STRATEGIC AGREEMENT, WHAT STRATEGIC AGREEMENT?

[vc_row][vc_column][vc_column_text]Another issue mentioned, but not analysed in depth, is the future of the various healthcare agreements signed by the current government with major industry bodies such as the MTAA and Medicines Australia amongst others.

Labor’s Shadow Minister for Health, Catherine King, has made no secret of the fact that such agreements will not be binding on a future Labor Government, having stated at her post-budget breakfast briefing: “governments sign agreements not oppositions”.

In and off itself, it is not a major revelation, and not unexpected.  What has been missed though is that it would not make sense for Catherine King to honour such industry agreements.

With Labor committed to a two-year 2% freeze on private health insurance premium increases while it awaits the report of the Productivity Commission, come the third year of a Labor Government and it will face both a major policy and political challenge.

In the absence of major and wholistic structural reform of the healthcare system in its entirety following the two-year review, then in isolation Labor will be looking at a catch-up increase in PHI premiums of anywhere up to 10% or more.

The political challenge for Labor is this would coincide with preparations for an election at the end of what would be their first term.

Presiding over a potential 10% increase in PHI premiums going into a Federal Election would not be a political winner.

It is for this reason Catherine King and Labor in Government need maximum flexibility to deal with major healthcare stakeholder groups. Standing by individual industry agreements, with different cessation dates and different policy objectives, would not be in their interests.

In order to have a credible policy response to keeping any PHI premium increase as low as possible, Labor in Government and Catherine King as Health Minister would need to be able to articulate a wholistic policy response across the entirety of the healthcare supply chain and not its individual components.

Hence while some healthcare industry players may consider that Labors freeze of PHI premiums at 2% is of no consequence to them, they will need to think again.

It also explains why Catherine King has stated emphatically that in government she is not necessarily committed to the various industry agreement struck by the current government.

Something for all players in the healthcare industry to digest and calibrate strategically.[/vc_column_text][vc_zigzag][/vc_column][/vc_row][vc_row][vc_column width=”1/4″][vc_single_image image=”1915″ img_size=”full”][/vc_column][vc_column width=”3/4″][vc_column_text]

ABOUT THE AUTHOR

Jody Fassina is the Managing Director of Insight Strategy and has been an strategic adviser to MedTech and pharmaceutical stakeholders.[/vc_column_text][/vc_column][/vc_row]

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