WHATEVER the outcome of the battle of the operating theatres between Kevin Rudd and the premiers, three crucial things need to be made clear.
First, they are fighting over a success story. The costs of running hospitals are rising sharply, not because hospitals are failing in their job, but because hospitals and the health system in general have done their job so well. Their job is to save lives. That's exactly what they've done. Australians' death rates at any age short of 85 are shrinking rapidly, to our great benefit.
The Bureau of Statistics estimates that its standardised death rate which adjusts death rates for the changing age of the population shrank by more than half between 1971 and 2008. So, if you are a 40-year-old, for example, your risk of dying this year is less than half the risk faced by a 40-year-old in 1971.
That's a big gain. It shows our health system, spearheaded by the hospitals, has done a great job in giving us longer lives. Of course it's not perfect: it's run by humans, and all of us know of cases in which the system has failed and failure in this system often means tragedy. But we are not talking about a system in crisis. This is a success story where it matters.
And death rates are still falling rapidly. In the decade to 2008, the bureau estimates, the standardised death rate shrank by 17 per cent. The sharpest falls were in death rates among people (especially men) aged between 55 and 79.
Isn't that happening the world over? Yes. But on the best single measure of health life expectancy Australia now ranks equal second or third in the world. The World Health Organisation's World Health Statistics 2009 reports that only in Japan do people live longer than in Australia. More pertinently, only people in Japan and Switzerland have a higher "healthy active life expectancy" than we do.
But there's a catch. Saving lives is expensive. The technology used in patient assessment and in the operating theatre is expensive. People wheeled out of the operating theatre have to be nursed back to recovery, and subject to repeated monitoring. A health system that works requires taxpayers to shell out a lot more money than one that fails.
Let me take an example close to home. When my father, John Colebatch, started work at the Royal Children's Hospital in 1946, leukaemia was seen as untreatable. Children diagnosed with it were given palliative care only, and survived on average for just six weeks. That was cheap, but only because it accepted complete failure as normal.
My father and a few colleagues took on the challenge. In 1948, he carried out the world's first controlled trial of a leukaemia treatment. He endured years of trial and error, with many casualties and painful opposition from professional colleagues, before his RCH team could declare a patient cured. But you know the outcome: today, 75 per cent of children with leukaemia survive it. That costs taxpayers a lot of money, but it's worth every cent.
I'm no expert on health administration. There may be some cost savings in doing things Rudd's way rather than the way we live now, but reading Rudd's case, I suspect they're marginal. Setting targets for reducing time taken in emergency wards, or paying only standard treatment costs for this or that procedure: they sound fine, but in the real world I suspect they will be like squeezing a balloon rather than ending the shortage of resources, they will simply shift the pressure from one area to another.
Second, where there are big health problems ahead, commonsense tells you they are in areas other than the hospitals. Australians were once a lean people. Slowly, we have become one of the most obese societies in the world, threatening the health system with huge future costs. Alcohol abuse, always a problem here, is reaching a new level. Mental health problems have escalated out of sight, with huge economic as well as social costs. It is the main reason why 10 per cent of all men aged 25 to 54 are now not even looking for work, up from 2 per cent in the '60s.
Professor Ian Hickie did a masterly job on this page yesterday analysing these issues, which the Rudd reforms do not touch. I would add another. We are short of nursing home beds because federal governments of both sides have squibbed the tough but inevitable decision to make people pay for their care through nursing home bonds. That's one health reform Rudd can do on his own.
But the Rudd package was never really about health reform. It was about getting the home insulation mess off the front pages, which is why Rudd is demanding that the states hand back 30 per cent of their GST revenue so it can be returned to hospitals as "Commonwealth money". You call that reform, PM?
Third, the one undeniable fact bolstering Rudd's case is that, thanks to past High Court decisions, the states on current trends will not have enough tax revenue in future to fund their hospitals properly. But that is due not only to soaring hospital costs, but also to inadequate revenue sources. Saying you can fix it by moving some hospital funding to Canberra is another case of squeezing the balloon. Hospitals might be OK, but we would get inadequate funding for schools, or transport, or whatever.
The problem we need to fix is to give states adequate revenue sources of their own. This could require a referendum to change the constitution, which means it will need to be tackled on a bipartisan basis. We're not good at that, but we will need to get good at it if we are going to make progress on tackling the real issues.
But I suspect Rudd's decision to take on the states over hospitals was never about tackling the real issues.
