State Labor casts shadow over PM's health overhaul

THE NSW government has quietly undermined attempts by the commonwealth to take over the bulk of primary care service.

WHILE Kristina Keneally has been portraying herself as the champion of national health reform, the NSW government has quietly undermined attempts by the commonwealth to take over the bulk of primary care services.

Key government sources have revealed that the Labor state's attitude has been at least as important as the bolshiness of Victoria and Western Australia in sending Julia Gillard back to the drawing board.

It is understood NSW has reclassified a range of primary care services in order to prevent them passing across to the control of Canberra under the new system to be finalised by the Council of Australian Governments on Sunday.

As a result, the $1.7 billion worth of primary care services the federal government has anticipated inheriting from NSW each year has shrunk to a measly $23 million. This has undermined the Prime Minister's plan to use a uniform GST clawback formula.

The concern in NSW was that the network of Medicare Locals being implemented by the federal Department of Health and Ageing would be unable to deliver a range of out-of-hospital services to an acceptable standard. Those that have been carved out include health services for refugees and youth; chronic disease care and prevention; and health education.

NSW opposition health spokeswoman Jillian Skinner said the revelations showed the plan was a "Clayton's" agreement. "Kristina Keneally has been caught out lying about the federal health agreement and can't be believed," she said.