Better Health Care

I spoke in Parliament this week about the government's health reform agenda.
Health Insurance Amendment (Compliance) Bill 2010
2 March 2011

Medicare is a central component of Australia’s universal healthcare system. It is a system that provides affordable treatment for Australians by the dedicated health professionals in our public health system. Introduced in 1975 by the Whitlam government, Medibank—as it was then—allowed for the subsidisation of medical treatment in public hospitals that has made health care more accessible and affordable and has added to the quality of the lives of Australians over the last 35 years. I want to place on record the role played in creating Medibank by Dick Klugman, member for Prospect from 1969 to 1990, who passed away just recently, on 21 February. In 1984, Medibank was renamed Medicare by the Hawke government, who returned it to the original model to reflect the great traditions of equity, fairness and dignity for all Australians—which are characterised by us in the Labor Party. The Health Insurance Amendment (Compliance) Bill 2010 adds to the history of responsible Labor governments by balancing the public interests of confidentiality and privacy with ensuring that public funds are spent appropriately and responsibly.

As part of the governments responsible economic management policy agenda, the Health Insurance Amendment (Compliance) Bill 2010 proposes to amend the Health Insurance Act 1973 to implement the increased Medicare compliance audits initiative announced in the 2008-09 budget. With expenditure on the Medicare benefits scheme over $15 billion in 2009-10, it has grown by more than $1 billion per annum over the last three years. This bill will put in place a system of compliance audits—checks that make sure that the services that are delivered meet Medicare item requirements. We are doing this in order to ensure that taxpayers’ money is spent appropriately, as taxpayers, I am sure, would wish to be the case.

Presently, medical practitioners are not required to produce documentation during a compliance audit conducted by Medicare Australia, and Medicare Australia does not have the authority to require compliance with the request. As a result, around 20 per cent of practitioners either do not respond or else refuse to cooperate with an audit request. This bill addresses that problem.

The bill enables the Chief Executive Officer of Medicare Australia to give notice of the production of documents to a practitioner to substantiate a Medicare benefit paid for a service. To address concerns of due process raised by key stakeholders in the process, the government has put in place four safeguards. Before a notice to produce documents can be issued, the CEO must first have a reasonable concern that the Medicare benefit paid for a service may exceed the amount that should have been paid. This means that Medicare Australia cannot conduct random compliance audits under the provisions of this bill. Secondly, the CEO must take advice from a medical practitioner employed by Medicare Australia on the kinds of documents a practitioner may need to provide in order to substantiate that kind of benefit. Thirdly, the CEO must take reasonable steps to consult with a relevant professional body about the types of documents required to substantiate a benefit before commencing a compliance audit; and, fourthly, the practitioner must be given a reasonable opportunity to respond to a written request to voluntarily provide relevant documents.

As a result, this bill does not add to the workload and record-keeping requirements of already busy practitioners. Provisions for the protection of sensitive information ensure that only information relevant to the purpose of substantiating benefits is produced. No clinical or private details will be required unless they pertain to the substantiation of the benefit payment.

Medicare Australia is also working with the Australian Medical Association and other stakeholders to develop guidelines for practitioners on the kinds of information that may be used to substantiate particular services or groups of services. In accordance with this bill, practitioners must be given 28 days in which to seek an internal review of an audit decision before a debt notice is issued. During this time a practitioner may provide additional material to the CEO to substantiate a Medicare benefit.

The Health Insurance Amendment (Compliance) Bill 2010 will provide savings of around $148 million over four years, and it is expected that the provisions contained in the bill will generate further savings of at least $132 million during this time. Protecting the integrity of Medicare and enhancing Medicare Australia’s current audit program is a crucial element in ensuring that the Australian people know their public funds are spent appropriately and responsibly in the provision of the health services they rely on. The Gillard government is committed to responsible economic management and delivering the world-class services that Australians are entitled to expect—all this in the great traditions of the Labor Party, the originators of Medicare. I commend this bill to the House.
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Peter Gomes

Former Harvard Minister Peter Gomes has passed away, aged just 68. A thundering voice for tolerance and thoughtfulness, his books and sermons will be greatly missed. A New York Times obituary discusses parts of his career, but somehow doesn't capture his sense of humour. I remember sitting in his Easter Sermon (2003, I think), when he said:
Ladies and gentlemen, I have some good news and some bad news.

