Mr GEORGIOU (6:02 PM) —The provision and funding of health care services in Australia involve a complex web of arrangements between Commonwealth, state and local governments, hospitals, both public and private, medical practitioners, private health insurance funds, community organisations and, of course, patients. The arrangements are difficult to follow and occasionally they seem to be almost impossible to untangle. They have been woven over a long period of time within quite difficult practical and constitutional constraints and they are put under constant strain by the different objectives and activities of the health care industry's various participants. The arrangements have, however, despite their apparent fragility, delivered for Australia a health system which is amongst the best in the world.

The bill before the House today, the Health Legislation Amendment (Health Care Agreements) Bill 1998 , deals with one of the most important threads in this complex web of arrangements, namely, the Medicare agreements, now to be called the health care agreements, between the Commonwealth and each of the states and territories.

These agreements set out the terms and conditions upon which the states and territories provide public hospital services to the Australian people and upon which the Commonwealth contributes financially to this task. Their origin lies in the Commonwealth's desire to ensure the provision of free public hospital services to all eligible Australians. They are made necessary by the fact that state and territory governments have traditional and constitutional responsibility for the operation of the public hospital system but do not have sufficient revenue of their own with which to provide services as comprehensive as those sought by the Commonwealth. The agreements are an essential component of Australia's Medicare system and make possible the national, universal access, free of charge public hospital system to which Australians have become accustomed.

The bill establishes the legislative framework for a new set of five-year agreements to replace those entered into by the former Labor government in 1993 and which will expire on 30 June this year. It confirms absolutely the coalition's commitment to a Medicare system which provides free public hospital services to all eligible Australians on the basis of clinical need. It does very clearly refute the claim made by the opposition, a consistent scare campaign that they have been running for almost a decade, that the coalition is seeking to dismantle Medicare.

At its most basic level, the bill grants parliamentary authority to the government:

. . . for the payment of financial assistance [to the states and territories] for designated health services and related matters and for projects and programs designed to improve the efficiency and effectiveness of the delivery of, or reduce the demand for, designated health services, or to improve patient outcomes in relation to the delivery of such services.

It also sets out the minimum conditions for such assistance. There must be an agreement that adheres to these stipulated health care agreement principles:

1. Eligible persons are to be given the choice to receive designated health services, free of charge, as public patients.

2. Access to designated health services by public patients is to be on the basis of clinical need and within a clinically appropriate period.

3. Arrangements are to be in place to ensure equitable access to designated health services for all eligible persons regardless of their geographic location.

On their face, these provisions differ little from those in the existing legislation. They do, however, involve an important change in focus which will remove some of the prescriptiveness and inflexibility of the current arrangements, diminish some of the incentives for cost shifting and overcome some of the barriers to appropriate care.

Under the current arrangements, the lion's share of Commonwealth financial assistance to the states under the Medicare agreements is made up of base hospital funding grants for the provision of public hospital services and bonus payments linked essentially to the level of public hospital activity. Determination of these grants is essentially linked to hospital admissions rather than outputs or outcomes of the public hospital system.

The result of all this has been that state health administrators have had a distinct financial incentive to treat patients in hospital rather than through potentially more desirable, more flexible and more appropriate settings outside the physical confines of a hospital building where this is appropriate and beneficial.

This bill will remove the prescriptive `components of financial assistance payable under an agreement' provisions of the existing legislation and replace them with a much more general and flexible authority for the provision of financial assistance. In so doing, it is designed to encourage the negotiation of agreements that reflect the outputs of the system and encourage innovative changes in service provision from acute to other forms of health care provision.

The more flexible financial assistance provisions contained in this bill will also enable the provision of funding for system restructuring projects, which aim to achieve better integration and coordination of care between the various health care sectors. One of the key areas identified by the Commonwealth where such funding could be beneficial is the area of improved access to and the use of information technology across the health system, between hospitals, GPs, specialists, diagnostic services and community care services, in a way which promotes integrated care.

Another area of system restructuring which the Commonwealth has indicated an interest in pursuing concerns pharmaceutical benefits. At present, hospitals have an incentive to dispense minimal pharmaceuticals—the payment for which they are responsible—to patients who are being discharged from their care. It occasionally happens that they send patients home with a couple of days supply and tell them to see their GPs within that time to get a prescription for a full supply, which will be funded through the Commonwealth's pharmaceutical benefits scheme. Not only does such a system place unnecessary and untimely burdens on patients who have just been discharged from hospital, but it is a distortion which creates, on occasion, friction between state and federal health administrations and adds an unnecessary GP consultation to total care costs. Under the new flexible funding arrangements, the Commonwealth is proposing to take over outpatient and discharge drugs, and this should assist the situation.

Pharmaceuticals are, however, only one of the more apparent examples. There are other examples of services being provided inefficiently or inconveniently which, all too often, we know little or nothing about. It is at least partly because of this that the bill proposes the establishment of the Office of the Health Care Information Commissioner. The 1996 report of the Australian Institute of Health and Welfare, Australia's Health 1996, devoted a considerable amount of space to a consideration of the demand for and provision of accurate and useful information on aspects of Australia's health care system. It noted that:

In Australia and elsewhere the demand for information and the ability to provide information have increased rapidly in recent years.

This phenomenon has been as evident in the health sector as in other areas. The demand for information has resulted in recognition of the need to improve the quality of, and reduce the gaps in, the nation's health information.

Amongst the gaps and deficiencies in health statistics which it identified were statistics on health care funding, resources and use, and it observed that:

There is almost no information about the health outcomes that result from the $37 billion spent on health services.

It is imperative that gaps such as this are addressed. There is nothing more detrimental to the delivery of effective and efficient health services than a lack of information about what services are most needed, what services are currently provided and where the gaps between supply and demand lie. There are few things less sensible than providing health services in an inefficient fashion, and there are few things more frustrating than knowing that such inefficiencies exist but being unable to identify them because of insufficient statistical data.

The Office of the Health Care Information Commissioner to be established by this bill will be able to collect and analyse patient level data supplied by the Commonwealth and the states, provide reports to the Commonwealth and the states on health service provision and disseminate other information to the Commonwealth, a state or any other person if the commissioner considers that it is in the public interest to do so. While no-one should anticipate that the new Health Care Information Commissioner will close all of the information gaps the system currently faces, its establishment as a central, specific purpose information collection and collation agency will certainly help.

This bill lays the foundation for the achievement of significant improvements in Australia's hospital system over the next five years. It reaffirms the coalition government's strong commitment to the Medicare system and particularly to the principle of free of charge, universal access, public hospital treatment on a clinical needs basis.

The legislation is, however, only a framework. It relies on the successful negotiation of agreements between the Commonwealth and the states. It is worth while noting that, at the moment, the negotiation of such agreements is proving difficult. As is occasionally the case, the root source of disagreement lies not in the structure of the agreements or their intent, but in the dollars on offer. It must be stressed, however, that there is a great deal in the health care agreements legislation and the established common ground between the Commonwealth and the states on the agreements themselves that is of value. Foremost amongst this is the continued commitment to Medicare and to open and free access to public hospital treatment for those who need it. The importance of this should not be allowed to be overshadowed by the dispute about funding and, as the Prime Minister has said, `The reality is that the Commonwealth will honour in full, to the last dollar, on time, the offer in regard to health funding that was made to the states'. I commend the bill to the House.