented in a periodical statement to the patient and this amount would then be added to the patients HECS liability. Obviously this would mostly quarantine low income earners from having to fork out anything for health care unless they later become higher income earners.
The key ideas here are as follows:-
- Patients fund hospitals, GPs etc.
- Medicare becomes a special case of a payment system.
- Low income earners get health care without financial stress.
- High income earners pay their way via HECS or else they may elect to just pay as they go via cash. They can decide to insure if they wish.
- The private insurance market can be free of subsidies and prescriptive interference.
- Hospitals and patients experience price signals.
- We can all get a decent cut in the general rate of tax.
- The states can focus on public transport, education etc.
- Either major party could embrace this agenda without betraying any major part of their base.
- No referendum required.
TerjeP (say Tay-a)
4 Mar 10 at 10:56 am
At least death panels won’t be a problem. They’re still tied up with the insulation program.
C.L.
4 Mar 10 at 11:00 am
Rog informs the forum:
“A referendum is tricky, for it to succeed it needs to have a majority in every State.”
No, Rog. Section 128 requires a majority in a majority of states (4 of 6) plus a national majority of voters.
Kindly button your lip regarding things about which you’re ignorant – which is a lengthy check list in your case.
You’re more clueless on constitutional process than Homer, which is really saying something.
C.L.
4 Mar 10 at 11:11 am
Politically, like it or loathe it, this is probably going to work for Rudd and draw a line under his long string of recent debacles. Most of the states are Labor-run, looking for excuses on hospital crises (real and imagined) and are now offering their “qualified support.” (This is code: they’re actually weeing themselves with excitement about the possibility of being freed from this responsibility but they’re trying to appear statesmanlike rather than as Labor Party hacks). Above all, though, this is a classic Rudd policy that is – for now and years to come – a bureaucratic process rather than an eventuality whose implementation date is just months away. Rudd loves this sort of “policy” – all vision dividend (he hopes) and no actual delivery. Kevin doesn’t do actual delivery, as his home incineration and worker electrocution policy demonstrated on an epic scale. If – if – this concocted health noise machine can drown out the racket from his other rackets (chiefly, insulation and Rorting The Building The Education Revolution), he stands a good chance of clearing the airwaves enough to win the next election. And that is what this health “policy” – pulled out of his bottom in a fortnight – is really all about.
C.L.
4 Mar 10 at 11:50 am
I reckon that Brumby could/would be re-elected if he opposed this.
Sinclair Davidson
4 Mar 10 at 11:54 am
“Each thing in its season, we’ve got to do one thing at a time.”
Kevin Rudd puts Ken Henry tax review on hold.
God, he’s such a transparent buffoon.
C.L.
4 Mar 10 at 12:01 pm
CL boasts that “Section 128 requires a majority in a majority of states (4 of 6) plus a national majority of voters.”
But Section 128 also requires that a majority be reached in those States that are affected, it”’s called “the triple majority rule”
In this regards all states will be affected
As per usual CL managed to put both feet into his mouth
rog
4 Mar 10 at 1:03 pm
Without bi-partisan support the proposed referendum is doomed
rog
4 Mar 10 at 1:04 pm
Rudd guarantees no Labor stacking in Local Hospital Networks.
Stephen Conroy and Mike Kaiser couldn’t be reached for comment.
C.L.
4 Mar 10 at 1:43 pm
I think rog is right here. You need to read the next para C.L..
Semi Regular Libertarian
4 Mar 10 at 2:05 pm
Without bi-partisan support the proposed referendum is doomed.
Thanks, Rog. This startling insight hadn’t occurred to anyone before.
Yes, I’m aware of the triple majority you just Wikied, Rog. It relates to altering state representation in Canberra or redrawing state borders or to changes with specific application to a specific state. (A majority of states cannot force citizens in a fifth or sixth state to do something unless a majority of citizens in that fifth or sixth state agree). The hypothetical hospital referendum does not involve the first two circumstances and will apply to all states rather than a specific state.
I haven’t encountered an analysis yet that suggests the triple majority would apply.
Case law and comment from any constitutional lawyers reading is certainly welcome, however.
C.L.
4 Mar 10 at 2:22 pm
Ah yes Marky who still hasn’t got to his third year Macro-economic class and is clueless on fiscal policy.
let us ad to that has not read much of OECD or Productivity Commission material on the subject.
The private sector is well and alive in more counties than the US and it is the same story. Even the AEI now agree the government is as good at providing insurance as the private sector.
The OECD says ‘whatever the role played in the health system , private health health insurance has added to health costs.’
It is no coincidence that the countries with the biggest private health insurance sectors, US, France, Germany, Switzerland, also have the highest health care costs in the world.
Another CL inaccuracy among many.
Mike Quigley at Senate Estimated said HE appointed Mike Kaiser after three interviews using the same method as the private sector.
