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Reforming the Australian Health System

Partner Institute: 
Centre for Health, Economics Research and Evaluation (CHERE), University of Technology, Sydney
Survey no: 
(13) 2009
Gallego, Gisselle
Health Policy Issues: 
System Organisation/ Integration, Funding / Pooling, Access
Reform formerly reported in: 
New government means new health reform measures
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? yes no no no no no no


The National Health and Hospitals Reform Commission (NHHRC) released its interim report. NHHRC was created by the Government to develop a long-term reform plan for the Australian Healthcare System. The Government envisaged it would provide a blueprint for tackling challenges such as the growing burden of chronic disease, population ageing, the rising costs of new technologies and the cost and inefficiencies generated by the ?blame game? - cost shifting between the Commonwealth and the States.

Purpose of health policy or idea

The National Health and Hospital Reform Commission (NHHRC) was appointed by the prime minister in early 2008. Its aim is to provide advice on the long-term reform for the Australian healthcare system, especially with regards to financial arrangements. The expectation is that the reforms provide a more equitable and affordable health system that can better serve the future health of Australians.

The NHHRC is also expected to provide advice on the framework for the next Australian Health Care Agreements (AHCAs). The ACHAs are a five year bilateral agreement between the Commonwealth and the States, and a vehicle for the Government to provide significant funding to assist the states and territories to provide free public hospital services to the Australian community.  

The Commission released its interim report for public consultation on 16 February 2009. The report included 116 reform directions categorised under four main themes: taking responsibility, connecting care, facing inequities and driving quality performance. Public consultation has been closed and a final report is expected in June 2009.  

The Commission also developed a set of principles to shape Australia's healthcare system. These were developed by the NHHRC to guide its work towards the final design for the future health system.

The "proposed principles", described as what citizens and potential patients want from the system, are: 

  • people and family centred,
  • equity,
  • shared responsibility,
  • strengthening prevention and wellness,
  • comprehensive,
  • value for money,
  • providing for future generations and
  • recognise broader environmental influences which shape out health.

The governance principles, described as how the system should work, are:

  • taking long term view,
  • safety and quality,
  • transparency and accountability,
  • public voice,
  • a respectful and ethical system,
  • a responsible spending on health, and
  • a culture of reflective improvement and innovation.

Main points

Main objectives

The Government envisaged the Commission would provide a blueprint for tackling future challenges in the Australian healthcare system including:

  • The rapidly increasing burden of chronic disease
  • The ageing of the population
  • Rising health costs and         
  • Inefficiencies exacerbated by cost shifting between the Commonwealth and the states and the blame game.

Type of incentives


Groups affected

Goverment, Tax-payers, Healthcare providers

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Characteristics of this policy

Degree of Innovation traditional rather traditional innovative
Degree of Controversy consensual highly controversial highly controversial
Structural or Systemic Impact marginal neutral fundamental
Public Visibility very low very high very high
Transferability strongly system-dependent strongly system-dependent system-neutral

This review is part of the Prime Minister's response to taking over government. As previously mentioned this is one in a number of reports in health. Since the Commission only has an advisory role there is no mandate for the Government to implement the proposed changes. The interim report has provided an avenue for the government to capture the stakeholder's response and then decide what they will act on upon this response (not a very innovative strategy).    

The expectation was that the NHHCR was going to address the main issue of who should run the healthcare system. However they did not explicitly do so. Perhaps the failure to address this issue and the nature of the Commission (it does not have the responsibility for developing and implementing health policy) are just some of the issues that have made it highly controversial. The transferability from Australia to other systems seems unlikely.

Political and economic background

One of key election promises of the National Labor party was to improve health funding and implement healthcare reforms. The incoming Labor Government has initiated different consultative processes such as the Preventative Health Taskforce, the health and Ageing Working, the national taskforce to address mental health and the National Health and Reform Commission (NHHRC).   

The NHHRC amongst others is expected to have a major role in shaping and finalising the Australian Health Care Agreement (ACHA). The ACHAs are due to expire in June 2009. Currently forty percent of the health budget is spent on public hospitals. The case for reform in this sector is quite compelling with wide spread dissatisfaction amongst health professionals and consumers, long waiting lists and overstretched staff and facilities. Furthermore one of the prime minister's election commitments was to improve the quality of health services, considering a takeover of public hospitals by the Commonwealth government if the States failed to improve their services. After the final NHHRC recommendations are tabled mid 2009, the government has not ruled out holding a referendum on wether or not Canberra should take over public hospitals. (Hall 2009)  

This NHHRC is one in a number of reviews held not only in the health sector but also into grocery, manufacturing, university research amongst others and the Prime Minister's response to taking over government.

