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How the Australian Model of Federal Government Impacts on Health

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Table of Contents

2Background information 1.0.

2Division of State and Federal Responsibility and Regulatory Decisions on Healthcare 2.0.

4How Growth and Development of Healthcare is Advantaged 3.0.

6How Growth and Development of Healthcare is Disadvantaged 4.0.

7Reform of the Federal Structure for Health Sector 5.0.

How the Australian Model of Federal Government Impacts on Health

  1. Background information

Health sector in Australia has transformed over years. As a matter of fact, policy makers, stakeholders and decision makers describe the magnitude of changes that healthcare systems need as being more than large-scale transformation—a process of radical and profound that orients Australian model of government into a new directions which gives the sector entirely different level of effectiveness. Looking at healthcare systems across different countries, one thing cuts across; attempts to establish a system that is able to give a seamless treatment or diagnostic and ongoing support care to its citizens has been transformed by the Australia’s federal government.1 Over years now, the system has attempted to bring policies that ensure that most of the Australian government healthcare funding is applied to different medical services, not limited to those provided under Medical Services Advisory Committee (MSAC).2 Key decisions and regulatory measures have been placed since the inception of Austrian unitary government (federal government) and this has seen healthcare services grow in complexity and size; the number of technical and people factors that should be addressed have been done so based on the government policies but within the framework of funding and exponential growth. Having its system of government modeled on the Westminster system, the model has seen progressive developments in terms of health financing—with the emphasis of the model being on subsiding health inputs.3 At the moment, the federal government has transformed the sector to an extent that Australian Government contributions stretches to a universal public healthcare insurance scheme and Medicare among others.4

  1. Division of State and Federal Responsibility and Regulatory Decisions on Healthcare

State and federal government have distinct roles in making decisions and policies that impact the current and future directions of healthcare provision in Australia. Additionally, an understanding into ways in which responsibility for key decisions, including regulatory decisions impacts the sector needs one to discern different roles and responsibilities between the state and federal governments.

To begin with, decisions and policy making process for health services in Australia are provided for by all levels of government: state, local, territory and Australian Federal Government. For instance, regulatory decisions and responsibility provisions was reached at after a wider consultative meetings that saw Australia adopt free inpatient care in all public hospital—a design and functionality which was also recognized under the National Health Act 1953.5 In such cases, all the governing sectors (state, local, territory and Australian Federal Government) agree on different modalities including decisions on funding and medical subsidies for different government programmes. The healthcare systems have been shaped around specific health needs of citizens, communities and families by availing cost-sharing services. For instance, Medicare has been designed to reimburse about 85 percent to 100 percent of its fees schedule for ambulatory services.

On the other hand, there are some policy designs and implementation and decision making responsibilities that have been left specifically for the federal government. Giving examples of instances where decisions and policies impacting healthcare provision remained in the hands of federal government included the 2012 and 2013 Extended Medicare Safety Net which provided additional infrastructure and financing to the neediest systems to ensure that patients get values for their money. Conversely, in 2009 alone Australia dedicated 9.2 percent of its GDP on health care systems (OECD 2012). This is what Schwartz terms as allocative efficiency where “…resources are allocated across sectors in a way that maximizes societal welfare, including dedicating the “right” level of resources to health care.”6 Comparing this with healthcare systems in other countries, England spent about 8.6 percent of its GDP on health care systems; an indication that federal model in Australia has committed itself in designing policies that positively transform healthcare services in the country.

A different point to note is that policies and decisions regarding regulations of healthcare services is done collaboratively where territory, state and federal government work in liaison with each other regarding licensing and registration of different healthcare facilities. This provides an opportunity for federal government to establish provisions that guide quality of therapeutic and pharmaceutical practices in the country. National Healthcare Specific Purpose Payments (SPPs), the Pharmaceutical Benefits Scheme (PBS), National Partnership Agreements (NPAs) and the Medicare Benefits Schedule (MBS) are some of the policies and frameworks that have been arrived to by state, local, territory and Australian Federal Government with an aim of providing inclusive medical cover for all Australians.7 The inclusivity of all state organs in making laws and policies and decisions regarding healthcare is further provided for when there is a need to amend laws relating to healthcare.8 It is for this reason that the federal government has ensured that most general practitioners (GPs) work in multi-provider practices and are self-employed and at the same time it is the responsibility of Royal Australian College of General Practitioners (RACGP) to set standards of practice for these GPs.9

  1. How Growth and Development of Healthcare is Advantaged

Australian model of federal government have created avenue where healthcare provisions have thrived. The first advantage of the system is its contrast with other government plans when it comes to the role the government plays to ensure its functionalities and design. For the case of Canada, while the provision of healthcare is almost private, federal government of Australia co-finances territorial/provincial health insurance programmes. Still in the case of Canada, the government through Canada Health Act has the mandate of setting pan-Canadian standards physician services, hospital and diagnostic tools. Unlike Canadian government, Australian model of federal government solely finances the healthcare systems. Basing on National Health Reform Agreement that was endorsed by Council of Australian Governments in 201110, the mandate of government in designing and monitoring functioning of the health now include monitoring and regulating all community based healthcare systems and hospitals. This makes the operations of healthcare in the country streamlined unlike situations where designing and functioning of healthcare policies and decisions rest with the parliament.

