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Time for COAG Health Council to address the Indigenous funding myth & ‘market failure’

Introduction by Croakey: Federal, state and territory Health Ministers are meeting in Alice Springs on Thursday for the next Council of Australian Governments (COAG) Health Council, with some preliminary meetings and visits expected to be held tomorrow (Wednesday).

While no agenda is published ahead of each meeting, the Health Council’s previous communique said this one would include “a significant focus on Aboriginal and Torres Strait Islander health issues”.

In the post below, Professor Ian Ring, from the University of Wollongong, suggests a big part of that focus should be on addressing the widespread myth that ‘money is not the answer’ given that, on a needs basis, spending on Aboriginal and Torres Strait Islander people is much lower than it is for non-Indigenous people.

Total government expenditure on Aboriginal and Torres Strait Islander health is only about 60 per cent of the needs based requirements – and so actually represents “massive market failure”, he says.

Ring argues that it is the Commonwealth Government particularly that needs to lift its game. It cannot rely on “the world of magical targets” in the Closing the Gap Refresh, but must deliver on clear priorities, equitable funding based on need and, most particularly, fill the service gaps to drive down preventable hospitalisations and deaths so the life expectancy gap between Indigenous and non-Indigenous people closes rather than widens, as it is at present.


Professor Ian Ring writes:

COAG Health Ministers will discuss Aboriginal and Torres Strait Island health at their meeting in Alice Springs this week.

There is much to discuss. Ten years on from the start of Closing the Gap, progress is mixed, limited and disappointing, and the life expectancy gap is widening.

This is hardly surprising.

The National Partnership Agreements on Indigenous health, which spelt out the roles, responsibilities and funding of the Commonwealth and state and territory jurisdictions, have not yet been replaced by bilateral agreements.

Formal regional structures and agreements to bring together Aboriginal community controlled health and mainstream services have yet to be formalised nationally. On the broader front, culture, racism and social, political and economic issues cry out for attention.

Much remains to be done in housing, the justice system is a debacle, and the question of an Aboriginal voice, one of the main priorities of the Uluru Statement from the Heart, remains unresolved.

Critically, the National Aboriginal and Torres Strait islander Health Implementation Plan, which was supposed to be the game changer for health, has become an unfunded plan of words not action and, after almost three years, basic core tasks such as defining service models and filling service gaps remain unfulfilled.

Misleading money myths

While money isn’t the only factor, money myths are playing an important role in the failure to close the gap.

A recent Productivity Commission report found that per capita government spending on Aboriginal and Torres Strait Islander people was twice as high as for the rest of the population.

The view that enormous amounts of money have been spent on Indigenous Affairs has led many to conclude a different focus is required and that money is not the answer.

But higher spending on Aboriginal and Torres Strait Islander people should hardly be a surprise.

We are not surprised, for example, to find that per capita health spending on the elderly is higher than on the healthier young because the elderly have higher levels of illness.

Nor is it a surprise that welfare spending is higher for Indigenous people who lag considerably in education, employment and income. There would be something very wrong with the system if it were otherwise.

The key question in understanding the relativities of expenditure on Aboriginal and Torres Strait Islander people is equity of total expenditure, both public and private, in relation to need, but the Productivity Commission’s brief is simply to report on public expenditure, and that can be misleading.

Massive market failure

For health services, while state and territory governments spend on average $2 per capita on Indigenous people for every $1 spent on the rest of the population, the Commonwealth spends $1.20 for every $1 spent on the rest of the population, notwithstanding that the burden of disease and illness for Indigenous Australians is 2.3 times the rate of the rest of the population. And total government expenditure on Aboriginal and Torres Strait Islander health is only about 60 per cent of the needs based requirements.

This is massive market failure.

The health system serves the needs of the bulk of the population very well but the health system has failed to meet the needs of the Indigenous population.

Mortality for the Indigenous population has flatlined since 2008 and the inevitable result is that the life expectancy gap is widening rather than closing.

