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Wednesday, 18 September 1996
Page: 3566

Senator NEWMAN —Yesterday Senator Lees asked me a question and I undertook to get further particulars. I would like to incorporate the additional answer in Hansard .

Leave granted.

The answer read as follows


Hospital Funding

My question is directed to the Minister representing the Minister for Health and Family Services. The cuts in the budget for public hospital funding, some $312 million across all States, are apparently there because the States have been cost shifting. Could you please explain what has been happening with regard to cost shifting? What have the States been doing? Which States have been doing what? How are you going to spread those $312 million in cuts over four years across the States? Finally, given the enormous problems facing our public hospital system, is your government prepared to reconsider this move and, in particular, are you prepared to consider allocating the one per cent increase in the Medicare levy for high income earners directly into the public hospital system?

Minister, when you are seeking further details from the Minister for Health, could you please ask if he will again reconsider this move, considering the pressure that the public hospital system is under. Last June—you are quite right—all States agreed to stop cost shifting, but they are insisting that they have stopped cost shifting. So can you ask the Minister what evidence he has of where the cost shifting is occurring, and who is doing what? My final question is: could you please again check whether he is prepared to look at allocating the increase in the Medicare levy directly into the state public hospital system?

Senator Lees asked several questions about the Budget measure addressing cost shifting under the Medicare program. I indicated that I would follow up on the details of this matter. I now have the relevant information.

There has been no cut in the Budget to hospital funding. The Forward Estimates show that Hospital Financing Grants have been maintained in their entirety across the four years of the estimate.

No efficiency dividend has been applied to Hospital Financing Grants, despite the significant improvements in efficiency in public hospitals in recent years. The Commonwealth would have been justified in asking the States for a share of these savings, but chose not to do so.

The cost shifting measure is not a cut to hospital funding. This measure is an acknowledgment that the Commonwealth is recouping some of the money being taken out of the Medicare system by the States, contrary to the commitment given at the April 1995 meeting of Health Ministers. Given that the amount being cost-shifted is greater than the amount being recouped, it could be said that hospital funding has actually been increased.

Cost-shifting is still going on—for example, one Melbourne hospital has 62 privatised out-patient services, some of which have been established very recently.

States cost-shift at different levels—at this point we do not have precise data. Estimates are based on Health Insurance Commission data, and the Department of Health is confident that over the coming months very exact figures can be devel oped. The cost-shifting measure recoups costs in proportion to the amounts by which States cost-shift.

The Government has already recognised the problems of public hospitals by its decision not to apply an efficiency dividend to Hospital Financing Grants. Difficulties the hospitals experience are related to the decisions made by State Governments about their hospital funding.

The Minister for Health has advised me that no State has stopped cost-shifting, and substantial evidence from medical practitioners who are being pressured to change the way they treat patients in casualty in public hospitals, and also to arrange pre- and post-operative work-ups away from hospitals gives a clear indication that the practice continues, in contravention of the Medicare Agreements.