Challenges in health and health care for Australia

Bruce K Armstrong, James A Gillespie, Stephen R Leeder, George L Rubin and Lesley M Russell
Med J Aust 2007; 187 (9): 485-489. || doi: 10.5694/j.1326-5377.2007.tb01383.x
Published online: 5 November 2007

The next Australian Government will confront major challenges in the funding and delivery of health care. Australia’s health care system ranks well internationally, as reflected in our continuing high average life expectancy and low rate of infant mortality.1 These advances are now under threat as our health system is stretched by an ageing population, the growing burden of chronic illness, and the increasingly outmoded organisation of our health services. Inequalities in health between our most and least advantaged citizens persist, and are the sentinels that remind us that there is no room for complacency, or for inertia in reforming our health care system.

There is almost universal agreement that the health care system must focus on prevention and better management of chronic illness.2,3 This will require targeting populations with the greatest need, especially Indigenous communities, establishing better links between primary, acute and rehabilitative services, and developing innovative ways of delivering health care to rural and remote communities. There is little flexibility to do this in a system hamstrung by a focus on fee-for-service and isolated episodes of acute care, growing out-of-pocket costs for patients, and workforce shortages.

Here, we present a number of pressing challenges that will require national leadership. We do not propose solutions here, but we are committed to being part of the search for effective responses to these challenges after the upcoming federal election.

While our list of health challenges confronting an incoming federal government may not be definitive, we believe these challenges must be addressed if Australians are to maintain or improve on present levels of health and wellbeing, have the health services they need when they need them, and be able to participate fully in the workforce and the community.

Changing demography and disease patterns

Our ageing population challenges the ability of health services to maintain health and wellbeing, manage serious and continuing illness, and provide support for the frail and disabled.

The average Australian can expect to live 73 years of healthy life. Actual life expectancy is some 10 years longer, but this longevity is often accompanied by increasing disability from chronic illness.4 Actions taken earlier in life can prevent or mitigate chronic illness, yet preventable chronic illnesses, such as diabetes (Box 1),5 pose a significant and growing burden of mortality, morbidity and health care costs.

The ageing of the population is not a major contributing factor to rising health costs. The federal Treasury’s intergenerational report for the financial year 2002–03 concluded that “ageing of the population will have only a small effect on spending”.6 However, the chronic diseases associated with ageing pose both medical and managerial challenges. Chronic diseases also dominate the long list of health problems experienced by our Indigenous communities.

Preventive initiatives do not reach out effectively to those most at risk, and services for the chronically ill are concentrated in the acute care sector, with suboptimal links to general practice and community care. Coordinating services in the cause of better primary, secondary and tertiary prevention, and better care for patients with serious and continuing illness, some of whom may require support for decades, is hindered by the separate and competing contributions made by the federal and state governments and the private sector to the funding and supply of health services.

The costs of new technology

Much of the rise in health care costs can be attributed to advances in medical technology (Box 2).7 Diagnostic and therapeutic advances, such as new radiological scanners, biological therapeutics, minimally invasive surgical procedures and prostheses, frequently come at a considerable cost. Listing these for subsidy through Medicare or the Pharmaceutical Benefits Scheme (PBS) greatly increases their availability and use, and therefore the cost to the community. Failing to subsidise them inevitably raises questions about why new medical advances are not available to all Australians, and generates political pressure.

Australia has an enviable record in the assessment of new pharmaceutical products, based on the principles of cost-effectiveness.8 However, the assessment of new surgical interventions, devices and other technology is not comprehensive and lacks the cost-effectiveness rigour applied to pharmaceutical products and vaccines. Different criteria are used in public and private hospitals to determine access to new technology and expensive cancer drugs not yet available on the PBS.9,10

A health workforce for the 21st century

The willingness of doctors and other health professionals to work extended hours has diminished as the health workforce ages, as the proportion of women in the health workforce increases, and as individuals seek to balance work and family life.11 Work, social and educational aspirations of health professionals and their families influence decisions about where to live and practise, and their criteria may not easily be met outside metropolitan areas.

