Scott Morrison on a collision course with states over hospital funding

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New South Wales Health Minister Brad Hazzard declined to comment on the document presented by his state, but his Queensland counterpart, Yvette D’ath, joined the call for “funding sustainable and long-term health of the Commonwealth”.

Victorian Minister of Health, Martin Foley: “We need a suitable funding model.Credit:Nine News

“We have written to the Commonwealth as well as all states and territories demanding a 50 per cent health care contribution from the Morrison Government,” Ms D’Ath said.

“We also want to see an extension of the current financial arrangements in the fight against COVID as the challenge the pandemic poses to Queensland is ongoing.”

“This includes providing aged care packages to the over 500 Queenslanders who are currently in beds in Queensland public hospitals.

“The Morrison government needs to start taking its health care responsibilities much more seriously.”

But Federal Health Minister Greg Hunt hit back at the push for more money, arguing that the federal contribution to health funding rose 92% between 2012-13 and 2020-21, compared to increases 44% of states.

“There is nothing stopping states and territories from matching the Australian Government’s investment in public hospitals and if they did, the hospitals would be adequately funded,” a spokesperson for Mr Hunt said.

Mr Hunt’s spokesperson said the federal government had also ‘secured funding to states and territories over the past two years and provided them with more than $500 million for delayed surgeries and hospital activities, recognizing that this activity will have to be caught up at a future stage”.

“We have also provided more than $8.8 billion in additional hospital and health funding to states and territories to help them manage the health effects of COVID-19.”

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The push for a 50-50 share of hospital costs has strong support from the Australian Medical Association, although President Omar Khorshid has stressed that increased federal funding should not allow states to pay less into the system.

“The reality is that health care is more expensive because of COVID, which includes things like PPE and testing, and we’ll likely live with those costs for years,” he said.

“And then there’s the cost of delayed care, diagnoses, surgeries that happen later. There is an additional cost if the cancer is detected and treated later, for example.

“We haven’t heard any willingness from the Liberals or Labor to tackle this problem of public hospitals, neither Labor nor the Liberals are even willing to have a conversation about funding public hospitals.”

The AMA estimated that moving to 50-50 funding and removing the 6.5% cap would cost the Commonwealth around $20.5 billion over four years. But Dr Khorshid said the money would help deal with “the huge pressure on the system”.

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Grattan Institute health program director Stephen Duckett said the ‘care deficit’ – the extra hospital costs linked to the pandemic – should rightfully be treated as ‘COVID costs’, and therefore the Commonwealth should increase by 50%.

“So you could legitimately argue, in my view, that the Commonwealth should share [costs] 50-50 in 2022, and possibly even 2023, depending on how long it takes to close the care gap,” Prof Duckett said.

But Prof Duckett said there was also a case for additional funding for Commonwealth hospitals on an ongoing basis, in addition to the removal of the 6.5% funding cap.

“It seems to me that the states have a case for additional Commonwealth funding, either on a COVID basis or in the works,” he said.

Hospital funding agreements between the states and the Commonwealth have been rocky for years. During the Rudd-Gillard era, the Commonwealth agreed to increase funding to 50%.

But that was detailed in 2014 when the Abbott government’s first budget tied hospital funding to population growth and general inflation.

Funding was then partially restored in 2016, with the Turnbull government agreeing that the Commonwealth would pay 45% of the cost of hospitals, subject to the 6.5% funding growth cap.

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