Scared Monkeys Discussion Forum

Kevin Rudd's health reform will end up costing us more

KEVIN Rudd won the politics of the health debate. But that's just a reminder that politics is about convincing voters that a cheap and easy-to-swallow policy tonic will cure their ills. It helps when your opponent doesn't have an alternative policy potion.

Rudd's tonic is not pure snake oil and could help the "sick" hospital system feel a bit better. But it won't cure the fundamental problem identified by the government itself: the looming huge increase in the cost of caring for Australia's ageing population.

Last month's Intergenerational Report projected that exploding health and aged-care costs would push federal government spending from 22.4 per cent of gross domestic product to 27.1 per cent of GDP by 2050. Hospital spending is projected to surge from $594 per person in today's dollars to $803 per person in 2022-23. Rudd's plan threatens to kick off a political bidding war on health spending that would add to these costs over the next few decades.

Instead, Roxon's office first points to the 8-10 per cent annual growth in healthcare costs. It says this threatens to swallow the entire budgets of state governments whose taxes, including the GST, are growing by more like 6 per cent.