The current mix of fragmentation, rising demand, workforce pressure and fiscal strain requires more than another review.
My introduction to the politics of health came with the dismissal of the Whitlam Labor government in 1975.
I had just begun as a research assistant at the School of Health Administration at UNSW, where Professor George Palmer was helping bring health economics into mainstream health policy in Australia.
The Whitlam government, elected in 1972, is widely regarded as one of the most reformist in modern Australian political history. One of its defining initiatives was Medibank, the universal health insurance scheme designed by health economists John Deeble and Dick Scotton.
At the same time, the Sax Report, produced under the Hospitals and Health Services Commission, helped pave the way for significant capital investment in public hospitals.
Medibank marked a decisive break from the past, reshaping not only how healthcare was funded, but who could access it. The National Health Insurance Act 1973 sat at the centre of Australia’s first universal health insurance system.
Medicare grew out of this era.
For five decades since, the balance between public and private insurance has remained a political battleground. Australia’s mixed public-private system is still complex, contested and subject to repeated cycles of review and reform.
Labor’s introduction of Medibank was fiercely contested. The 1975 constitutional crisis that led to the dismissal of the Whitlam government grew out of an earlier confrontation in which the Opposition-controlled Senate blocked supply, the budget and Medibank legislation, forcing Whitlam to call the 1974 election.
Labor narrowly won and implemented Medibank.
Under the new arrangements, the Commonwealth also funded state hospital services through agreements with each state, contributing the equivalent of 50% of gross operating costs at a time of rapidly rising expenditure.
Deadlock over Medibank continued in the Senate and helped set the scene for the dismissal of Whitlam in 1975. The conflict exposed deep ideological divisions over a funding model that reduced the role of private health insurers and challenged traditional fee-for-service arrangements.
The AMA opposed Medibank outright, mounted a major public campaign, and established a $1 million Freedom Fund. Proposals for salaried doctors and sessional payments for specialists in public hospitals were also strongly resisted.
Malcolm Fraser’s election in early 1976 triggered a series of major changes to health insurance between 1976 and 1981. By 1979, Medibank 2, 3 and 4 had been introduced, creating a period of confusion, complexity and serious debate about abandoning universal access altogether.
In May 1979, Fraser established a Royal Commission of Inquiry into the Efficiency and Administration of Hospitals. Its terms of reference focused on rising expenditure in hospitals and how those costs might be contained. They also covered financing methods, including health insurance, reflecting the broader debate over Commonwealth-State funding responsibilities.
Most commissioners came from business and banking and had limited understanding of the health sector. I served on the Commission staff as an adviser, and it became clear that there was a strong preference for findings that would support the Prime Minister’s desire to reduce the Commonwealth’s contribution to state public hospitals.
That was not the position adopted in the final report released in December 1980. Its main recommendation was to replace existing cost-sharing arrangements with a system of block grants. The health insurance recommendations also favoured a larger role for private health insurance in funding health services.
In early 1981, Fraser’s cabinet decided to abolish Medibank, and Australia’s health system reverted to arrangements closer to those of the 1950s and 1960s.
The election of the Hawke government in 1983 brought Medibank back in a new form: Medicare. Dr Neil Blewett, as health minister, worked with John Deeble and Dick Scotton, who returned as key policy architects.
The National Health Strategy, established by the Hawke government in 1990, was the major Commonwealth health policy initiative of the post-Medicare era. It was a comprehensive, evidence-based review of Australia’s health system and produced a substantial body of issues papers and reform proposals that shaped policy through the 1990s and beyond.
It remains one of the most influential health policy exercises in modern Australian history. I was fortunate to contribute to one of its most important issues papers, Hospital Services in Australia: Access and Funding.
The major reforms of this period included the re-establishment of universal health insurance, continued access to public hospitals and medical services through bulk billing and subsidised care, the Medicare Benefits Schedule, Australian Health Care Agreements with the states, and levy-based Medicare funding through taxable income.
By the time Paul Keating became Prime Minister, the sustainability of private health insurance had become a serious concern, with membership falling towards 30% and approaching a potential death spiral. The Keating government was largely in damage-control mode.
Under the Howard government from 1996, Medicare remained the core universal insurance system, but policy increasingly focused on strengthening participation in private health insurance, constraining Commonwealth expenditure growth, and reshaping primary care funding.
After 12 years of Medicare, the system was deeply embedded in Australian public policy.
