Funding system for indigenous health in dire need of reform

There have been many significant developments in Aboriginal and Torres Strait island health in Australia in recent years, and perhaps the most significant has been the national Close the Gap initiative. A total of $1.6 billion has been directed to Aboriginal health in the four years ending June 2013, as part of a broader suite of initiatives also including employment, housing, education and remote services.

Progress however, as reported earlier in the year by Prime Minister Tony Abbott, has been patchy, and a new report, Economic Value of Aboriginal Community Controlled Health Services, launched recently at the National Press Club, highlights several funding issues that need urgent attention. Who would have thought that while funding for health services for Australians as a whole was uncapped and growing, funding for specific health services for Aboriginal people had been cut by the previous government in 2012-13, and was projected to fall further in real terms in the next four years? How do you "Close the Gap" by reducing funding for those with the worst health, while funding for the comparatively well-resourced majority of the population continues to increase with rising demand?

It turns out that funding for Aboriginal health services as a whole, almost uniquely among government programs, bears no relation to population size, the growth in the population, service demand or inflation. Worse, funding among states seems to have been driven largely by bid-driven processes, rather than any rational basis in terms of population size or health need, and on the face of it appears to be grossly inequitable – particularly for the majority of indigenous people who live in NSW and Queensland. Perhaps of even greater significance is the lack of any formal process for assessing which individual regions have poor indigenous health outcomes and a relative lack of services.

In short, the present funding system for indigenous health might be seen as somewhat amateurish and counterproductive in terms of closing the gap. This is not the fault of the administration, as the funding system seems to have been that way more or less from the start. But the administration has the opportunity, and the responsibility, to put the system on a rational basis – and in so doing, would reap big gains in terms of best use of public funds and in achieving the Close the Gap goals.

But why invest in specific services for Aboriginal people? Surely the mainstream services provided for the rest of the population would suffice? Well, manifestly not. If they did, there would be no need for the Close the Gap initiative in the first place and indigenous health would be far better than it is. It is unrealistic to expect that mainstream treatment and preventative services for the rest of the population could deal adequately with the needs of a very small minority with particular health and cultural needs. Most GPs see no Aboriginal patients or, at most, a handful each year, whereas services designed by and for Aboriginal people promote better access to services and offer a much more comprehensive range of services for them, tailored specifically to their needs. And the limited evidence available suggests that Aboriginal Community Controlled Health Services (ACCHS) outperforms mainstream services in terms of monitoring of risk factors, management of hypertension and implementation of systematic care for prevention and chronic disease.

Further, in terms of the broader government agenda of the Abbott government, ACCHS services are one of the largest employers of Aboriginal people in Australia, with clear benefits in terms of skill development, and a significant factor for regional development.

The report calls for fundamental reform of the funding mechanisms for Aboriginal health services so that in future funding is indexed to the size of the indigenous population, inflation, and demand for services. It wants funding in under-resourced states and territories to be brought up to an equitable level (but not by reducing funding to those states with more adequate funding), and for funding to be made available to provide the necessary services in areas which now have poor health outcomes and inadequate services. And of course, it is untenable national policy to cut funds for ACCHS services when such services produce the best results, are preferred by many Aboriginal people, provide a significant proportion of health services for them, but are now inadequately funded and poorly distributed.

There is nothing remarkable in these recommendations, which are long overdue, but addressing them would pay real dividends in terms of closing the gap and in terms of the broader government agendas of employment, education and regional development for Australia's indigenous people.

Ian Ring is a professorial fellow at the Australian Health Services Research Institute at the University of Wollongong.