THE HON CATHERINE KING
SHADOW MINISTER FOR HEALTH AND MEDICARE
MEMBER FOR BALLARAT
POST-BUDGET ADDRESS TO AIPS
TUESDAY, 15 MAY 2018
The AIPS has hosted post-Budget speeches by the federal Health Minister for as long as I can remember. But this could well be the first time you’ve hosted the Shadow Health Minister – certainly it’s the first time that I can recall.
Whatever the case, I’m grateful for the invitation to join you today. I think it reflects two things.
First, we’re no more than a year from the next federal election. We could in fact be only a few months from polling day.
That’s a scary thought given it’s only been two years since that gruelling eight-week double dissolution campaign.
But it’s true: the window for a regular House and half-Senate election opens in August – just three months from now – and closes this time next year.
Whenever the election is called, Labor will be competitive.
We’re not over-confident, and we certainly don’t underestimate the challenge ahead – winning from Opposition is never easy.
But we are competitive – and that’s largely because we’ve been doing the policy hard yards.
Instead of being your typical small target Opposition – ducking and weaving and refusing to detail a real alternative plan for Government – we’ve consistently developed and announced policy.
Even when it’s hard, even when it’s contentious – we have given the Australian people a real choice.
Which brings me to what I think is the second reason for your invitation: you want to hear about the health agenda that Labor would pursue in Government, if we’re fortunate enough to get the chance.
As everyone in this room knows, the politics of health have been hotly contested since the 2014 Budget.
Health cuts in Budget after Budget ensured that health became a real political battleground.
Now, I know that stakeholders – particularly industry – have worried about that at times. Political fights don’t always generate great policy.
But the reality is that the political contest that has developed around health reflects fundamental philosophical and policy differences between us and the Government – particularly when it comes to the role of Medicare, our universal public health insurance scheme.
So today, I want to give you an insight into Labor’s health agenda, particularly in the areas of primary care, public hospitals and private health insurance.
But I’ll begin with some reflections on last week’s Budget.
As always, the true implications of the Budget will be understood over weeks and months, not hours and days.
Health Estimates in the last week of May will be a key opportunity for the Parliament and stakeholders to gain a better understanding of many of the Government’s measures, particularly those that are currently scant on detail.
At this stage, I think the best way to describe this Budget when it comes to health is – as my friend Lesley Russell has said – one of ad hockery and missed opportunities.
True, there are many measures in the Budget that Labor has welcomed. These include:
• a new Rural Health Strategy;
• some investment in the health of mums and bubs;
• and new MRFF disbursements, some of which have been badged as a National Health and Medical Industry Growth Plan.
But I want to flag three concerns today.
First – the new savings.
The Budget actually includes over $1 billion in new health savings.
This has so far gone relatively unnoticed – perhaps because compared to the savage cuts inflicted in previous Abbott-Turnbull Budgets, a billion dollars no longer seems like that much.
But these savings include:
• $416 million from GP visa changes;
• $336 million from increased use of generic and biosimilar medicines;
• $190 million from the MBS Review;
• $78 million from improved use of blood products and anti-rheumatic drugs; and
• $40 million from MedicineWise and the National Return of Unwanted Medicines project.
Now, not all of these savings are necessarily bad.
Labor has offered bipartisan support for the clinician-led MBS Review – despite calls for us to do otherwise from some quarters.
And we welcome constructive engagement from the medicines sector, which has led to further savings in this year’s budget – on top of the savings banked last year.
But some of these savings will be contested.
In particular, the Government must urgently explain the claimed savings from GP visa changes.
AMA President Dr Michael Gannon has argued these savings won’t be realised because patients will move to other GPs.
Now, if that’s true – the Government has a half billion dollar black hole in its Budget.
The only alternative is that the savings will be realised and services will be cut. Either way, the Government needs to come out of hiding on this point.
But there is a broader question here, namely: where is all the money going?
The Government claims it will reinvest or redirect each of these savings into the Health portfolio.
But there’s no guarantee or detail about how it will do so.
For example, while there’s $190 million in savings from the MBS Review, there is just $25 million in new MBS listings – meaning a net cut to Medicare.
Now, call me a cynic but I simply don’t trust this Government’s assurances on health anymore.
So watch this space: Labor will be pushing the Government for much more detail on its new $1 billion in health savings.
Second – the Budget includes new listings on the National Immunisation Program and the PBS, which are always welcome.
