What can be done about the growing cost of health care in Australia?

Parliament house flag post

What can be done about the growing cost of health care in Australia?

Posted 18/11/2011 by Anne-marie Boxall

 The sustainability of Australia’s health system is becoming a key concern for Australian governments, along with those in many other advanced economies. But, with growing demand for high quality health care, an ageing population and rapid advances in medical technology, what can be done to keep a lid on health expenditure? This recently published Parliamentary Library Research Paper outlines the key mechanisms the Australian government has to control health care spending, and it proposes some potential options for reform.

 
In a recent speech on the sustainability of the health system, the Finance Minister, Penny Wong, highlighted the problem policymakers now face: health care expenditure is projected to continue to rise, but the pool of taxpayers is shrinking. According to The Treasury’s 2010 Intergenerational Report, health care will consume about two thirds of the projected increase in government spending over the next 40 years if current trends continue. Clearly, this is not going to happen because changes will be made. But what changes?
Slowing the growth in health care expenditure is not easy (this earlier Flagpost points out some of the challenges). Governments, however, do have some tools at their disposal. They can:
  • ensure governments fund only the highest quality and most effective health care interventions (this involves comparing different types of treatments for the same condition and ‘de-funding’ treatments found to be relatively ineffective);
  • pay health care providers in different ways (there are various options, but experts consider that paying salaries, applying strict budgets and paying providers a set amount for each patient under their care are some of the best ways of containing expenditure);
  • impose some costs on individuals (there is a major downside to this if it means people do not use necessary health care services when they need them);
  • exert greater control over the capacity of the health system (for instance, the number of health care facilities and health professionals); and
  • stimulate competition between the public and private sectors (however considerable care needs to be taken that competition does not add to costs and compromise quality).
All of these tools are currently used in Australia to control the growth in government health expenditure, but some are relied upon more heavily than others. Successive governments have tended to rely heavily on co-payments – imposing costs on individuals – to control expenditure growth. There is growing evidence that this is detrimental for many people on low incomes, who, incidentally, often have the greatest need for care. For this and other reasons, a high level review of Australia’s co-payment policies appears justified.

 
At the other end of the spectrum, governments have paid relatively little attention to the way decisions about major health infrastructure (for example hospitals, primary health care clinics and diagnostic imaging machines) affect the growth in health expenditure. At present, there are multiple funding processes in operation, making it difficult, if not impossible, to monitor the overall impact health infrastructure decisions have. This is another area ripe for reform.

 
The reform agenda ahead is challenging, there is no doubt. But as Minister Wong explained in her recent speech, ensuring we have strong and sustainable health system ‘demands that we look ahead – that we consider how today’s priorities shape tomorrow’s future.’ It requires ‘making the right choices now, [so] we can ensure that future governments continue to provide the level of health care Australians deserve.’


Thank you for your comment. If it does not require moderation, it will appear shortly.
Facebook LinkedIn Twitter Add | Email Print

FlagPost

Flagpost is a blog on current issues of interest to members of the Australian Parliament


