Why health, sadly, is not an election issue

by Stephen Duckett

Published by The Australian, Page 14, Tuesday 13 August 2013

We are in an election campaign and for once health is not a big issue. That’s a shame. Last week, former Treasury secretary Ken Henry pointed to projected expenditure growth in health and aged care as the “key problem” both parties are failing to deal with.

In the past decade, spending on healthcare in Australia has doubled, and it is projected to double again in the next 20 years, increasing from about 9 per cent of gross domestic product now to more than 12 per cent by 2033. Ageing will account for about one quarter of the increase. More than half comes from changing treatment patterns – more tests, new procedures, new drugs.

Increases in private or government health spending are not bad per se. The critical issues are whether the spending delivers benefits (and to whom), whether these benefits are worth it, and where the money will come from.

But the debate is not always framed this way. It is regularly claimed that because health spending is growing faster than the rest of the economy, it is inherently unsustainable. It will result in too much debt, or stop us spending on anything else.

But as the economy grows, people choose to spend more on health – they want to live longer, healthier lives. Trying to restrict this growth to the same speed as the rest of the economy is unrealistic.

Sustainability panic often comes with calls to shift costs to consumers, or to introduce new, unproven structures, or to make deep funding cuts.

But the proportion of health costs met from private sources in Australia is already high on international measures. High levels of private out-of-pocket costs mean some people find it difficult to see a doctor, and this may increase costs over time.

A simple solution is an across-the-board spending cut that ignores the costs and benefits of different types of expenditure. This isn’t useful.

Sustainability can be consistent with a spending increase if the money is successfully invested. The good news is there are about 600 fewer deaths each year compared with 20 years ago, attributable to improvements in healthcare.

But although additional health spending is delivering benefits, we must ensure what we do is efficient. Most of us have seen examples of waste. In a recent survey, 10 per cent of patients reported that doctors ordered tests that had already been done. But one person’s waste is another person’s income or profit. Opponents of change advance a litany of obstacles: the changes have not been proven elsewhere, they will hurt patient care, quality and safety, or hinder innovation. Naked political interest is hidden behind a fog of apparent selfless concern for others.

In some areas interest groups have negotiated waste-protecting agreements with government. The commonwealth government’s deal on drug pricing costs taxpayers and consumers more than $1 billion a year. The policy agenda for the future must make kowtowing to self-interest more expensive than resisting it.

New spending must be rigorously assessed to ensure value for money. Australia already leads the world in requiring new drug listings to demonstrate their cost-effectiveness. Money could also be saved by an enhanced focus on prevention. Although preventive investments are not always cost-effective, many should be pursued.

We need to recognise that choices need to be made, and that faster growth in healthcare may mean slower growth in other sectors, and possibly increased taxes.

The aim of policy should not be to stop health spending growth but to change its trajectory. The problem is unmanaged growth. The answer is better management: less red tape, improved efficiency, elimination of waste and making the investments that lead to better health for all Australians.