Labor bows to hospital funding push

Labor is buckling under state demands for a multi-billion dollar increase in public hospital funding.

Opposition Leader Bill Shorten. Picture: AAP

Labor is buckling under state demands for a multi-billion-dollar increase in public hospital funding, despite already planning to top up the existing Coalition contribution with lucrative infrastructure grants.

The Australian yesterday revealed Queensland and Victoria expected a Shorten government to lift the commonwealth contribution to annual growth in hospital expenditure from 45 per cent to 50 per cent, in line with a commitment from the Gillard era.

The incoming Coalition government’s decision not to lift the contribution has led to five years of Labor claims that hospital funding had been cut, even though there has been record funding every year.

Health Minister Greg Hunt had already started to negotiate the next agreement on the basis the 45 per cent contribution would be maintained — with the tentative support of all states and territories except Queensland and Victoria. Under the Coalition proposal, commonwealth funding would have increased by $30 billion to almost $128bn between 2020 and 2025.

Labor had also sought to maintain the existing growth split if elected, and instead offered the states a Better Hospitals Fund worth $2.8bn, which it said was the difference between 45 per cent and 50 per cent. Labor’s health spokeswoman, Catherine King, yesterday signalled a major shift in policy, only weeks out from the election. “If Labor is elected, it will become our responsibility to land that next agreement,” Ms King said. “As part of that, we will return core funding to 50 per cent.

“That means every hospital in the country will benefit from increased funding under Labor.”

Ms King would not provide further details, including whether the increased share would come in stages, as would appear, and whether the commonwealth cap would remain.

However, with the $2.8bn infrastructure fund already being distributed in pre-election promises, and up to $3.3bn more commonwealth funding now at stake, Labor has gone over-and-above what former prime minister Julia Gillard had promised the states.

With unanswered questions over how the states use commonwealth funding, it remains to be seen whether a Shorten government would put any conditions on Canberra’s extra money.

Mr Hunt’s proposed terms included reforms to the state practice of identifying privately insured patients in emergency departments and billing their care to health funds. Insurers say restricting private billing to pre-planned elective surgery would prevent $550 million a year being shifted to the private sector, and ultimately premiums and the government rebate.

Independent funding agencies are also investigating whether public hospitals are billing more than $330m a year to Medicare for services already covered under commonwealth and state agreements.

There is also an ongoing dispute between the states and the commonwealth over the process of reconciling hospital activity and funding, which some states argue has left them $609m worse off.

Even the methodology used to calculate an efficient price for ­activity-based funding, under­pinning the whole system, is set for review.

Some jurisdictions have repeatedly called for a rethink.