Parliamentary Library Logo showing Information Analysis & Advice

Archive

Syndication

Tagcloud

refugees asylum immigration Australian foreign policy Parliament climate change elections women social security Indigenous Australians Australian Bureau of Statistics Employment Sport illicit drugs people trafficking taxation Medicare welfare reform Australian Defence Force higher education welfare policy United Nations health financing Asia income management Middle East criminal law disability Australian Sports Anti-Doping Agency World Anti-Doping Agency United States federal budget gambling school education forced labour aid statistics Australian Electoral Commission WADA emissions trading dental health Australia in the Asian Century steroids detention Private health insurance OECD ASADA labour force transport Law Enforcement Australian Federal Police Industrial Relations people smuggling National Disability Insurance Scheme Australian Crime Commission slavery Senate election results Papua New Guinea Australian Public Service constitution International Women's Day corruption Afghanistan Fair Work Act child protection debt federal election 2013 parliamentary procedure poker machines ALP New Zealand Newstart Parenting Payment 43rd Parliament political parties Census High Court skilled migration voting Federal Court terrorist groups Higher Education Loan Program HECS youth paid parental leave Aviation environment foreign debt gross debt net debt defence capability customs doping health crime health risks multiculturalism aged care Gonski Review of Funding for Schooling sex slavery sea farers Special Rapporteur leadership United Kingdom UK Parliament Electoral reform politics banking firearms public policy violence against women domestic violence mental health China ADRV terrorism social media pensions welfare ASIO intelligence community Australian Security Intelligence Organisation governance public service reform Carbon Pricing Mechanism carbon tax mining military history employer employee fishing by-election European Union same sex relationships international relations coal seam gas family assistance planning United Nations Security Council Australian economy food vocational education and training Drugs health reform Indonesia children codes of conduct terrorist financing health system money laundering asylum seekers early childhood education Canada Population Financial sector national security fuel disability employment Tasmania integrity science research and development Australian Secret Intelligence Service sexual abuse federal state relations World Trade Organization Australia accountability housing affordability bulk billing water renewable energy children's health health policy Governor-General US economy export liquefied natural gas foreign bribery question time speaker superannuation expertise Senators and Members climate Intergovernmental Panel on Climate Change Department of Agriculture Fisheries and Forestry food labelling Pacific Islands reserved seats new psychoactive substances synthetic drugs UNODC carbon markets Indigenous constitutional recognition of local government local government consumer laws PISA royal commission US politics language education baby bonus Leaders of the Opposition Parliamentary remuneration Australia Greens servitude Trafficking Protocol energy forced marriage rural and regional Northern Territory Emergency Response ministries social citizenship human rights High Court; Indigenous; Indigenous Australians; Native Title ACT Indigenous education Norfolk Island External Territories emissions reduction fund; climate change child care funding refugees immigration asylum procurement Indigenous health e-voting internet voting nsw state elections 44th Parliament 2015 ABS Age Pension Death penalty capital punishment execution Bali nine Bali bombings Trade EU China soft power education Fiji India Disability Support Pension Antarctica Diplomacy by-elections state and territories workers Bills anti-corruption fraud bribery transparency corporate ownership whistleblower G20 economic reform innovation standards NATO Members of Parliament Scottish referendum Middle East; national security; terrorism social services Criminal Code Amendment (Misrepresentation of Age to a Minor) Bill 2013 online grooming sexual assault of minors ACT Assembly public health smoking plain packaging tobacco cigarettes Asia; Japan; international relations Work Health and Safety Migration; asylum seekers; regional processing China; United States; international relations fiscal policy Racial Discrimination Act; social policy; human rights; indigenous Australians Foreign policy Southeast Asia Israel Palestine regional unemployment asylum refugees immigration political finance donations foreign aid Economics efficiency productivity human rights; Racial Discrimination Act employment law bullying Animal law; food copyright Australian Law Reform Commission industry peace keeping contracts workplace policies trade unions same-sex marriage disorderly conduct retirement Parliament House standing orders public housing prime ministers election timetable sitting days First speech defence budget submarines Somalia GDP forestry world heritage political engagement leave loading Trade; tariffs; safeguards; Anti-dumping public interest disclosure whistleblowing Productivity Commission regulation limitation period universities Ireland cancer gene patents genetic testing suspension of standing and sessional orders animal health live exports welfare systems infant mortality middle class welfare honorary citizen railways disciplinary tribunals standard of proof World Health Organisation arts international students skilled graduate visas temporary employment visas apologies roads Italy national heritage NHMRC nutrition anti-dumping Constitutional reform referendum Rent Assistance competition policy pharmaceutical benefits scheme obesity evidence law sacrament of confession US presidential election international days DFAT UN General Assembly deregulation Regulation Impact Statements administrative law small business Breaker Morant homelessness regional engagement social determinants of health abortion Youth Allowance Members suspension citizen engagement policymaking federal election 2010 workplace health and safety Trafficking in Persons Report marine reserves hearing TAFE Victoria astronomy resources sector YMCA youth parliament alcohol Korea rebate Australian Greens presidential nomination Racial Discrimination Act entitlements political parties preselection solar hot water Financial Action Taskforce Horn of Africa peacekeeping piracy Great Barrier Reef Stronger futures political financing Hung Parliament political education social inclusion Social Inclusion Board maritime early childhood National Quality Framework for Early Childhood Education and Care Murray-Darling Basin Iran sanctions Norway hospitals republic President Barack Obama Presidential visits

Show all
Show less
Back to top