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J Deeble (2002)Funding the essentials: Australian Health Care Agreements, 2003?2008
Australian Health Review, 25
SJ Duckett (2001)Daring to dream: The future of Australian health care
SJ Duckett (2004)The Australian Health Care System
(2002)Performance information in the Australian Health Care Agreements
MA Reid (2002)Reform of the Australian Health Care Agreements: Progress or political ploy?
Medical Journal of Australia, 177
JP Paterson (2002)Australian Health Care Agreements 2003?2008: A new dawn?
Medical Journal of Australia, 177
SJ Duckett (1999)Health policy in the market state
SJ Duckett (2002)The 2003?2008 Australian Health Care Agreement: An opportunity for reform
Australian Health Review, 25
The Australian Health Care Agreements for the five years 1 July 2003 to 30 June 2008 were signed in August 2003 after vituperative debate and intransigence from the Commonwealth that vitiated the negotiation process. The new Agreements, which were not as generous as the Agreements they replaced, increase accountability on the States, requiring States to match increases in Commonwealth funding, and de-emphasise the prospects for further reform in Commonwealth- State relations during the course of the Agreements. This paper describes the new Australian Health Care Agreements and the process which led to them. Introduction The 2003–08 Agreements should contain the principles, The most significant Australian health policy event for objectives and proposed health outcomes designed to 2003 was the signing of the five-year Australian Health achieve those objections. Care Agreements. The Agreements were preceded by an ultimatum to the States and Territories from the Com- The Ministers also agreed to establish nine reference monwealth indicating that there would be no changes groups to address key issues in health reform which would from the offer on the table. This led to bitter political feed into the Agreement "negotiation" process . The recriminations, but the Agreements were eventually reference groups addressed interaction between hospital signed. funding and private health insurance; improving rural health; interface between aged and acute care; continuum In fact important preparations for Agreement renewal between preventative, primary, chronic and acute models occurred in April 2002 with the Commonwealth and State of care; improving indigenous health; improving mental Ministers, in a display of remarkable amity and accord, health; information technology, research and e-health; endorsing a new approach to the Agreements that: quality and safety; and collaboration on workforce, train- ing and education. • Commonwealth/State relations in the health arena should focus on the provision of optimal care and health The reference groups were co-chaired by senior Govern- outcomes, regardless of jurisdictional boundaries. ment officials and non-Government clinical experts involving participants from the bureaucracies, people It is in the best interests of all Australians for the Com- who work in health agencies, and consumers. The refer- monwealth, Stats and Territories to work co-operatively to ence groups created great expectations amongst the neo- improve the health and wellbeing of the community and phyte health policy contributors who believed the the way in which health services are provided; Page 1 of 5 (page number not for citation purposes) Australia and New Zealand Health Policy 2004, 1:5 http://www.anzhealthpolicy.com/content/1/1/5 Table 1: Key elements of Commonwealth-state hospital funding agreements Agreement Political Objective Key Principles 1984–88 : Labor (Medicare Compensation Introducing Medicare Compensation for cost increases and revenue Agreement) losses 1988–93 : Labor (Medicare Agreement) Consolidating Medicare Incentives for system reform Growth and reform of public provision Penalties for lower public:private bed day shares and excess private medical service use 1993–98 : Labor (Medicare Agreement) Entrenching Medicare Reward for relatively higher levels of public Expansion of public provision provision and for increasing public provision relative to other states Post 1996, accountability for negotiated outcomes 1998–2003 : Coalition (Australian Health Care Continuing with Medicare Increased accountability on states for activity Agreement) Increased Commonwealth funding with level changes increased accountability for states Increased clarity of Commonwealth responsibility if health insurance levels change 2003–08 : Coalition (Australian Health Care Continuing with Medicare Improved reporting, including of state spending Agreement) Slowed Commonwealth funding growth Requirement on states at least to match Increased accountability for states Commonwealth funding increases Source:  rhetoric of the Commonwealth about being prepared to and priorities of these Agreements have changed over time consider wide ranging changes to the health sector. (see Table 