These and other factors have led to problems in the supply and distribution of the health workforce (Box 3).11,12 There are serious shortages of general practitioners, dentists, nurses and some key allied health workers. Shortages are more significant in outer metropolitan, rural and remote regions, especially in Indigenous communities, and in particular areas of care, such as mental health, aged care, and disability care. Overseas-trained doctors now make up 25% of the medical workforce compared with 19% a decade ago.13

The Australian Health Ministers’ Conference developed the National Health Workforce Strategic Framework in 2004 to address these issues, but its implementation has faltered because of lack of national leadership and lack of integration across health and education bureaucracies, governments, and public and private training sectors.14

The public–private mix in health care funding

Access to health services is becoming less equitable. Patients’ out-of-pocket costs have grown 50% in the past decade19 and now, for some, present a sizeable barrier to needed care.20

Australia has always had a health system that relies on public and private financing and service delivery. This has been presented as a matter of choice. However, the private health insurance surcharge can be seen as unfair by those who live in rural areas where access to private health facilities is limited (Box 5).21

Some areas of surgery are now performed predominantly in the private sector, and the 57% of Australians without private health insurance must wait, often for months, for elective surgery in the public system. This creates an equity challenge where access to care is based on ability to pay rather than need. Specialist surgical training remains concentrated in the public sector, where the caseload is diminishing.

The private health insurance sector is heavily regulated. Premiums for private health insurance are the same for the active and the indolent, the prudent and the profligate. Should this be so? Health funds respond by shifting their bad risks back to the public sector — for example, they do not pay for home renal dialysis and limit payments to specific dialysis centres.

The reinsurance scheme, which evens out the risk to insurance companies irrespective of performance, obliterates incentives for funds to seek out and develop imaginative solutions to chronic disease management and prevention. Innovations linking health services to health service financing are forced to the margins, and flourish in the health management programs of the Department of Veterans’ Affairs. An example is the program to improve hospital discharge planning and prevent hospital readmissions, which is expected to deliver savings of $46.1 million in hospital costs over the next 4 years.

Addressing modernity’s paradox

Since the beginning of the last century, there has been a dramatic decrease in the mortality rates of babies and children. But after decades of progress, children’s health is under fresh threat from an array of modern conditions that impair their life expectancy and quality of life.

In what is described as “modernity’s paradox”,22 many Australian children are now not as healthy as were children of earlier generations. The responsible afflictions include: low birthweight; rising rates of obesity and diabetes; childhood asthma and other allergies; a range of developmental disorders; autism; and mental health problems including depression, anxiety and behavioural disturbance. There is an increase in learning disabilities, aggressive behaviour and violence. Children living in rural and remote areas and from the lowest socioeconomic groups are particularly at risk.23

Such problems are likely to become more prevalent as these children, impaired through no fault of their own, become adults and parents (Box 6).23


We have examined eight major health and health service challenges that Australia faces. Doubtless there are many more. Of these, the pre-eminent challenge of achieving health equity for all Australians, regardless of race, income and where they live, must drive the search for effective and lasting solutions to the others.

Recent announcements from both major political parties outlining their policies about the way in which hospitals are funded and managed mean that health issues will be important in this election, and that is a welcome development. The willingness of the next federal government to invest in public hospitals is crucial, but not enough to improve the health of the nation.

The solutions to these challenges must recognise that new approaches to prevention, primary and acute care and rehabilitation will be needed to effectively and efficiently tackle the health problems facing Australia in the 21st century. Public consultation and agreement about what a wealthy democracy such as Australia should provide for the health and health care of its citizens, and how the health system might be structured to achieve that provision, should take priority. The focus should be on the big picture. There is little point tinkering with the carburettor, worrying about the tyre pressure or replacing the battery if we have the wrong vehicle for the drive ahead.

The eight challenges outlined above await Australia’s next government. It will need leadership, wisdom and courage to engage with them effectively.

  • Bruce K Armstrong1,2
  • James A Gillespie3,2
  • Stephen R Leeder4,3,2
  • George L Rubin5,2
  • Lesley M Russell2

  • 1 Sydney Cancer Centre, Sydney, NSW.
  • 2 University of Sydney, Sydney, NSW.
  • 3 Menzies Centre for Health Policy, University of Sydney and the Australian National University, Sydney, NSW.
  • 4 Australian Health Policy Institute, University of Sydney, Sydney, NSW.
  • 5 Centre for Health Services and Workforce Research, Sydney, NSW.


Competing interests:

Bruce Armstrong’s employment is funded by the Sydney South West Area Health Service, to whose business much of the article’s content is relevant.


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