Prime Minister Kevin Rudd is heading for a showdown with the states and a possible referendum over his plan to rebuild the health system.
Central to the plan is the states and territories giving up $90 billion over five years - $50 billion over the first three - in GST revenue so the Commonwealth can become the major funder of public hospitals, covering 60 per cent of the bills for every service, infrastructure, research and training.
In exchange, the states will save $15billion in the five years to 2020 and potentially tens of billions more after that.
The Commonwealth would also fund up to 100 per cent of the ''efficient price'' for hospital outpatient services and assume full policy and funding responsibility for GP and primary health-care services.
The states would be excluded from managing public hospitals, with the task going to new Local Hospital Networks run by specialists in health, finance and management that would be responsible for small groups of hospitals.
The Commonwealth would also develop national standards for patient care and publish performance statistics for hospitals.
For more on this story, see the print edition of today's Canberra Times.