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More health reform reaction: Menadue, Duckett and more

The SMH has a story featuring Dr Stephen Duckett, who has an interesting perspective as one of the architects of casemix funding in Victoria and a member of the National Health and Hospitals Reform Commission. Now running health services in Alberta, he raises several cautions about  the Government’s plans, including:
• the huge difficulties of implementing casemix funding on a national scale
• the potential pitfalls of appointing local clinicians and community leaders to the boards of new ‘local hospital networks’
• the potential for the proposed funding mechanism to encourage unnecessary hospital procedures.

And don’t miss this piece at Inside Story by James Gillespie, from the Menzies Centre for Health Policy, who provides some thoughtful context to Rudd’s announcement, incorporating both political and policy perspectives.

Meanwhile, John Menadue, who has been a strong critic of aspects of federal health policy in the past, has a piece in Crikey today arguing that the states should get behind the reforms. But he also has some suggestions for how Rudd et al should proceed, and advises tackling not only the interests of the states, but also of the powerful provider groups “who dominate the public debate at the expense of a community that is effectively excluded and disenfranchised”.

Menadue has also written this piece below for Croakey readers, arguing that now is the time for the Government to revisit its commitment to private health insurance incentives. These are a barrier to the reform plans, he says.

He writes:

“Kevin Rudd gave a secret commitment to the PHI lobby before the last election that a Labor Government would maintain the government subsidy to private health insurance. The subsidy costs over $4 b. p.a.

One of the many unfortunate consequences of PHI is that it helps escalate costs. PHI introduced attractive gap insurance to cover gap payments to specialists. This was an open invitation for specialists to increase their fees further. The result has been a spectacular increase in specialist fees in recent years. The increase has been the most for a quarter of a century. Through gap insurance, PHI has in effect undercut Medicare’s ability to contain fees.

A natural result of these higher fees, particularly for orthopaedic specialists in private hospitals is that these specialists earn such high incomes that they have little interest in additional work. Many doctors in public hospitals are also leaving to take work in private hospitals where incomes could be four or five times higher.

So when Kevin Rudd says that his proposed hospital network will negotiate and place elective surgery work with specialists in private hospitals, he should not be surprised that his own policy of subsidising PHI is a major stumbling block.

The government could spend the $4 b plus, better by directly funding private hospitals on a DRG basis (or by funding dental care) which would integrate both public and private hospital delivery and at the same time restore some market power to Medicare for it to control costs through the scheduled fee.

Why can’t we appreciate the enormous damage that PHI is wreaking in this and so many other fields? The $4 b. subsidy is among the worst pieces of public policy I have seen in my lifetime.

Kevin Rudd might now be able to see the real problem of PHI. It is a barrier to implementing a key aspect of the hospital program he announced this week.”

Update (8 March): Putting mental health on the reform agenda – transcript of Sky News interview with Prof Pat McGorry.

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