1). Seasoned commentators also called for reform [2-4]. The most significant elements of the 2003–08 Agreements Although extensive reports were produced by the Refer- are: ence Groups and delivered to the Health Ministers the reports had no discernible impact on the 2003–2008 a base grant which is increased for weighted population Agreements . increases, a further 1.7 per cent increase for utilisation drift, and indexation for wage movements On 23 April 2003 the Commonwealth produced a non- negotiable offer with severe penalty clauses if States a withheld amount of 4 per cent of the grant paid on refused to sign by the Commonwealth's arbitrary deadline compliance with reporting schedules and funding growth of 31 August 2003. An Australian Health Reform Alliance matching requirements was formed to put pressure on the Commonwealth to respond to the reference group reports and to attempt to a capital funding scheme to facilitate improvements in ensure that the 2003–2008 Agreements did not waste yet services involved in the transition from hospital to home another opportunity to improve the efficiency, equity and ('Pathways Home Program') quality of the health system. The Alliance's National Health Summit, which met at Old Parliament House, pre- funding for palliative care, mental health, and safety and sented its final communiqué to non-Government politi- quality initiatives. cians following a march up the hill to New Parliament House . The Commonwealth deadlines remained and The most contentious difference between the 1998–2003 there was no change to the Agreement content. and 2003–2008 Agreements related to the indexation pro- visions (see Table 2 for significant areas of difference The Commonwealth's confrontationalist stance effec- between the two Agreements). tively destroyed relationships between the Minister for Health and Ageing, Senator Kay Patterson, and her State Each of the predecessor Agreements provided indexation colleagues, and she was replaced as Health Minister by formulae to account for growth and ageing of the Tony Abbott MP in the Ministerial reshuffle of October population. The 1998–2003 Agreements also recognised 2003. that there was further "utilisation drift", that is increases in utilisation were occurring in the hospital sector over and above that which can be explained by population The content of the Agreements There have been five Health Care Agreements since Medi- growth and ageing. This utilisation drift was in part the care was introduced in 1984. The emphasis, orientation result of new technologies that allowed for treatments for Page 2 of 5 (page number not for citation purposes) Australia and New Zealand Health Policy 2004, 1:5 http://www.anzhealthpolicy.com/content/1/1/5 Table 2: Comparison of provisions of 1989–2003 and 2003–08 Australian Health Care Agreements Agreement Provision 1998–1998 Agreement 2003–2008 Agreement Indexation 2.1% above weighted population growth applied to 83% of 1.7% above weighted population growth applied to 71% of the grant the grant State matching Nil State "commits to increase its own source funding for public hospital services such that the cumulative rate of growth will at least match the cumulative rate of growth of Commonwealth funding" (Clause 11) Scope and level of (State) "continues to provide services to public patients at "The range of services available to public patients should be services an indicative public patient weighted separation rate of XX" no less than was available on 1 July 1998" (Clause 7(a)) (Clause 22) Reform The Commonwealth and Victoria recognise the need for Victoria and the Commonwealth are committed to working service delivery reform and ongoing exploration of with other States to progress the reform agenda agreed by additional initiatives under a measure and share model. Commonwealth and State Ministers for Health on 27 Victoria will work with the Commonwealth in evaluating September 2002. The Commonwealth considers that for its the outcomes from the Co-ordinated Care Trials to part, such reform can taken place within existing funding provide information to guide future directions for the parameters. reform of health service delivery. In line with clause 18, the specific areas of national co- The Commonwealth and Victoria will consider proposals operation to deliver reform include: which move funding for specific services between (a) improving the interface between hospitals and primary Commonwealth and State funded programs on the basis and aged care services; that each proposal meets the following criteria: (b) achieving continuity between primary, community, • the proposal must be consistent with accepted evidence acute, sub-acute, transition and aged care, whilst promoting based best practice care models; consumer choice and improved responsiveness. Initial • there should be a sound basis for believing that the reform priorities for a stronger continuum of care approach will be will lead to improved patient outcomes