Hospital funding clash to be reignited at national cabinet as states call for more resources

Pressure is mounting on the federal government to ramp up hospital funding to the states and territories ahead of a national cabinet meeting this week, with doctors calling on the Commonwealth to adequately resource public hospitals or risk “dire consequences”.

The premiers and chief ministers are expected to raise the issue when they meet with Prime Minister Anthony Albanese at national cabinet on Friday.

The ongoing tug-of-war between the nation’s leaders over the cost of public hospital services has escalated during the pandemic, on the back of an influx of demand from COVID-19 cases, rising inflation, a burnt-out workforce and a backlog of elective surgeries.

Typically, the federal government picks up 45 per cent of the cost of public hospital services, and the states and territories pay for the rest.

But at the height of the pandemic, the federal government agreed to pay a greater share of overall funds through a 50:50 funding deal that runs until the end of this year.

However, the money is conditional — the Commonwealth puts the brakes on any large cost increases by constraining annual growth to 6.5 per cent, which limits the federal increase to about $2 billion a year.

It means the states and territories have to cover any additional expenses incurred beyond that, and they have long been angling for a new funding package that exceeds the cap and extends the 50:50 sharing arrangement. 

A spokesperson for the Victorian government told the ABC the current model was not sufficient, saying the states and territories were working with the Commonwealth through national cabinet on funding reform options. 

A close shot of Butler's face, looking serious, with blue curtains in the background.
Mark Butler has indicated he won’t back hospital funding changes.(ABC News: Nick Haggarty)

“We need a fit-for-purpose funding model and cost-sharing arrangement so we can continue providing the care Victorians need — not one where the Commonwealth’s funding contribution to states is capped at 6.5 per cent each year and the states contribute 55 per cent of health funding,” the spokesperson said. 

“Our position is an approach the Australian healthcare sector strongly supports.”

A spokesperson for the ACT Chief Minister Andrew Barr echoed those comments. 

“It is necessary for there to be a set of short-term urgent responses to address immediate funding issues as well as investments in medium-term reforms to reduce the pressure on hospitals, particularly in preventative healthcare,” the spokesperson said. 

Speaking to ABC Radio National on Wednesday, Health Minister Mark Butler indicated the government was not going to change its position on the growth cap. 

“There are substantial constraints on hospital activity right now, mainly due to workforce,” he said. 

“The advice I have is not that we’re going to breach the 6.5 per cent cap, but we’ve also made sure that hospitals are in a good position over the course of the rest of the year to deal with the increase in COVID activity.”

A middle aged woman in a green shirt wearing a scarf
Danielle McMullen says hospital funding is effectively going backwards.

AMA vice-president Danielle McMullen said hospital funding was effectively going backwards, and needed to be increased.

“The risk of not improving funding to our public hospitals is we’ll continue to see the dire consequences of that logjam facing our hospitals, people waiting excessive amounts of time for surgeries, appointments and other healthcare procedures and patients of Australia getting sicker and the hospitals not able to keep up with demand,” Dr McMullen said.

“The 6.5-per-cent cap doesn’t keep pace with the cost of providing health care, and potentially not even with the cost of inflation.

“We need the government to recognise that and adequately resource our public hospitals so that they can take care of our sickest patients.”

The federal government is eager to keep costs reined in with Treasurer Jim Chalmers recently flagging health as one of the five areas placing the most stress on the budget, which will be handed down next month. 

Isolation period also up for debate at meeting

National cabinet is also expected to address isolation periods on Friday, with NSW Premier Dominic Perrottet publicly jostling for the mandatory quarantine time to be scrapped. 

Last month, national cabinet agreed to reduce the mandatory isolation period for COVID-positive cases from seven days to five.

But Mr Perrottet wants the isolation period removed entirely, saying that should happen as soon as possible. 

“My view is we need to move to a system, moving away from public health orders and ultimately moving to a position of respect,” he said earlier this month. 

“We can’t have state government public health orders in place for perpetuity.”

Health Services Union secretary Gerard Hayes backed those calls, arguing people needed to take personal responsibility if they were sick. 

“I don’t want to get to a position where people don’t comply with the rules because they’re going to make choices about being paid, or not being paid,” he said. 

“At the moment, the community is growing, we’re seeing all the football events occurring. We’re seeing [King] Charles cuddling people, and then we’re telling people to stay home, if they are potentially unwell. 

“If people are unwell, they should stay home. But if they’re not unwell, they should be able to live their lives.”

Dr McMullen said any changes to the isolation period should be based on medical advice, saying that should be publicly released so there is transparency surrounding the decision. 

“It will be exceedingly important that governments at all levels then encourage the community to take whatever steps necessary to minimise the spread of COVID-19,” she said. 

“And encourage the community to get tested, get their booster shots up to date, and continue to make those public health decisions to keep safe distances from people around them wear a mask in crowded indoor areas.”

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