The Minister is right that thousands of Australians will benefit from new drugs to prevent and treat disease, including refractory Hodgkin lymphoma, spinal muscular atrophy and breast cancer.
These listings are particularly welcome where they have been delayed – as in the case of the pertussis vaccine, which was recommended for listing almost two years ago.
I want to pause here to make three reflections.
The first is that PBS listings are the ordinary business of Government.
The last Labor Government spent over $6 billion to add around 800 new medicines and vaccines to the PBS, the Life Saving Drugs Program and the National Immunisation Program.
But we understood that credit for listings doesn’t belong to the Minister of the day. They are not his or her personal gift to the nation.
It belongs to the medicines companies that develop new treatments – the patients and clinicians and researchers who build evidence for them – and the independent committees that ensure that new listings are clinically- and cost-effective.
Second, whether they admit it or not, governments of both stripes have struggled to afford the new high-cost drugs that will increasingly characterise the PBS.
But list them we must. And so the discussion around PBS sustainability is crucial.
The $1 billion provision for new listings in this Budget is a start. But it’s a drop in the ocean compared to the $20 billion in PBS savings under the Howard, Rudd and Gillard governments through simplified price disclosure.
As many of you know, in our second term Labor had agreed to establish a ‘notional bank’, allowing the Health Minister to offset new listings against these savings.
But that concept was lost with the change of Government, and so we are back to where we started.
My third reflection in this space is that the PBS has always been – should always be – defined by a rigorous focus on clinical and cost effectiveness.
But everyone in this room is aware of reports that the Government has begun to politicise the PBS to secure support for its changes to rebate arrangements.
Those changes may prove to be worthy.
But no Minister should overrule the repeated advice of the PBAC on any issue – and when there is a perception that overruling the PBAC has resulted in a drug being listed on the PBS and a company participating in a rebates trial – we have a problem.
The politicisation of the PBAC process would be a shocking legacy for this Minister and this Government.
Labor will be pursuing this issue further in the weeks ahead.
Third, the Budget is notable for what it doesn’t include.
There’s little on prevention, other than a continued commitment to sport and some physical activity.
There’s nothing on innovation in primary care.
There’s very little on Aboriginal and Torres Strait Islander Health – and nothing at all on other health inequalities.
In fact, while there’s lots of activity in the Budget – listings and disbursements and grants – there’s very little focussed on outcomes or innovation.
And I’m sorry to say that’s typical of this Government’s approach to health.
After repeatedly attacking health throughout its first term, this Government is doing what it can to settle disputes in its second. That has certainly taken up a lot of the Minister’s time over the last 18 months.
But what we actually need is a Government that is prepared to ask and help answer the big questions in health – not just clean up the messes of its own making.
• How do we better promote health and prevent disease?
• How do we ensure all Australians can access quality, affordable care?
• How do we adapt our unique health care system to meet our future needs?
All of which brings me to Labor’s agenda.
Late last month, Labor released our draft 2018 National Platform.
The Platform is our most important policy document. It sets out the principles by which we would govern, and forms the basis for the detailed policy-making that’s done by our Cabinet and Caucus.
We will continue to consult on the Platform until it is adopted by our National Conference in July.
External stakeholders can respond to the consultation draft via the ALP website until this Friday – so get in fast if you haven’t already.
But the fact is the health chapter has already been informed by dozens of submissions – including many from people and organisations here today, and I thank you for your input.
Today, I want to discuss three parts of Labor’s agenda in particular – Medicare, public hospitals and private health insurance.
First, to Medicare – our universal public health insurance scheme.
There have always been challenges to Medicare’s universality – such as the difficulty of accessing services for Aboriginal and Torres Strait Islanders, as well as people in regional, rural and remote Australia.
But in recent years, thanks in part to the Government’s Medicare freeze, out-of-pocket costs have become a significant barrier to access.
Medicare statistics show that 10 years ago, Australians paid an average out-of-pocket fee of $21 to see a GP. If that cost had increased in line with inflation, it would be around $26 today.
Instead, Australians now pay an average out-of-pocket fee of $38 to see a GP – by far the highest on record.
The same is true for specialists – 10 years ago, Australians paid $44, equivalent to around $54 now.
But the average out-of-pocket specialist fee is now $88 – again the highest on record – and of course many patients pay much more.
Australian Bureau of Statistics figures tell us that those costs are forcing many Australians to skip basic health care.
One million Australians say they delay or avoid seeing their GP each year due to cost.
