In April, National Cabinet agreed to hold a dedicated meeting on health reform by the end of the year. Based on media coverage this week, it might be a battle about NDIS and GST funding instead. Who pays for what is important, but it will be a missed opportunity if a funding fight displaces discussion of health reform.

National Cabinet’s mandate is to tackle issues of national significance with “genuine partnership”. Health reform certainly fits the bill. The system is groaning under pressure everywhere from GP clinics to emergency departments. And federal and state governments hold different pieces of the puzzle, so they will have to work together to achieve the real change that is needed.

While there have been amazing breakthroughs in treatments and technology in recent decades, the health system itself has remained much the same. The broad outlines were set half a century ago, when Australians were younger and healthier.

Today, half of us have a chronic disease, and about half of those over the age of 65 have two or more. We are living longer, but also living sicker. Of the five years of life the average person has gained since 1990, one will be spent with disease or disability.

Unless Australia makes three long-term reforms to respond to the rise of chronic disease, pressure on the system will eventually reach breaking point. Each require federal and state governments to work together.

First, we need to stop chronic disease before it starts. Our health system is in fact a sickness system, with far too little investment in keeping people healthy – just two cents in every dollar of health spending. Two years ago, Australia’s governments committed to more than doubling that figure. But there’s no sign that they are following through, with Australia still languishing near the bottom of the international pack.

The last national prevention deal was scrapped a decade ago. Federal and state governments should fill the vacuum with a new deal that delivers on their pledge to increase funding. The money should be spent on initiatives recommended by the new Centre for Disease Control, to make sure we get good value for money.

Second, primary care needs to help people with chronic disease to stay as healthy as possible. Even with better prevention and new breakthrough drugs to treat obesity, we can still expect rates of chronic disease to stay high for decades, and chronic disease management is one of the most important roles of primary care.

The federal government has already launched reforms to expand multi-disciplinary teams in GP clinics, which will give patients more support, and to develop a new way to fund ongoing care. But those reforms won’t work in rural and remote parts of Australia that have too few doctors.

Governments should make sure people in those areas can get care. When services in a region fall below an agreed level, that should trigger federal and state governments working together to expand existing clinics, or set up new ones.

National collaboration will be essential. It is wasteful for federal and state systems to work in parallel in rural areas that have too little care. Often, the same doctors, nurses, and allied health professionals could work across state-run rural hospitals and federally funded primary care. By working together, governments can offer the certainty, salaries, and infrastructure needed to attract health workers to where they’re needed most. Decades of experience show that money alone won’t do it.

The third priority should be a strategy to shift care out of hospitals. As chronic disease intensifies, demand for hospital care will keep growing. Spending on hospitals has been surging in recent decades, yet hospitals are still struggling to keep up. With demand predicted to grow further, hospitals will need to change.

The pandemic has shown the benefits of keeping people out of hospital. Telehealth expanded and care was provided in people’s homes using remote monitoring technology. Patients benefited from less travel time and cost, and reduced risk of infection. If these trends continue, government budgets will benefit too, because fewer new hospitals will be needed.

Governments can accelerate the uptake of virtual and in-home care by measuring the care delivered in people’s homes, setting targets, and tweaking funding. Alternatives to hospitals, such as urgent care centres, should be evaluated, improved, and scaled up.

It is the perfect time to lay out how the health system will change. A new national funding deal for health must be agreed in 2025. So far, the goals of the agreement and what it will look like are unclear, with a mid-term review shrouded in secrecy. But If Australia’s leaders set the direction, that agreement can make it happen.

Governments will need to work together on many other things to improve the health system, such as recruiting and retaining health workers, increasing investment, and modernising digital systems. But Australia must address structural problems with the shape of our health system too, to set it up for the future. Let’s hope that National Cabinet takes up the challenge.

Peter Breadon

Health Program Director
Peter Breadon is the Health Program Director at Grattan Institute. He has worked in a wide range of senior policy and operational roles in government, most recently as Deputy Secretary of Reform and Planning at the Victorian Department of Health.

While you’re here…

Grattan Institute is an independent not-for-profit think tank. We don’t take money from political parties or vested interests. Yet we believe in free access to information. All our research is available online, so that more people can benefit from our work.

Which is why we rely on donations from readers like you, so that we can continue our nation-changing research without fear or favour. Your support enables Grattan to improve the lives of all Australians.

Donate now.

Danielle Wood – CEO