The Commonwealth-state “blame game” became one of the most potent issues in the 2007 Rudd election campaign. Public hospital pressures and elective surgery waiting lists were rising. States argued that the Commonwealth was not contributing enough growth funding to meet demand driven by an ageing population, increasing prevalence of chronic disease and rising workforce strain. Hospitals became the visible symbol of a system under pressure.
At the same time, bulk-billing access was falling and inequities were widening in rural and outer metropolitan areas. Rudd framed the election around ending the blame game, restoring confidence in public hospitals, protecting Medicare, and increasing Commonwealth accountability.
This culminated after the election win in the National Health and Hospital Reform Commission along with major COAG health reform negotiations and the 2011 national health funding reforms under Julia Gillard.
In policy terms, the 2007 campaign marked the start of a major new cycle of national reform focused on integration, accountability and hospital performance. The National Health Reform Agreements were among the most important structural reforms to Australian public hospitals since Medicare and represented the most significant redesign of Commonwealth-state health governance in decades.
Their enduring legacy includes activity-based funding, national pricing, stronger safety and quality standards, and greater national accountability.
What they did not fully address were the underlying pressures of rising demand, chronic disease, workforce shortages, aged care, interface failures between sectors, and broader system fragmentation. The reforms modernised the machinery of the system more successfully than they transformed models of care.
The covid pandemic then stress-tested this machinery more than ever before.
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What we quickly realised was that, while Australia’s health system demonstrated remarkable resilience, the crisis exposed deep structural cracks beneath the surface. Healthcare providers were forced to navigate fragmented systems, disconnected data, workforce strain and rapidly shifting demands. Yet it also proved the sector’s capacity to innovate under pressure, accelerating the adoption of telehealth, digital health infrastructure and cross-sector collaboration in ways that may otherwise have taken years.
More than four decades after the 1980 Royal Commission, Australia’s health system is still cycling through review, reform and reinvention.
From the Medicare era to the current Strengthening Medicare Taskforce the core questions have changed little: who pays, who delivers, who coordinates, and how equitable access can be sustained as demand rises.
What stands out is not the number of reviews since 1980, but how consistently they reach the same conclusions. Across hospital reform commissions, productivity inquiries, workforce studies and digital health strategies, five structural lessons keep reappearing. Those lessons are now shaping the next generation of policy reform.
Fragmentation is the system’s defining weakness
Nearly every major review since the 1980s has identified fragmentation between Commonwealth and state responsibilities as the central structural challenge in Australian healthcare.
Future policy must increasingly be designed around integrated care pathways and shared accountability across the continuum of care.
Hospitals cannot carry the future burden alone
The system remains overly hospital-centric.
Sustainability now depends on rebalancing investment toward primary care, preventive health, virtual and home-based care, and multidisciplinary community models.
Workforce reform is no longer optional
Successive workforce reviews have warned that Australia’s traditional professional boundaries are increasingly incompatible with future demand.
Expanded scope of practice and multidisciplinary care are becoming central reform priorities.
Digital infrastructure has become core health infrastructure
Digital capability is now foundational to system resilience, productivity and equity.
The next phase of reform will increasingly focus on connected data ecosystems, interoperability, AI governance and equitable digital access.
Sustainability requires a shift from volume to value
Long-term sustainability depends on value, outcomes and productivity – not simply growth in service volume. Governments are increasingly pursuing outcome-based funding, prevention and reduction of low-value care.
Australia does not lack reviews. What it has too often lacked is sustained implementation at scale. The next decade of reform will be defined less by the generation of new ideas than by whether governments, providers and industry can act on the structural lessons identified repeatedly over the past 50 years.
The future system will need to be more integrated, more community-based, more digitally enabled, more flexible in its use of the workforce, and more focused on outcomes.
The opportunity is not simply to improve health care delivery, but to redesign the health system as national infrastructure – central to economic productivity, sovereign capability and social resilience.
Having watched these cycles of reform from a front-row seat over four decades, I have seen both transformative policy and long periods of drift.
Reform slowed markedly under the Abbott, Turnbull and Morrison governments, and the opportunity created by the pandemic to reset the federation’s approach to health reform was largely missed.
The Albanese government has inherited both the strengths and the unfinished business of 50 years of health policy reform.
Not everything old needs to be made new again. But the current mix of fragmentation, rising demand, workforce pressure and fiscal strain requires more than another review. It requires a clear national vision and the political will to deliver reform that is equitable, efficient and financially sustainable.
Digital health Cooperative Research Centre CEO Annette Schmiede has spent over four decades working across the health sector.