This is not surprising since the Federal Government’s own reports clearly show that preventable admissions for Indigenous people, funded by the states and territories, are three times as high as for the rest of the population (see graphs below, and sources at the bottom of the post) yet use of the Medical Benefits Scheme (MBS) and Pharmaceutical Benefits Scheme (PBS), funded by the Commonwealth, appears at best to be a half and a third respectively of the needs based requirements for Indigenous people.

It is simply impossible for the mortality gaps to close under these conditions.

It is not that the Commonwealth is deliberately underfunding health services for Aboriginal and Torres Strait Islander people. However there are decades of experience establishing beyond all doubt that demand driven services designed to meet the needs of the bulk of the population will not adequately meet the needs of a very small minority of the population with very special needs.

In recognition of that, for over 40 years, the Commonwealth has been funding Aboriginal Community Controlled Health Services (ACCHS), which evidence shows better meet those needs, but the coverage of those services is patchy and needs to be expanded.

It has been shown that the nonviolent death rate for at risk Aboriginal people can be halved in just over three years by systematic application of knowledge we already have. It really is within the grasp of the current government to turn things around and now is the time to do it.

Priorities to address

A key requirement is to address the shortfall in Commonwealth funding for out of hospital services, which is contributing to excessive preventable admissions funded by the states and territories, and to avoidable deaths.

A vital priority is seed funding for the provision of satellite and outreach ACCHSs that Indigenous people will access, and which provide the comprehensive services needed to fill the service gaps, to boost the use of MBS and PBS services to more equitable levels, and to reduce preventable admissions and deaths.

Additional funding is also required for mental health and social and emotional wellbeing services which are neglected in the Closing the Gap initiative.

And much more attention needs to be paid to the quality of services, with much needed investment in the training of clinicians, managers and public servants for the difficult and complex roles they have to play.

The ‘Refresh’: resource-free targets

The danger is that action will be put on hold in the belief that somehow the Closing the Gap ‘Refresh’ is going to solve everything!

The fear is that we have entered the world of magical targets – the kind where you just say what you would like to happen and that’s it, it just magically comes to pass without actually specifying, let alone actually doing all the things that are required to achieve the targets. It’s a bit like painting pictures in the sky: let’s put an end to war and famine without any thought or action about what would need to be done for those desirable things to come to pass.

With the Refresh target setting process, there seems to be a lot of emphasis on data issues while more or less completely overlooking consideration of the investment or services required to achieve the targets.

In an orthodox sensible planning process, target setting is an important element. Targets need to be directly related to overarching goals, and need to relate directly to the services, actions and investments that will be made to achieve the targets.

Timeframes setting out what is to be achieved in say 1 year, 5 years, 10 years etc are crucial, and both process and outcome targets need to be set. In the absence of this kind of process a belief that the Refresh will somehow turn things around may well be illusory.

It is extraordinary that the only response to the finding on the life expectancy target – that it not only won’t be met but is going backwards – is an apparent intent to freeze Commonwealth funding for Indigenous health services!

There is little point in having mortality goals which are clearly in jeopardy – and when the causes are not hard to define and the remedies clear – if there is insufficient action taken to actually achieve them.

The funds required for satellite and outreach ACCHS services to fill the service gaps, together with the other priorities described above, spread over a carefully prepared five year plan, are likely to be modest and would make a real and substantial improvement to the health of Indigenous people.

There is no call for some kind of special deal, but simply the same level of expenditure from both Commonwealth and state and territory governments for Australia’s Indigenous peoples that anyone else in the population with equivalent need would receive.

The way forward is within the reach of the COAG Health Council.

If there is to be a point in retaining the goal to close the life expectancy gap, the hope is that COAG will now grasp that opportunity.

Sources:

Ian Ring AO is an Honorary Professorial Fellow at the Research and Innovation Division at the University of Wollongong

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