Bernie Ripoll Federal Member for Oxley

PREVENTATIVE HEALTH CARE FOR OUR FAMILIES

AND OUR FUTURE ECONOMY

Good health policy is also good economic policy.

The cost of providing health care and the demand for health care are both rising.

The second Intergenerational Report estimates spending on health care will increase from 3.8 per cent of GDP in 2006-07 to 7.3 per cent in the middle of this century.

One quarter of the projected increase will be the result of the ageing population. The rest will be due to factors other than ageing, such as the increasing cost of medical technologies.

In the future, demand for health services will arise from the escalating chronic disease burden of largely preventative conditions such as diabetes and cardiovascular disease.

More than 50 per cent of the Australian population already suffers from a chronic or long-term condition of some form. It is estimated that three million people alone will have diabetes by 2030.

The rise of these diseases poses both a major risk to the long term health of millions of Australians and a frontline economic challenge.

Poor health adversely affects work performance and productivity. It can lead to people spending a greater amount of time out of the labour force which presents personal economic challenges for individuals and their carers, and has a negative impact on the economy as a whole.

The Productivity Commission has estimated that health conditions such as cancer, cardiovascular, mental and nervous conditions, injury and diabetes reduce labour force participation rates by between around 12 and 40 per cent.

Individual chronic conditions now cost individuals and the economy significantly. For example:

• the annual financial cost of cardiovascular disease in Australia is $14.2 billion, or 1.7 per cent of GDP, including lost productivity costs of $3.6 billion;

• the estimated cost of diabetes each year is around $21 billion including lost productivity, health and carer costs, taxation revenue foregone and welfare and other payments; and

• the annual productivity loss from obesity-related illness is approximately $1.7 billion.

According to research conducted by the Australian Health Management Group, for people aged less than 45 years, those with five or more modifiable risk factors for chronic disease, such as smoking or a lack of exercise, cost the fund 2.39 times as much as a person who is ‘low’ risk. But providing care for someone over 65 with no or few health risks costs only 2.22 times as much.

In other words, the data suggests health status is as important a factor in determining the cost to the health system as age.

The cost of treating chronic disease also rises steeply if it is not managed well. According to one estimate, the cost of treating uncomplicated diabetes is $4,000 per person per year, but this rises to $10,000 for people whose eyes, heart or circulation are affected.

Many of these costs to our health system and the personal cost to Australians could be reduced or in some cases avoided altogether if chronic disease were prevented or better managed. For example, a five percent reduction in smoking prevalence would save the Pharmaceutical Benefits Scheme more than $1 billion over the long term.

Importantly there is also international evidence which suggests that reducing major risks to health can also reduce social inequities. This is because many risk factors for chronic disease (such as smoking and obesity) occur most commonly in the poor and disadvantaged, who typically have fewer resources at their disposal to reduce risk factors.

The current health system is very good at providing acute and episodic care when people are sick, but it is not well equipped to meet the future challenge of the growing chronic disease burden.

In fact the Commonwealth Fund, a US-based health policy think tank, recently reported that Australia rates poorly – fifth out of six industrialised countries surveyed – on preventative care and chronic disease care.

The Australian Institute of Health and Welfare has also found that almost one in ten hospital admissions could have been avoided with better preventative care or disease management. A staggering 552,000 Australians were taken to hospital in just one year for conditions, many of them chronic, preventable conditions that could have been avoided or better managed in the community.

The Productivity Commission has estimated that with modest investments in health promotion and prevention, as many as 175,000 additional people could be in the workforce by 2030. This represents an increase of around 0.6 of a percentage point in the workforce participation rate – a substantial increase at a time of significant skills shortages around the country.

But these kind of results cannot be achieved if precious health resources are wasted on cost-shifting and duplication: as the 2004

Governments Working Together report completed by the Allen Consulting Group for the Victorian Government highlighted, increased emphasis on prevention, health promotion and better disease management is not only important for patient care, but also for financial sustainability.

Despite the obvious health, social and economic benefits of preventing chronic disease – and the growing evidence-base around the importance of prevention – only 1.7 percent of recurrent national health expenditure in 2004-05 was spent on health promotion and prevention.

Our failures to date on prevention and chronic disease management are borne out by the fact that things are actually getting worse – the prevalence of Type 2 diabetes in Australia has doubled since 1996.

Federal Labor believes the best way to equip our health system to deal with the challenges of the future is to end the blame game and re-invigorate the role of the primary care system – the front line of the health system which provides health care to local communities.

The available research suggests that a health system oriented towards primary care delivers better health outcomes for a lower cost than one which focuses on specialist or tertiary care. For example, cross-country analyses have found that mortality rates and total health care costs are lower in countries with a strong primary care system.

A Rudd Labor Government will treat preventative health as a first order economic issue. Labor recognises the importance of good health to all Australians as well as its importance in underpinning participation and productivity.

As a first step Federal Labor will:

• Establish a National Preventative Healthcare Strategy to bring a true preventative focus to the health system. The Strategy will be supported by a permanent taskforce to provide evidence-based advice to government and health providers – both public and private – on preventative health programs and strategies.

• Shift the focus on six minute medicine by beginning a reform process to provide incentives for GPs to practice quality preventative health care and an increased focus on multi-disciplinary care from primary care teams.

• Broaden the focus of the major health care agreements between the Commonwealth and the States and Territories, to include more than just hospital funding. Labor’s new agreement will include a new Preventative Health Care Partnership with the States and Territories; and

• Commission the Treasury to produce a series of special reports on the impact of chronic disease on the Australian economy, and the economic benefits of a greater focus on prevention in health care.

For more information about Labor’s other policy blueprints please visit www.alp.org.au or contact my office on 3818 3900.

P.O. Box 555, Goodna QLD 4300 Phone: (07) 3818 3900 Fax: (07) 3818 1181