Hospital funding overhaul examined0:45
Potential changes to hospital funding could see the private health insurance rebate abolished.
Health chiefs consider hospital funding shake-up abolishing private health insurance rebate
TAXPAYERS spent $55,000 paying a private think tank to develop a radical hospital funding reform plan that was today dumped by Health Minister Greg Hunt exposing tensions between the minister and his department head.
The hospital funding model would have seen the subsidy for private health insurance scrapped and the government pay 35 per cent of the cost of all hospital treatment in both public or private hospitals.
Health fund members would have faced huge new bills for seeing the dentist, getting spectacles and accessing physiotherapy under the plan which would have scrapped a government subsidy for extras cover.
Health Department chief Martin Bowles engaged private consultancy form Global Access Partners to draw up the plan which was today ruled out by Health Minister Greg Hunt.
The plan has exposed tensions between Mr Hunt and Mr Bowles, who was driving the reform.
And it is a sign the government is now too timid to progress any health reform as it smarts from its near election loss as a result of Labor’s successful Mediscare campaign in the 2016 federal election.
News Corp reported that details of the controversial hospital funding reform plan were being considered by the government to try and improve the efficiency of the health system.
Health Minister Greg Hunt said this morning he would not proceed with work on the plan instigated by former health minister Sussan Ley.
“The story does not reflect Government policy. It will not be Government policy. It will never be Government policy,” Mr Hunt said in Canberra.
Mr Bowles told Senate Estimates this morning he had been told by Mr Hunt in March to stop work on the program.
However, he conceded the taskforce working on it had another meeting March and the consultancy compiling the report mentioned it again at another meeting in May.
“I struck it out. I rejected it. If it ever comes forward, I’ll reject it again,” Mr Hunt said yesterday.
Labor senator Murray Watts described the plan as an attempt to “gut Medicare” as he pursed the department over what he said was a secret plan.
“This is proof the Government hasn’t given up attacking Medicare — they’ve expanded to another target,” opposition health spokeswoman Catherine King said.
News Corp reported on the plan in November 2015 revealing it would see the private health insurance subsidy abolished saving the federal government $6 billion.
The money from the subsidy would be pooled with existing government funding for public hospitals and be paid to Australians as a Commonwealth Health Benefit when they needed hospital treatment.
The benefit would be able to be used in both the public and the private sector.
Leaked documents presented at Senate Estimates show the payment would have been equivalent to 35 per cent of the national efficient price (NEP) of cost of hospital treatment.
This would represent a five per cent cut to public hospital funding because the federal government currently pays 40 per cent of their costs.
In the private system it would mean the government would boost what it pays for patients from around 26 per cent to 35 per cent.
The states would have to foot the bill for the other 65 per cent of public hospital costs and insurers or individuals would have to pay that gap for those using the private system.
EXTRAS PAIN
Australians would have lost a government subsidy for health fund coverage of extras like glasses, dentists under a radical hospital reform plan.
“It was later noted that the Commonwealth Health Benefit will have an effect on individuals’ expenses,” the minutes say.
“As a result, either individuals will miss out on ancillary cover (which covers the costs of dental, optical, physiotherapy, etc.), or there will need to be additional costs charged to individuals to continue cover for ancillary treatments,” the minutes of one of the group’s meetings say.
Tensions between Health Minister Greg Hunt and Health Department Secretary Martin Bowles have emerged over the hospital funding reforms plans pursued by Mr Bowles.
Mr Bowles told Senate estimates he did not discuss the controversial plans he was pursuing with the minister until they were to appear on an agenda of a meeting of state and federal health ministers in March.
Mr Bowles could not say whether Mr Hunt had been told about the plan in briefing papers when he took over the job as minister earlier this year.
Liberal Senator Dean Smith has been aggressively pursuing Mr Bowles over why he was continuing to complete work on the reforms that the minister said would never be government policy.
The department says the taskforce paid $55,000 of taxpayers money to develop the radical hospital funding reforms will complete its report and it will be handed to the minister.
The minutes of one of the meetings of the group drawing up the reform plans have been leaked to the Opposition and the Greens.
Health Department chief Martin Bowles is said to be a fan of the dumped plan.
He told Senate Estimates yesterday it was his job as head of the department to look at the future of health funding.
He confirmed the department had entered into broad policy work on the proposal.
However, it emerged he did not put the $55,000 contract for the consultancy work to tender.
Mr Bowles said he gave the work to Mr Peter Fritz, the head of GAP, after they met in 2016 and told the Senate it was possible for him to award contracts for work costing less than $80,000 without a tender process.
Senator Watts probed Mr Bowles about connections between GAP and the Australian Health Research Centre which is funded by a number of large health insurers.
Members of the AHRC attended taskforce meetings, he revealed.
However, Private Healthcare Australia which represents insurers has raised major concerns about the plan.
“I’m genuinely stunned,’ Private Healthcare Australia chief Rachel David said when she was told the work had been paid for by taxpayers.
“It was a dramatic overhaul of the health system that totally changed the role of private health insurance, eliminated the difference between public and private hospitals and wold have put doctors on salaries,” she said.
“It would have been inflationary, there was no demand management,” she said.
Originally published as Hospital funding shake-up dumped