and/or more cost cancer care and mental health services; and effective care; (c) exploring setting up a single national system for • the impact of the proposal should be measurable in terms pharmaceuticals across all settings. of change in services delivered and costs to the health system as a whole and to each party to this Agreement; • if the proposal is expected to lead to net savings, these should be shared equitably between the Commonwealth and Victoria; • the proposal should have potential to be replicated, be on a scale such that extension can be realistically tested and be evaluated in terms of such extension; and • the proposal must preserve eligible persons' current access to Medicare Benefits Schedule services or their equivalent. Reform proposals may result in the cashing out of State funded programs and/or Commonwealth funded programs, including the Medicare Benefits Schedule and Pharmaceutical Benefits Scheme. conditions for which there was previously no hospital hospitals as a result of State Government funding treatment. Utilisation also increased because of shifts in constraints. treatment from general practitioners' rooms and other ambulatory settings to same day hospital admission. The 2003–08 Agreements also addressed an ongoing con- cern of Commonwealth Governments (both Labor and The 1998–2003 Agreements provided an escalation factor Coalition): its perception that when the Commonwealth of 2.1% per annum over and above the growth caused by increased expenditure on hospital services, this often had the increase in the rate of population for key elements of no discernible impact on hospitals as State Governments the grant. The 2003–08 Agreements reduced the utilisa- withdrew funding concomitantly. As Deeble points out, tion drift factor to 1.7% and narrowed the applicable the reality is more complex, but the evidence is that an components of the grant, saving the Commonwealth increased Commonwealth share is associated with growth Government about $1 billion from that provided for in in spending . The new Agreements provided that the the Forward Estimates. This reduction in growth provision States were required to increase their funding of hospitals was vociferously opposed by States and also by clinicians at the same rate as the Commonwealth increases, other- who were experiencing significant financial pressures on wise the increases available to the State would not be paid. Page 3 of 5 (page number not for citation purposes) Australia and New Zealand Health Policy 2004, 1:5 http://www.anzhealthpolicy.com/content/1/1/5 These stronger reporting frameworks built on the trend was welcomed by those involved and has set a precedent from the previous agreements and responded to a critical for future negotiations. Auditor-General's report that concluded that the Com- monwealth did not have all the performance information Prospects for Reform required to administer the Commonwealth funding allo- The 2003–08 Agreements commit the Commonwealth cated under the agreements . and states to work towards reform in a number of areas including the interface between hospitals, primary care, and aged care; continuity of care particularly in cancer care The 'negotiation' processes Why were the processes so acrimonious and what shaped and mental health services; and continued work on phar- the Agreement outcome? To some extent the shape of the maceuticals reform. A subtle shift from the predecessor 2003–08 Agreement negotiations was inevitable. The Agreement model is the more sceptical and parsimonious political context, where all state and territory governments approach to the potential for health care reform. Despite were of the opposite political colour from the Common- the aspirations implicit in establishing the nine reference wealth, meant that harmonious negotiations were proba- groups, the language of the 2003–08 Agreements reflects bly never seriously in contemplation. Commonwealth a much more hard-nosed approach to reform with a governments of both persuasions have tightened up strong emphasis on efficiency. This approach is most accountability on states with successive Agreements and clearly articulated in Clause 18: "The Commonwealth so tighter control was also probably inevitable. Two considers that for its part such reforms can take place important political choices did exacerbate the tensions within existing funding parameters". and inflamed the processes. Although predecessor Agreements also made provision First, the 2003–08 framework was more parsimonious for reform to Commonwealth/State relations, the progress than predecessor Agreements. As mentioned above, this in designing and implementing reform has not lived up to represented a saving to the Commonwealth of about $1 expectations. The most important shift that occurred dur- billion on the Forward Estimates. A contemporary politi- ing the course of the 1998–2003 Agreements was the cal issue was the decline in bulk billing. The Common- rationalisation