Butterfield, Bloomfield & Bishop
4 Mar 10 at 2:27 pm
How to get a $450,000 job: no ads required – just a nice word from the minister.
Just like the private sector, says Homer.
You just can’t help yourself can you?
C.L.
4 Mar 10 at 2:38 pm
C.L.,
I am not a lawyer and googled it myself. In my haste I misread the penultimate clause of that paragraph.
“Ah yes Marky who still hasn’t got to his third year Macro-economic class and is clueless on fiscal policy.”
Here’s the thing you dope: you’re countering the stuff I know from higher macro stuff and also the literature with basic first year trash that should have been turfed out of universities by the 1980s.
“let us ad to that has not read much of OECD or Productivity Commission material on the subject.”
Yet I’m more versed on this than you.
“Even the AEI now agree the government is as good at providing insurance as the private sector.”
Reference please.
“The OECD says ‘whatever the role played in the health system , private health health insurance has added to health costs.’”
Political trash. What about outcomes? What about the comparative costs? Or the fact that Government healthcare in America (re: FICA and Medicare) is NOT opt-out?
“It is no coincidence that the countries with the biggest private health insurance sectors, US, France, Germany, Switzerland, also have the highest health care costs in the world.”
They also have the best patient care, you dolt.
The fact that you’re not a Federal MP and you’re defending the Kaiser appointment means that you can’t think for yourself, ALP-bot.
Semi Regular Libertarian
4 Mar 10 at 2:43 pm
‘Marky’
How much does ‘Homey’ owe you for the distance education that you’re providing him?
jtfsoon
4 Mar 10 at 2:51 pm
Let’s see
about six years full time (twelve semesters, four subjects per semester)
$1300 per subject, as economics is in HECS band 3
roughly 62 400 AUD, excluding accrued interest.
I take cheque or direct deposit.
Semi Regular Libertarian
4 Mar 10 at 3:29 pm
Six years full time? What are you providing, a professional doctorate?
Actually, Homer requires no tutelage on doctoring.
C.L.
4 Mar 10 at 3:32 pm
CL, Conroy suggested hi BUT Quigley employed after interviewing him times convinced he would not find a better person.
Yes that is how it works in the private sector.
It is called the shadow market. They use it more than advertising.
Your nose gets bigger each time you write.
Sure Marky you still have no idea like the rest of the crackpots here of the difference between cyclical and Structral deficits and their effect on the economy.
Why is why you are wrong so often.
Best patient care for who and who says.
IT says a lot that no crackpot here knows how the private sector works when employing people.
Butterfield, Bloomfield & Bishop
4 Mar 10 at 3:32 pm
CL, Conroy suggested hi BUT Quigley employed after interviewing him times convinced he would not find a better person …
Best patient care for who and who says.
Shouldn’t Homer be going through ESL classes before taking up a doctorate under you Mark?
jtfsoon
4 Mar 10 at 3:39 pm
Homer
Here’s some tutelage in Micro 101
1) Costs have to be compared against benefits.
2) Benefits to be quantified should include quality attributes
3) Queueing is also a cost
4) There is a big difference between paying for stuff with your own money and paying for stuff with taxes.
jtfsoon
4 Mar 10 at 3:45 pm
eRR StAtman if you had bothered to read Toozes reciope book you would know that Cattalxian crackpots are RONG
Infidel Tiger
4 Mar 10 at 3:52 pm
“Sure Marky you still have no idea like the rest of the crackpots here of the difference between cyclical and Structral deficits and their effect on the economy.”
Um no Homer what I’ve proven is that you’ve defined a 11 year long history of surpluses as a series of “structeal deficits” and then you’ve misused Rubinomics to the point where Fmr Sec. Rubin would give you a clip over the ears for giving his work a bad name.
You don’t understand the fiscal theory of prices and have a bizzare interpretation of it. As one great economist said to a child of a lesser God in his tribe…”The laws of economics may be different in your part of the gamma quadrant, but around here…”
http://www.imf.org/external/np/vc/2002/070202.HTM
Semi Regular Libertarian
4 Mar 10 at 3:54 pm
I can’t see how the new policy can do much good. Given that there is effectively unlimited demand for free health care you can only reduce public health spending if you control the prices for supplies to the system or the amount of services provided by the system. Clearly this new policy is supposed to increase the services provided so how exactly are they intending to save money? I can’t see any prospect of reducing the bureaucracy.
Sinclair, I don’t think that the regional management system is likely to have constitutional issues because all of the country will still be treated the same.
Pedro
4 Mar 10 at 6:49 pm
CL says “Thanks, Rog. This startling insight hadn’t occurred to anyone before.”
Except CL
“Yes, I’m aware of the triple majority you just Wikied, Rog.”
It”’s freely available on any number of govt websites and
it”s obvious that you were never aware of it”’s existence until told you.
Feel free to dig yourself an even deeper hole, you have the experience
rog
4 Mar 10 at 7:07 pm