About 1.7 million people say they don’t fill prescriptions.
And another 1.7 million people say they skip seeing a specialist.
Older Australians fare even worse, with 1 in 8 telling the Commonwealth Fund that they have problems getting care because of cost.
Only patients in the US – which I think we all agree is no role model when it comes to universal health care – fare worse.
All of that means we’re not upholding the promise of Medicare – universal access to care.
So we need investment, and we need reform.
I am disappointed the Government did not take the opportunity of the Budget to end their Medicare freeze immediately and in full.
After four years, the freeze on GP and specialist consultations will be lifted in July.
But the freeze will remain in place for specialist procedures and allied health services for another year.
Even then, some Medicare items will remain frozen – it’s not until July 2020 that it will finally be gone, six years after it was introduced.
And even as the freeze is lifted, we know that the benefits of re-indexation will be marginal – 55 cents on a standard GP consultation, for example.
That won’t put a dent in those soaring out-of-pocket costs I detailed earlier.
So we do need new investment in Medicare.
Bill Shorten announced the first of Labor’s new investments in Medicare last week – a significant investment in MRIs.
Unlike other diagnostic imaging services, MRI scans only attract a Medicare rebate if they are performed on an eligible machine.
The licence system is anachronistic but worked relatively well until 2013, given that the last Labor Government granted 238 licences.
Unfortunately the current Government has neglected MRIs, granting only four MRI licences in almost five years in office.
This is a woeful record.
And as a result access to Medicare MRIs is patchy, with many Australians travelling long distances or experiencing significant wait times to access an eligible machine.
Labor’s Senate Inquiry into MRI licences heard evidence that in some Primary Health Networks, people wait an average 50 days for an MRI after a specialist referral. That’s too long.
The inquiry also heard that a shortage of Medicare MRI licences could have deadly consequences, with evidence that children were being overexposed to the radiation of CT scans.
That’s why Bill announced last week that Labor will grant 20 new full MRI licences.
The first 10 licences will be reserved for public hospitals, with locations determined based on evidence to the Senate Committee.
Importantly, the remaining licences will be awarded via a transparent application process under a Labor Government.
This will be the first opportunity for communities around Australia to apply for a licence since Labor was last in office.
Labor’s $80 million investment will ensure more communities have affordable access to life-saving scans.
We will of course have more to say about new investments in Medicare in the months ahead.
But we’ll also have more to say about primary care reform.
An older population with higher rates of chronic disease means Australians will need more care and different types of it.
I do acknowledge the Government’s Health Care Homes trial. But so far it has been marked by activity, not delivery – and there are worrying signs that it is doomed to fail.
Australia isn’t lacking for pilots or ideas. As I visit general practices around the country, I hear lots of them.
What we’re lacking is a shared vision for primary care reform.
And so I actually think we need to start at the end – by asking what primary care should look like in 10 years’ time.
Once we have a set of agreed principles, we can work backwards to map out how we will get there – particularly in relation to funding models.
Labor’s vision is for primary care that is led by GPs, but much more integrated with other specialists, allied health, and other health providers. We also want much better coordination between primary care and hospitals.
But we are not so arrogant as to impose a one-size-fits-all model. At the last election, we committed $100 million in new money to develop and roll out new models of primary care.
Importantly, we also committed that every dollar saved from the MBS Review would be reinvested in innovations in Medicare.
That would prove that reviewing the MBS is not just a cost-cutting exercise, and give models of care that work a way of scaling up nationally.
Turning to hospitals – the last Labor Government signed the historic National Health Reform Agreement with the states and territories in 2011.
Under that Agreement, the Commonwealth committed to fund an equal share of efficient growth in hospital costs – ending the blame game and giving public hospitals long-term budget certainty.
Ahead of the 2013 election, the Liberals promised they would – and I quote – “support the transition to the Commonwealth providing 50 per cent growth funding”.
But of course in the aforementioned 2014 Budget the Abbott Government tore up this Agreement and cut billions from hospitals.
Despite returning to an activity-based funding formula ahead of the 2016 election, Malcolm Turnbull is only funding 45 per cent, with a new 6.5 per cent cap on Commonwealth growth – cutting millions for the 2017 to 2020 period.
Now he’s seeking to lock in these cuts for another five years.
Between the next election and 2025, that would mean a $2.8 billion cut from Australia’s public hospitals.
At the same time, our public hospitals are in crisis.
With growing presentations and acuity on one hand and Commonwealth cuts on the other, hospitals are simply not keeping up with demand.
