The future of health care in Australia

Our future health system must focus on overcoming health inequality

Around the world there is growing awareness of the extent and impact of economic inequality. Bernie Sanders and Jeremy Corbyn put inequality at the heart of their longshot bids to lead their countries, and demonstrated that the issue has deep resonance in the United States and the United Kingdom. Certainly, Labor has always been committed to tackling inequality in Australia — in fact, it was our founding purpose.

But national debates are less often focused on health inequality. That is a glaring omission. Health inequalities both drive and are driven by economic inequalities. And unequal health can only mean unequal quality of life and unequal participation in our economies and our societies.

Here in Australia, the most urgent health gap is between Indigenous and non-Indigenous Australians. Aboriginal and Torres Strait Islanders continue to die about 10 years before their non-Indigenous peers.1 And while the 2017 Closing the Gap report includes some progress, it also shows that we are failing to meet our targets on child mortality and life expectancy, as well as our targets on social determinants of health such as literacy, numeracy and employment.2

Health inequality is also a broader blight on Australia. As an example, the Public Health Information Development Unit has shown recently that premature death increases in step with socio-economic disadvantage.3 If that is not a surprising finding, the fact that the gap between the most and least disadvantaged areas has increased since the 1980s should shock us all.

Much has been made of the recent finding that Australia has the second-best health care system in the world.4 But these inequalities in our access to health care and in health outcomes did not go unnoticed. On measures of equity, Australia ranked just seventh of the 11 countries studied.

Addressing health inequality should therefore be central to every government’s agenda, and to our national discussion on health reform. But instead the 4 years of the Abbott–Turnbull Government have been characterised by deep cuts and, as a result, the re-litigation of disputes that we thought — hoped — were resolved decades ago with the creation of Medicare.

While patients, many health providers and Labor have been fighting to save the furniture, our health care system has gone backwards and inequality has worsened. For example, when Australians are not bulk billed they now pay an average of $82 to see a specialist5 — partly because of the freeze on Medicare rebates. As a result, one in 12 Australians who need to see a specialist delay or avoid care because of the cost.6 And crucially, the rate at which people skip care is 50% higher in the areas of most socio-economic disadvantage than in areas of least disadvantage.6

To address these challenges, we need targeted services and supports for Indigenous Australians, regional and rural Australia, and people in other areas of locational disadvantage. But because health inequality affects us all, we also need a vision for what our health system should look like in 5, 10 and 20 years.

Australia’s future health needs

That vision needs to begin with a clear-eyed understanding of our future health needs. The defining demographic change of the 21st century is that we are living longer and our population is ageing. Regardless of the mantra of sustainability, the simple fact is that we will need to spend more on health care to meet the needs of an older population. For example, the Productivity Commission estimated that the cost of the PBS is almost 50 times higher for people aged over 75 than those aged under 18.7

A second and related dynamic is the chronic disease crisis — unquestionably our biggest health challenge. The Australian Institute of Health and Welfare has shown that half of all Australians have one of eight chronic conditions (arthritis, asthma, back problems, cancer, chronic obstructive pulmonary disease, cardiovascular disease, diabetes mellitus, or a mental or behavioural condition), and that 5.3 million Australians have two or more of these.8 As well as the personal and social harms of these diseases, their economic cost is immense — conservative estimates attribute 39% of health expenditure to chronic disease.9

Labor’s vision

Addressing health inequality in the context of these challenges would be a core focus of a Shorten Labor Government. While we will not announce detailed policy until nearer to the next election, three areas deserve early attention.

First, the federal government needs to re-focus on prevention, including both public health and preventive care. After sustained attention and investment by the last Labor Government, the prevention agenda and certainly the prevention budget have all but disappeared over the past 4 years. But if we are concerned about chronic disease and the strain it is putting on our health care system, then the obvious answer is to keep people as well as possible for as long as possible.

Without taking our eye off other risk factors, we need to focus on obesity in particular. Two-thirds of adults and one in four children are overweight or obese.10 As a result, obesity is now one of Australia’s leading causes of chronic disease, causing 53% of diabetes, 45% of osteoarthritis and 25% of coronary heart disease.11 The total annual cost of obesity has been put at more than $58 billion a year, including direct health care costs, lost productivity and reduced quality of life.12 Interventions targeting obesity are essential if we are to address this staggering toll and alleviate pressure on both our primary care and hospital systems.

Prevention efforts must also include a social determinants of health, or Health in All Policies, approach. Health promotion initiatives will not be sufficient if they are not backed up by broader systemic change. The good news is that the federal government is uniquely positioned to tackle the systemic factors which contribute to health inequality, particularly in areas such as housing, education and employment.

Second, Labor is committed to reform in primary care, including in response to the evidence that many Australians now struggle to access services. Part of the answer is to gradually organise and fund care in different ways. We need to encourage the right types of care, including no care at all where patients and providers can prevent the need for it.

Our primary care system was built around treating acute illness at a time when infectious diseases were at their most deadly. Today, Medicare needs to adapt to provide comprehensive care that rewards general practitioners and other providers for managing complex cases of chronic illness. A 2016 examination of the primary care system by the Grattan Institute found that the “dominant Medicare fee-for-service model ‘encourages reactive rather than systematic care’”, and that “much greater emphasis needs to be placed on service coordination and integration for people with chronic disease”.13

This sort of system-wide change requires investment. Over time, as we move towards new models of primary care, it may prove possible to bundle existing Medicare Benefits Schedule items into sustainable funding models. But at this early stage of reform, we need to offer the right incentives for providers to innovate and prove the benefits of reform. This is one reason why I think that the Coalition Government’s Health Care Homes trial has overpromised and will underdeliver, leaving much work to do in this space.

Finally, we need to invest in our public hospitals and build on the reforms of the last Labor Government. Long waits for elective surgery and emergency department care in public hospitals, as well as growing disparities between our public and private systems, can only contribute to health inequality.

The national rollout of activity-based funding was necessary but not sufficient. Before the Commonwealth could fund outcomes, it needed to fund outputs — not just throw block grants at state treasuries. Activity-based funding gives us a platform for further reform — such as encouraging quality and safety, preventing re-admissions, and shortening waiting times in emergency departments and for elective surgery.

But that cannot be done while making cuts, or without giving states and hospitals long term certainty. So the Commonwealth–state agreement that will govern public hospitals from 2020 could not be more important.

Of course, addressing inequality and adapting our health system to our future needs will require efforts beyond these three areas. But preventing disease where we can, and reforming primary and acute care where we cannot, would be an excellent start.

We have a world-class health system, the envy of many countries across the world. But we must adapt it for the future, and re-focus it on addressing inequality in health. As we do that, we should keep in mind the words of the former Director-General of the World Health Organization, Margaret Chan: