The Federal government has reached a landmark agreement on healthcare with the states.
After an ongoing stoush between state and federal governments, the federal government is pledging 25 billion dollars over five years for the states and territories to help run their public hospitals and cap growth of the National Disability Insurance Scheme.
This figure represents an increase from the $23 billion offered previously, following the Commonwealth’s 2023 pledge to boost its hospital funding share to 42.5 percent by 2030 and 45 per cent by 2035.
Prime Minister Anthony Albanese is framing the deal as an historic overhaul that dwarfs previous federal commitments.
"This agreement represents one of the most significant national reforms in living memory. As part of this deal, the Commonwealth will provide an additional $25 billion for public hospitals to reach a record $219.6 billion over the next five years. This is three times more additional funding for public hospitals than was agreed to under the last five year agreement under the Morrison government. We also committed to working together to make the NDIS better and more sustainable. We want growth in the future to be 6 per cent or less, and have agreed to work towards that."
Mr Albanese says the expansion of bulk billing and primary care services is evidence of a massive revitalisation of the national health safety net.
"There are now 3300 medical centres that are fully bulk billed. 1300 of those are new as a direct result of our tripling of the bulk billing incentive. In addition to that, we are opening 92 Medicare mental health clinics, cheaper medicines for every Australian, and delivering the most significant aged care reforms that have been implemented by any government this century."
Health Minister Mark Butler says the hospital system has been at breaking point.
"There is very real pressure on the hospital system, as there is right across the health and social care system, presented by the ageing of the population."
For years, the states and the Commonwealth have been locked in a high-stakes fiscal tug-of-war.
The Federal Government had already bought itself a one-year extension, but the clock was ticking, with the interim public hospital arrangement due to expire in June
The Grattan Institute’s Peter Breadon explains what the core funding friction was, that was straining relations between state and federal leaders.
"The states say that the federal government should be shouldering more of the burden. The states have been paying most of the extra cost for public hospitals in recent years, and that wasn't what the federal government signed up to, but the federal government sees really fast growth in hospital costs. They see avoidable costs and waste in the system, and they're worried about being on the hook for endless growth in costs that's taking up more and more of their budget."
Mr Breadon says to survive an ageing population and a rise in chronic disease, the country needs more than just money.
According to him, the country needs a strategy to train rural specialists, a move toward efficient pricing, and a way to shift care out of overcrowded wards and back into the community.
He says the real test is whether the Commonwealth and the states can actually build a system that doesn't burn out its staff or leave patients waiting in emergency departments.
Adding to the pressure are the thousands of aged care patients across the country languishing in public hospital beds due to a lack of aged care beds.
Mr Breadon says this crisis has forced the states to bear the costs of stranded patients who are utilising up to ten percent of all hospital bed days while waiting for federal support systems.
"Far too many patients who are ready to go home in terms of their health needs are stuck in hospital, sometimes for weeks or many months, because they can't get into aged care, or they can't get the disability supports that they need to leave hospital and go home. And the states are rightly really worried about this. It could add up to one in 10 hospital bed days that are used for these stranded patients. It's bad for the patients, their well being, their health, and of course, it clogs up the whole hospital system."
Australian Medical Association President Dr Danielle McMullen says there should be a shared funding model that mandates a 45 per cent Commonwealth contribution, a target this current five-year cycle will not quite achieve.
"We do think the Commonwealth Government needs to stick to its previous promise to fund 45 per cent of our public hospital activity, and we think that should be brought forward to 2030 that Australians can't wait until 2035 but the Commonwealth definitely needs to stick to that 45 per cent funding commitment, and that also means the States will continue to need to put more money in as well. The cost of delivering care continues to increase, but both state and territory and Commonwealth governments need to pay their fair share."
Dr McMullen is arguing that an additional investment of up to $40 billion is necessary to ensure hospitals can meet the rising demands of an aging population.
She says the figure should be higher to avoid dangerous ambulance ramping and surgery waitlists.
Queensland Premier David Crisafulli is welcoming the collaboration while vowing to continue the fight for the higher funding levels needed to sustain state hospitals.
"If you're asking me whether or not I would have liked to have seen more, of course, and if you're asking whether or not we're going to fight for more in the future, you bet. But we've taken a really big step forward today, a really big step forward, and one of the things that the Prime Minister has spoken about is aged care, and this isn't something that's emerged in the last two minutes, and they're a long, long time. Now we've got to get that right. Right now in Queensland, we've got 1250 patients staring at a roof who should be given the dignity of that care in aged care. And that's really important to us, and that's not about dollars, that's about dignity, and the willingness to work on that, and the willingness for the federal government to say that is an important issue, combined with the extra funding today, shows a willingness to work together."