There were 7.8 million emergency department presentations in 2016-17 – one million more than five years ago (a 16 per cent increase).
More than one in four emergency department patients are not seen within the clinically recommended times.
And the same proportion are not treated within the four hour National Emergency Access Target.
In elective surgery, it’s a similar tale.
Almost 870,000 Australians needed elective surgery in 2016-17.
But one in 10 Australians is forced to wait an average 258 days.
The Australian Medical Association says the current funding formula will “doom our public hospitals to fail and patients will suffer as a result”.
That’s why Labor will fully reverse the Government’s cut by investing an extra $2.8 billion from 2019 to 2025 – from straight after the next election to the end of the Government’s proposed agreement.
Labor will establish the Better Hospitals Fund to allocate the funding.
We will announce more details in the months ahead, but the fact that this funding commitment was a centrepiece of Bill Shorten’s Budget Reply last week should tell you a lot – it means this is a top priority for us.
The Better Hospitals Fund will pay for more activity – more emergency department presentations, more elective surgery. It will also pay for more resources – more beds; more doctors, nurses and hospital staff.
But we also want the Fund to drive innovation in our hospitals.
Activity-based funding has made our public hospitals more efficient. That’s a good thing, because it allows more services to be provided within the same budgets.
But now we need to work with the states and territories to make our hospitals more effective.
First, as things currently stand we don’t pay hospitals for what they don’t do. They have no financial incentives to prevent admissions, and limited incentives to prevent readmissions.
We need to create those incentives.
Second, seven years after the National Health Reform Agreement and five years after the election of the Abbott-Turnbull Government, the quality and safety agenda has stalled.
The Government is focussed on penalising poor safety. But we also need to think about how we reward quality care.
Labor’s $2.8 billion Better Hospitals Fund gives us an opportunity to do just that.
PRIVATE HEALTH INSURANCE
Finally, let me turn to private health insurance.
Labor has already announced our policy to task the Productivity Commission with an inquiry into the private health system, and to cap premium increases at two per cent for two years.
This policy was driven by two messages that we heard over and over in recent years.
The first was from consumers, who told us that private health insurance premiums have become unaffordable.
And they’re right – premiums have increased by 27 per cent since 2014 – costing families an average $1,000 more. Health insurance is now a leading cost-of-living concern – right up there with energy bills.
12,000 Australians dropped their hospital insurance in the last three months of 2017. Hospital cover has dropped to its lowest level since 2011.
This is a worrying portent for the future viability of this industry.
But private health insurance is still a product that Australians want – and rightly so.
So Labor is intervening on their behalf, to make private health insurance more affordable.
The second message we heard loud and clear was from the private health insurance industry itself. It told us that governments and regulators needed to step in urgently to turn the tide.
And so while Labor’s policy prescription is different than the insurers’, we have the same aim: to maintain private health insurance coverage and the unique balance between our public and private systems.
We think that the two year cap will be an important circuit-breaker in the private health insurance affordability crisis.
But we accept it is only a short-term measure.
We know that our private health system also needs long-term reforms to improve affordability and value for consumers.
That’s why Labor will task the Productivity Commission with the most significant review of the private health system in 20 years – since the then-Industry Commission’s last review.
The reality is that recent reviews and reforms – including by the Government – have barely scratched the surface of the complex private health system.
In contrast, the last Productivity Commission review led to the modern private health insurance system. Within a few short years of that review, we saw the introduction of important measures like the Private Health Insurance Rebate and the Lifetime Health Cover loading.
We should be no less ambitious for this review.
We want the Commission to consider issues including underlying cost drivers, the range of carrots and sticks that encourage insurance coverage, and the balance between the private system and Medicare – Australia’s universal public health insurance scheme.
So Labor has an ambitious agenda around Medicare, hospitals and private health insurance. For reasons of time today, I haven’t gone into other priorities like prevention in detail.
And we have some fundamental differences with the Liberals about how to fund and reform these important areas.
So health will be on the agenda for the forthcoming election – you can count on that. Labor will make sure it’s on the agenda, we will fight to put it front and centre of the campaign – because for us it’s one of the most important policy areas and we genuinely believe the Liberals don’t get it.
Labor is the party of Medicare; the party that truly believes in universal health care; the party that believes a civilised society – and a Federal Government – must make the health and wellbeing of its citizens a top priority.
Thank you and I look forward to your questions.
TUESDAY, 15 MAY 2018