The 2003 - 2008 Australian Health Care Agreements: an opportunity for reform

The Australian Health Care Agreements govern the relationship between the Commonwealth and States about public hospital funding. The incentives enshrined in the Agreements can shape policy priorities. Although they provide for the largest specific purpose grant a State/Territory receives, the current negotiations should not be seen as providing the only opportunity for reform of health care for the next five years. This paper argues that the negotiations should focus on two key areas where Commonwealth- State frictions are high but reform is feasible. Specifically it is suggested that the Commonwealth should contribute its funding of public hospital inpatient services on a casemix basis, and secondly, should fund outpatient services directly The typical 1998-2003 Australian Health Care Agreement between the Commonwealth and each State and Territory is a document of about 45 pages long with clauses about consultation, roles, formulae, etc. The critical obligations on the State are encompassed in the agreed Principles (clause 13) which provide: 1. Eligible persons must be given the choice to receive public hospital services free of charge as public patients. 2. Access to public hospital services by public patients is to be on the basis of clinical need and within a clinically appropriate period