AMA Transcript - Health funding and lifting GST

ADAM SHAND: Our State leaders have been meeting with the Prime Minister to work out a way to get a breakthrough on health funding. We're seeing premiers like Mike Baird in New South Wales suggest we should raise the GST to cover the shortfall in future health funding, and we've seen the Premier here come up with a similar idea but a lower rise, I think Baird's saying 15 per cent, Colin Barnett saying 12.5 per cent. Now the Australian Medical Association's been watching this gabfest go on and their President, Brian Owler, says basically none of them have a got a clue and he lacks confidence in the State leaders to actually get a breakthrough and he joins me now. Good afternoon Brian.

BRIAN OWLER: Good afternoon.

ADAM SHAND: So what do you think, you say clean up this mess in health funding. You're saying that it can only come through an increase in the Medicare levy and you're effectively saying we'd have to double it.

BRIAN OWLER: No, look, I mean it doesn't really matter which way it comes, I mean whether they're talking about the Medicare levy, GST or any other form of taxation, all of those taxes go back to the Commonwealth, but unless the Federal Government decides that it's going to live up to its responsibilities for funding public hospitals and actually provide the funding to the States and Territories then this argument is really not solving the problem which is, if you make States and Territories responsible for public hospitals then they need to be able to have the revenue themselves in order to be able to find the funding. Or you need to have some rock solid guarantee from the Federal Government that they are actually going to get the funding back for health.

ADAM SHAND: So you're saying we can't trust the Federal Government then, Brian?

BRIAN OWLER: Well, we've seen this Federal Government in the 2014 budget walk away from a commitment to funding public hospitals. And it's not just about the commitment that the last Government made. What they're doing is changing the formula for funding public hospitals from a formula which would have guaranteed growth to a formula based on CPI and population growth, so that will be about 1.7 per cent compared to the average growth of public hospital funding which is around five-and-a-half to six per cent, so you can see that every State and Territory is going to have a significant shortfall for funding their public hospitals under this Federal Government scheme.

ADAM SHAND: Yeah, so you're more or less saying we have to have some form of hypothecated tax like the Medicare levy- it's not a tax but it's a levy, so that's the only way we can guarantee that extra money would go into health?

BRIAN OWLER: Well, that's one way, but I think people need to remember that the Medicare levy only raises about - a bit over $10 billion for Medicare - and so to raise that you'd have to raise it very substantially. And I think the discussion around how you raise the revenue is really more a discussion around the fairness and equity and looking after, particularly, those disadvantaged in society, low income earners, and how are they going to be protected in some form of new taxation scheme, the fairness of the scheme. Now what happens to the money then is really going to be the critical question in terms of getting it back to the States and Territories for health care.

ADAM SHAND: I see. Now we had Andrew Laming the MP for Bowman in Queensland on the show this week, he's a doctor as well...

BRIAN OWLER: Yes.

ADAM SHAND: ...and he says the big issue is not so much GST or Medicare levy but wastage in the health system and that we have to take a fine tooth comb to that before we think about raising more money for it.

BRIAN OWLER: Look, I mean, I'm sick of politicians raising waste and inefficiencies in the public hospital system as the solution. I mean we've been working on this literally for decades and we’ve actually had great success in reducing waste. Now is there more to do? Yes. But it's not going to fix the problems of our public hospital system funding. At the end of the day, there is a responsibility of governments to fund public hospitals properly, and this Government has walked away from that commitment.

ADAM SHAND: Well, also, you have to see the private health funds shoulder their part of the burden. You've been also critical of Medibank Private's hardball negotiating demanding and citing 165 highly preventable adverse events that Medibank will simply not pay for, including maternal death during childbirth.

BRIAN OWLER: It does make me angry because they may…inaudible…for some time before the float of Medibank Private but once you made this a public company its responsibility was going to be to its shareholders, not to its customers or its members, but actually to shareholders, who want to see market share increase and want to see increased returns. Now what we're seeing is the pattern of behaviour where we've got more and more policies with exclusions, the coverage - particularly for things like pathology and radiology - is being lowered so people are getting surprise bills of course when they get home. And now they've taken this approach to private hospitals and the Calvary Group is just the first cab off the rank. And what they've come up with is a list of 165 what they call preventable complications. Now these are conditions that we can do all in our power to try and prevent but, at the end of the day, we cannot prevent all of these problems because they're just the nature of medicine and those that are most sick, those with chronic and complex illnesses, particularly things like diabetes, for instance, are going to be at increased risk of [indistinct] infections. So when private hospitals start saying, ‘well we're not going to admit those patients because we may not end up being covered,’ they are going to end up being in the public hospital system and people are going to have to start questioning the value of their private health insurer.

ADAM SHAND: So you're saying that Medibank Private should forego some profits for the national good?

BRIAN OWLER: No, I think they should live up to their responsibilities to those people that take out policies and actually cover their cost when they go to hospital properly and make sure that people actually can go to the hospital that their doctor has recommended. Now if this problem with Calvary doesn't get solved then those, particularly patients in ACT, Tasmania and South Australia where that particular health group has quite a presence, then many of those patients with Medibank Private policies won't be able to go into a private hospital and this is a really big issue. Now as I said the Calvary Group is just the first cab off the rank. Our private health system is something we should be very proud of. It does shoulder a lot of the burden and what we can't do is see players like Medibank Private cost cutting and undermining the value of private health insurance.

ADAM SHAND: Okay, thanks for your time Brian.

BRIAN OWLER: It's a pleasure.

24 July 2015

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