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    Stephen Duckett

    Efficient costs should surely be set on a ceteris paribus assumption about quality i.e. the definition of the service/output should incorporate an assumption of standard quality. To use an analogy, when I go to the shop to purchase tomatoes, I expect to pay something different for a healthy ripe tomato vs one which has a narrower range of uses and hence might be seen as of ‘lower quality’. The task then is how to define quality in this context. Improving overall efficiency in the health sector (by placing incentives on providers) frees resources for investment in other strategies, many outlined in the Reform Commission Report, which might also improve average health (and hence represents a better allocation of resources overall)

    Stephen Duckett

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    Mobius Ecko

    Whenever a Federal takeover of State’s responsibilities is canvassed I always come back with one thing (well two) Defence (and AFP).

    As inefficient and faulty as State run institutions are, the alternative no matter how you look at it is worse. Canberra is OK at macro management and wide sweeping usually hit and miss targeted policy and spending whilst the States do better at the micro level of management but are lousy at the large scale financial side of things.

    Also if one State attempts a reform or restructure and it fails (as Kennett did with Victoria health) the other States “usually” learn from that and go down a different path, and the cost is normally in the tens of millions, sometimes in the hundreds of millions and rarely in the billions. If a wholly Federally controlled and run entity gets it wrong then we get screwed for many billions every single time and the failure, which could be catastrophic, is nation wide. Defence is a good example of this.

    So if you want a very wasteful top heavy remote ADF style bureaucracy foisted upon health, education, transport, roads etc. then keep insisting on the Federal government taking over the States or getting rid of the States.

    For mine as inefficient as the State system is and as much as it can do with a major shake up, taking over its responsibilities or getting rid of it all together is not the answer. A better national, State and local balance, a greater accountability and better Federal oversight is the answer.

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    Luke S

    Yes, in a world with perfect information and data, and without market failure it would be quite easy to ceteris ‘paribise’ all factors and calculate quality. In practice that that would be nigh on impossible in the complex and convoluted domain of health care. Not only does one have to contend with massive information asymmetries, there’s myriad uncontrollable factors. inter alia: massive power differentials within the sector, strong vested interests by lobby groups, protectionism and, big pharma and of course the tricky apects of measurement in health with all the various determinants etc…

    The tomato analogy – in reality all tomatoes would look the same but taste vastly different; one in 20 tomatoes are ‘bad’ and could incapacitate or kill. powerful lobby groups promote ones over others plus your ‘enjoyment’ of them depends on a range of contextual factors. diminishing marginal returns…..etc. … simple in textbooks but not in practice

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