of hospital provision of outpatient phar- wealth's response to this involved an injection of around macy services, a long overdue response to a significant $1 billion. The link between the two policy debates within frictional issue in Commonwealth/States relations [9,10]. the Health portfolio is clear. Cabinet probably judged the political costs of finding a $1 billion saving from the states It is unclear whether the dynamic, facilitatory aspects of as low, as state premiers complaining about Common- the 2003–08 Agreements will lead to any reform, espe- wealth cuts and meanness is a regular part of the political cially given the acrimonious exchanges prior to signature landscape. Further, States would probably have criticised of the Agreements. However it is important to note that, the Commonwealth position regardless of the offer made. with a Federal election due at the end of 2004, there is a possibility that a Labor Government will be administering The second choice that shaped the process was the Com- the remainder of the 2003–08 Australian Health Care monwealth's intransigence after the drafts were released. Agreement. A new Government may be more committed The Commonwealth's position here may have been based to reforming and strengthening Medicare. However, on a recognition that, eventually, all the states would have despite the fact that a Labor would then hold political to sign the Agreements as they were politically committed office throughout Australia, at all levels, this would not to Medicare and free access at point of admission to hos- necessarily presage a more laissez faire attitude by a federal pitals, and that the states could not afford to suffer the government to its state politically-allied counterparts. A cash flow consequences announced by the Common- Commonwealth Labor government would be just as keen wealth if the Agreements weren't signed by their deadline. as its Liberal predecessor to ensure that states are held The Prime Minister probably took a strong hand in this accountable for maintaining spending and access. decision and left no room for his Health Minister to manoeuvre. The Minister's failure to attend meetings exac- Competing interests erbated an already difficult situation. The author(s) declare that they have no competing interests. A positive of the process was the extensive involvement of practitioners in the lead-up to the draft Agreements References 1. A Report to the Australian Health Ministers' Conference through the Reference Groups. Commonwealth-state from Australian Health Care Agreement Reference Groups negotiations had hitherto been an arcane process involv- 2002 [http://www.health.gov.au/internet/wcms/Publishing.nsf/Con ing bureaucratic insiders. This widening of participation tent/health-med iarel-yr2002-kp-ahmc3.htm]. Page 4 of 5 (page number not for citation purposes) Australia and New Zealand Health Policy 2004, 1:5 http://www.anzhealthpolicy.com/content/1/1/5 2. Reid MA: Reform of the Australian Health Care Agreements: Progress or political ploy? Medical Journal of Australia 2002, 177(16 September):310-15. 3. Paterson JP: Australian Health Care Agreements 2003–2008: A new dawn? Medical Journal of Australia 2002, 177(16 September):313-15. 4. Duckett SJ: The 2003–2008 Australian Health Care Agree- ment: An opportunity for reform. Australian Health Review 2002, 25(6):24-26. 5. Australian Health Care Agreements [http://www.health.gov.au/ ahca/agreements.htm] 6. Australian Health Care Summit [http://www.healthsum mit.org.au] 7. Deeble J: Funding the essentials: Australian Health Care Agreements, 2003–2008. Australian Health Review 2002, 25(6):1-7. 8. Auditor-General: Performance information in the Australian Health Care Agreements. Canberra, Australian National Audit Office; 2002. 9. Duckett SJ: 'Commonwealth/state relations in health'. In Health policy in the market state Edited by: Hancock L. Melbourne, Allen & Unwin; 1999:71-86. 10. Duckett SJ: Rationalising roles in public hospital funding. In Dar- ing to dream: The future of Australian health care Edited by: Mooney G, Plant A. Bentley W.A.: Black Swan Press; 2001:69-78. 11. Duckett SJ: The Australian Health Care System Melbourne: Oxford Uni- versity Press; 2004. Publish with Bio Med Central and every scientist can read your work free of charge "BioMed Central will be the most significant development for disseminating the results of biomedical researc h in our lifetime." Sir Paul Nurse, Cancer Research UK Your research papers will be: available free of charge to the entire biomedical community peer reviewed and published immediately upon acceptance cited in PubMed and archived on PubMed Central yours — you keep the copyright BioMedcentral Submit your manuscript here: http://www.biomedcentral.com/info/publishing_adv.asp Page 5 of 5 (page number not for citation purposes)
Australia and New Zealand Health Policy – Springer Journals
Published: Nov 18, 2004
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