Oh dear, what an embarrassment. Thank heavens so few journalists
noticed. Last month, one of the federal government's official
bean-counters, the Australian Institute of Health and Welfare, issued
its report on total spending on health in 2012-13. It didn't exactly fit with what the government has been telling us.
As
you recall, Health Minister Peter Dutton got an early start this year,
warning that health spending was growing "unsustainably". (Blame it all
on Gough Whitlam, whose supposedly too-expensive Medibank Malcolm Fraser
dismantled, only to have Bob Hawke restore it as Medicare.)
The
report of the Commission of Audit soon confirmed that health was
prominent among the various classes of government spending growing - and
projected to continue growing - "unsustainably".
Something would have to be done.
In
the budget, we found out what the something was. A new "co-payment" of
$7 a pop on visits to the GP and on each test the GP orders. The general
co-payment on prescriptions to rise by $5 to $42.70 each.
And the
previous government's funding agreement with the states to be torn up,
with grants for public hospitals to rise only in line with inflation and
population growth.
Sorry, but it was all growing "unsustainably".
So
how unsustainable was growth in 2012-13? Total spending on health goods and
services was $147 billion, up a frightening 1.5 per cent on the
previous year, after allowing for inflation.
This was the lowest growth
since the institute's records began in the mid-1980s, and less than a
third of the average annual growth in the past decade.
Allow for
growth in the population, and average annual health spending of $6430
per person was actually down a touch in real terms.
It gets better (or worse if you've been one of the panic merchants).
That
$147 billion is the combined spending on health by the federal
government, state governments, private health funds and other insurers,
plus you and me in direct, out-of-pocket payments on co-payments and
such like.
So, total spending may not have grown much, but the
federal government's share of the tab rose faster than the rest, right?
Err ... no. The opposite, actually.
The feds' health spending in 2012-13 actually fell by 2.4 per cent in real terms. The states' spending rose by 1.5 per cent, but that left the combined government spend falling by 0.9 per cent.
So
it was actually the private sector (including you and me) that
accounted for more than all of the overall increase in spending. This is a big
problem for the government?
By my reckoning, out-of-pocket
payments by individuals rose by 6.9 per cent in real terms. The pollies
seem to have been doing a good job of shunting health costs off onto us
even before the latest onslaught.
So, all very embarrassing for
the three-word-slogan brigade. Or would have been had the government's
spin doctors not had the media off chasing foreign will-o-the-wisps at
the time. Easily diverted, the media.
But let's be reasonable
about this. One year of surprisingly weak growth in total health
spending - and falling federal spending - doesn't prove there isn't
longer-term problem.
Government health spending has grown pretty
strongly in previous years, and the latest year's moderation may be the
product of one-off factors rather than the start of a new moderate
trend.
Actually, the real fall in federal spending seems to be
largely the product of savings measures taken by the previous
government, particularly its tightening of rules for the private health
insurance rebate - which the Coalition fought so hard to stop happening.
Even
so, when you look at the trend of spending in recent years revealed by
the institute's figures, it does suggest that health spending may not
grow as strongly in coming years as we've long been told to expect.
The
spectre of ever more rapid growth in public spending on healthcare - to
the point where health spending comes to dominate the federal budget -
is one the federal Treasury has been warning of in each of its three
"intergenerational reports" since 2002.
The state treasury
versions of this exercise portray health spending positively overrunning
state budgets, crowding out all other spending.
Federal Treasury has
explained its dramatic projections in terms of the ageing of the
population, developments in medical technology that invariably are much
more expensive than the technology they replace, and the public's
insatiable demand for immediate access to whatever advances medical
science has come up with.
But Treasury's figures are essentially
mechanical projections of past growth trends over the coming 40 years,
meaning just a small reduction in the assumed annual rate of growth can
make a big difference.
The institute's latest figures show the
federal government's real spending on health grew at an annual rate of
4.8 per cent over the five years to 2007-08, but by just 4.1 per cent
over the five years to 2012-13.
Perhaps more significantly, they
show that whereas the prices of health goods and services rose faster
than the prices of all domestic goods and services by 0.7 per cent a
year during the first five-year period, during the second period they
rose by 0.2 per cent a year more slowly than other prices.
In other words, the long-feared problem of "excess health inflation" seems to be going away.
It will be interesting to see Treasury's latest prognostications in next year's intergenerational report.