Secondly, the federal government of Australia allows for integrated maternity and paediatric care. Certainly, what is dreamed of by citizens of Australia is a healthcare system that is integrally connected with them and such supports their specific needs and where possible, quality, effectiveness and efficiency is determined by the knowledge of the diverse consumers. Regardless of the healthcare system a country puts in place, citizens have one ambition; system of governance should be designed to an extent that the social dimensions of the healthcare attend to their needs systematically so that even people with disability can be supported by virtuous systems. Contextualizing this argument, those with 70 years and above currently makes up 20-30% of Australia with the population requiring particular healthcare needs11. In addition, this age group is responsible for about 72% of all replacements of hip as reported in most healthcare service, 68% of knee replacements and about 60% demand for palliative care as well as rehabilitation services12. Based on the statistics above and unique challenges and scenarios experienced in the healthcare facility, Australian model of federal government has focused on the provision of problem-based care for the older generation visiting the facility. Such focus has been funded according to the following priorities;

  1. Increased Rehabilitation Services:

Australian model of federal government is already having rehabilitation services like those at Hampstead Centre and RGH. Increased rehabilitation services will increase the number of rehabilitation consultants which will also incorporate allied health staff. Also considered in the plan is to establish new training positions which in turn care for the aged recovering from conditions such major orthopaedic surgery or stroke.13 Australian model of federal government recently enacted a policy that introduced National Health Performance Authority. The Authority has since devised methods of ensuring that there is provision of exclusive and transparent quarterly public reporting of the performance of Local Hospital Network regarding the health standards of the aged.14

  1. Integrated Maternity and Paediatric Care:

Courtesy of Australian model of federal government, Australia has average obstetric healthcare as well as the lowest infant mortality basing on the latest reports from Australian Bureau of Statistics.15 The scenario at hand is the supply of high quality safe maternity. Further, the model of federal government ensures the funding is channeled to have the healthcare centres in different parts of the country adopt the working policies. A good case in hand is the current practices at Women and Children Hospital in Adelaide.16

Australian model of federal government ensures there is delivery of value for money. This policy has been designed by making responsible institutions to be flexible in staffing, financing and providing necessary infrastructures. In 2012 and 2013 Extended Medicare Safety Net provided additional infrastructure and financing to the neediest systems to ensure that patients get values for their money.17 Conversely, in 2009 alone Australia dedicated 9.2 percent of its GDP on healthcare systems (OECD 2012). This is what Marchildon18 terms as “allocative efficiency” where Australian model of federal governance allows for allocation of resources across sectors in a way that maximizes societal welfare, including dedicating the “right” level of resources to health care.

  1. How Growth and Development of Healthcare is Disadvantaged

One major undoing of the Australian model of federal government towards healthcare provision is that it is unlikely to attain the Australia’s vision of achieving comprehensive healthcare services by 2026. Under this vision, the country is aspiring to have a healthcare system which is integrally linked to social support and community and in so doing, the quality and efficiency will be determined by the needs and knowledge of the diverse range of Australian community. The model of governance in countries such as England have what they term as Clinical Commissioning Groups (CCGs) and Care Quality Commission that are coordinated by National Health Service thus making healthcare systems in England to have some connectivity across community support and health systems. Unfortunately, the Australian model of federal government solely finances the healthcare systems. While this funding has been helping, it only aims to improve healthcare systems that are driven by specific interests of community rather than future vested interests. These ideological and perspective differences make these systems to have difference in their design and functioning.

Australian model of federal government restricts healthcare expenditures for major healthcare needs. Making comparative analyses between Canada, England and Australian budgetary allocations as dictated by system of governance, England continues to outspend all the other two systems with their GDP allocation ranked the highest according to report by Nuffield Trust19 this is where the effectiveness comes in. The percentage as earlier quoted even doubles Organization for Economic Cooperation and Development (OECD) median of $2,995. Based on equity, Australian model of federal government makes Australia to record the lowest physicians and physician visits compared to Canada and United Kingdom. According to NHS Information Centre20, in 2014 Australia had 5.4 doctor consultations per capita while United Kingdom and Canada registering 5.9 and 5.7 respectively. On a similar breadth, there is relatively lower hospital admission rates in Australian compared to the other two systems thus compromising the effectiveness. Despite the enormous infrastructures, the rates of stays in Australian healthcare systems are shorter but with higher spending for every discharge.