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? yes no no no no no no

Origins of health policy idea

The Labor Government has expressed its commitment to reforming the Australian healthcare system. In February 2008 it announced the establishment of the National Health and Hospitals Reform Commission (NHHRC). The announcement was made by Prime Minister Kevin Rudd and Health Minister Nicola Roxon. The expectation is that the NHHRC will provide advice on reforms for public hospitals and the broader health system, deliver practical improvements to health services and end the blame game between the Commonwealth and State and Territory governments. (NHHRC 2009)    

By its nature the report coverage of health system is broad in its issues but lacks specific detail around its recommendations. The 116 proposals range from a call for electronic personal records to a total overhaul of national health funding.

One focus of NHHRC's recommendations has been on primary health care as a way of relieving the pressures of public hospitals.

NHHRC also proposed three different options for governance reform:

  • Option A is maintaining the status quo.
  • Option B has been described as a British-style system with services delivered by regional health authorities.
  • Option C and perhaps the most controversial one is the socialisation of the healthcare system. In this option the Commonwealth Government would be responsible for health care and establish a compulsory social insurance scheme (perhaps similar to the one in The Netherlands).   


Initiators of idea/main actors

  • Government
  • Providers
  • Opinion Leaders

Approach of idea

The approach of the idea is described as:

Stakeholder positions

The NHHRC received more than 240 submissions from individuals and organisations in response to its interim report. Responses were diverse and focus on different aspects of the proposed reforms. Opinion leaders are divided about the merits of the proposed reforms.  

Even though the establishment of the NHHRC was welcomed and seen as a positive move by opinion leaders, it is seen as an "investigative body". The NHHRC is not responsible for health policy development and implementation. This of course could translate in a set of proposed reforms that might never get introduced. The NHHRC is one of 11 bodies that would report on different aspects of health (primary health care, mental health to name a few) by June 2009.

One of the proposals that received attention was the plan for improving governance in the health system. Some have also described it as a missed opportunity. As stated by Fiona Armstrong (chairwoman of the Australian Health Care Reform Alliance), even though for most part public hospitals (i.e. improving funding of and provision of services) dominate the political healthcare debate they are strangely absent from this report. So is the debate around the role of private health insurance in the delivery of health care and the fee for service model (Armstrong 2009).

The opposition is supportive of measures and reforms that will end the blame game, cost shifting and inter-governmental conflicts. (Dutton 2009)

Actors and positions

Description of actors and their positions
Govermentvery supportiveneutral strongly opposed
Healthcare providersvery supportiveneutral strongly opposed
Opinion Leaders
Academics and social commentatorsvery supportiveopposed strongly opposed

Actors and influence

Description of actors and their influence

Govermentvery strongvery strong none
Healthcare providersvery strongvery strong none
Opinion Leaders
Academics and social commentatorsvery strongweak none
Goverment, Healthcare providersAcademics and social commentators

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Adoption and implementation

The Government has already committed AUS$3.3 billion over five years for the NHHRC. The NHHRC's final report is due to the Council of Australian Governments' (COAG - the peak intergovernmental forum in Australia, comprising the Prime Minister, State Premiers, Territory Chief Ministers and the President of the Australian Local Government Association (ALGA)) mid June 2009. It is important to note that the Commission has an advisory role. Therefore the Government is not compelled to implement the recommendations provided by the NHHRC. However it is expected that the Government will respond to this once the final report is released. 

Expected outcome

The final report is expected to be release in mid June 2009. The Government would need to respond to the final recommendations. However it is unlikely that it will implement the 116 proposed reforms described by the Commission.

Impact of this policy

Quality of Health Care Services marginal neutral fundamental
Level of Equity system less equitable neutral system more equitable
Cost Efficiency very low neutral very high

It is uncertain which of the 116 proposed reforms will be adopted and implemented by the Government and their impact on the quality of services. At this stage it is not clear if the proposed reforms will make the system more equitable and efficient. For example strengthening primary care has been identified as a priority however the method for funding and governing the entities providing PHC was not provided.


Sources of Information

  1. Hall L. Health review has option of federal control - BLUEPRINT FOR HEATH. In. Sydney: Sydney Morning Herald 2009.
  2. National Health and Hospitals Reform Commission (NHHRC). A healthier future for all Australians: Interim report December 2008. Canberra: Commonwealth of Australia 2009.
  3. Dutton P. Time running out to fix health. In: The Australian 2009.,25197,25102169-7583,00.html
  4. Armstrong F. Hospitals hardly rate a mention. The Australian 2009.,25197,25079146-23289,00.html.

Reform formerly reported in

New government means new health reform measures
Process Stages: Implementation

Author/s and/or contributors to this survey

Gallego, Gisselle

Suggested citation for this online article

Gallego, Gisselle. "Reforming the Australian Health System". Health Policy Monitor, April 2009. Available at