  1. Reform of the Federal Structure for Health Sector

Overall, we note that Australians have different reasons to be satisfied with the performance of their healthcare system—at least with regard to overall outcomes and facilities that federal structures have put in place. However, federal structure should be reformed to ensure that current challenges faced in the health sector are reduced or eliminated completely. First, this study has already noted that federal structure has focused to offer equitable services especially to the indigenous community who cannot pay for any other services. This therefore calls for reform in the outpatient services the systems has been designed to offer. At the moment, Australia is facing a situation where there is cost shifting in the sense that a given service as provided by the same clinician is reimbursed differently basing on the location of service. Looking at the Australian National Healthcare Agreement21, the anomaly is even more with regard to such cases in United Kingdom and Canada as there are restrictions to hospital billing depending on physical location and whether the said services existed before 1st July 1998. If the federal structure is not reformed the aspect of equity in terms of service deliveries will not be resolved. This state is not even helped when one considers the parlous state under which indigenous health exist. Unless there is ratification on how outpatient services are done, coordination or continuity of equitable healthcare services will continue to be inhibited by the currently existing Commonwealth-State division on how responsibility should be handled. There exist strong relationship between health status of an Australian and the economic status. On the one hand, though the government is committed to ensuring universal access to medical facilities, national health insurance scheme and Medicare are not efficient and has not been designed to meet needs for all Australians, regardless of the economic status. Therefore to address this issue, either federal structure or National Health Reform Agreement that was endorsed by Council of Australian Governments should be revisited so that the role of government should be streamlined and strengthened with regard to the funding and governance of all public and private healthcare.

1 More complete information on how the federal government in Australia has transformed health care facilities in Australia can be found in the World Bank’s 1993 World Development Report, on which this discussion draws.

2 See Australian Institute of Health and Welfare, Australia’s Health 2002 (2002), 238–243.

3 Since 1901 Australia has had a federal system of government modelled on the Westminster system which has developed over years to ensure that health provision is more for the citizens than healthcare providers

4 AIHW (Australian Institute of Health and Welfare) 2013a. Health expenditure Australia 2011-12. Health and welfare expenditure series no. 50. Cat. no. HWE 59. Canberra: AIHW.

Australian Law Reform Commission. For Your Information: Australian Privacy Law and Practice; Report. Law Reform Commission, 2008.

R.L. Schwartz, “How Law and Regulation Shape Managed Care” in D.A. Bennahum ed., supra note 24 at 22. Schwartz predicted that all insurance plans would be MCOs before much longer.

7 Health Practitioner Regulation National Law (WA) Act 2010.

8 Amending Acts and amending provisions are subject to consultations from all state agencies and levels of government pursuant to sec 30C of the Interpretation Act 1987 No 15

9 AHMAC (Australian Health Ministers’ Advisory Council) 2013. Australian Health Ministers’ Advisory Council. Canberra: AHMAC. Viewed 13 August 2013.

This Agreement recognises that clinical practice and technology changes over time and that this will impact on modes of service and methods of delivery. These principles should be considered in conjunction with the definition of public hospital services set out at clauses A10 to A26

11 Australian Commission on Safety and Quality in Health Care. Australian Safety and Quality Goals for Health Care. Sydney; ACSQHC; 2012.

12 Australian Institute of Health and Welfare. Australia’s Health 2012. Department of Health and Ageing, Residential Care. 2012

13 Furthermore the Home and Community Care (HACC) transfer took place with effect from 1st July 2012 (with the exception of Victoria and Western Australia).

The reporting is done through the new Hospital Performance Reports and Healthy Communities Reports, as outlined in clauses C2(c) and C6-C9 of National Health Reform Agreement 2011

15 Australian Bureau of Statistics (2012). Patient Experiences in Australia: Summary of Findings, 2011-12. (Cat. no.


16 Women and Children Hospital in Adelaide represent a case where the National Health Funding Body has staffed an employee under the Public Service Act 1999 (Commonwealth) and has included staff seconded from the States. The staff of the National Health Funding Body is not supposed to be subject to direction from any Commonwealth Minister while undertaking duties as directed by the Administrator. World Health Organization. (2014). Retrieved May 13, 2014, from World Health Organization: 17

18 Marchildon, G.P. (2013b) “Implementing Lean Health Reforms in Saskatchewan,” Health Reform Observer – Observatoire des Réformes de Santé vol 1, iss. 1, article 1. Available at:

19 Nuffield Trust (2013). Public payment and private provision: The changing landscape of health care in the 2000s.

20 NHS Information Centre (2014b). Prescriptions Dispensed in the Community, Statistics for England: 2000–2010.

The National Healthcare Agreement affirms the agreement of all governments that Australia’s health system should: be shaped around the health needs of individual patients, their families and communities (see clause 12)