The good news is that this church has all the money it needs to do its good works throughout the community - to look after the vulnerable, and to strengthen our congregation.

The bad news is that most of that money currently resides in your pockets.

The collection plates will now circulate.
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What I'm Reading

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Canberrans Nominate Black Spots

Canberrans have responded strongly to Federal Member for Fraser Andrew Leigh’s call to ‘dob in a Black Spot’. Since nominations were called two weeks ago, 21 intersections or corners have been nominated as potentially dangerous locations.

 Andrew Leigh, Chair of the ACT Black Spots Consultative Panel, said the response highlighted that importance of road safety to Canberrans.

“By working with the community we can ensure this program continues to make our roads safer,” said Andrew Leigh.

“Canberrans drive their local streets every day, and the number of nominations shows the interest we take in road safety.

“The nominations will now be assessed to ensure they meet the criteria set out by the Federal Black Spots Program before being considered by the panel.

“The federal Black Spots program sets a high bar. To receive funding, a project must have community benefits that are at least twice the cost of construction,” concluded Andrew Leigh.

Since 2007 the Federal Labor Government has allocated over $4.6 million to over 34 black spots across the ACT.

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Me and Mitch Fifield on Sky 28 Feb 2011

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Carbon Pricing

My AFR op-ed today is on carbon pricing, and the Liberals' volte-face on market mechanisms.
Liberate the True Liberals, Australian Financial Review, 1 March 2011

In 1989, when US President George HW Bush proposed the use of market-based mechanisms to deal with acid rain, electricity generators warned that costs would skyrocket. Today, the program is universally regarded as a success, achieving its emissions targets at around one-third of the projected costs.

Why are market-based mechanisms so much cheaper at cutting pollution? In the case of acid rain, researchers found that firms used a variety of approaches to reduce emissions. Some retrofitted emissions control equipment. A number switched to cleaner fuels. Others retired their dirtiest generators. Because each firm took the lowest-cost approach to abatement, the social cost was minimised.

For environmental economists, this result merely reaffirmed theoretical work going back to Arthur Pigou in the 1930s and Ronald Coase in the 1960s. By the time Coalition climate change spokesman Greg Hunt won a prize for his 1990 university thesis on ‘A tax to make the polluter pay’, the economic theory was widely recognised. Hunt pointed out that ‘An attraction of a pollution tax regime is that it produces a strong incentive for firms to engage in research and development’. For consumers, ‘goods which do not generate [pollution] in their production will become relatively cheaper and therefore more attractive’.

Discussing the politics surrounding pollution taxes, Hunt argued out that ‘a pollution tax is both desirable, and, in some form, is inevitable’, but acknowledged ‘even if some of the Liberal’s [sic] constituents do respond negatively, a pollution tax does need to be introduced to properly serve the public interest’.

The purpose of quoting Hunt’s thesis is not to play some form of ‘gotcha’ game, but because it represents the view that most small-L liberals have held for decades. The UK Conservatives are proud champions of their nation’s emissions trading scheme. As recently as 2007, the Liberal Party of Australia’s election platform promised: ‘To reduce domestic emissions at least economic cost, we will establish a world-class domestic emissions trading scheme in Australia (planned to commence in 2011).’

To provide certainty, the Gillard Government proposes to start with a carbon price (in which the market determines the quantity of pollution), before transitioning to a fully flexible emissions trading scheme (in which the market determines the carbon price). Both have the advantage that they allow millions of households and businesses to find the most cost-effective way to reduce carbon pollution. For the first time, it also becomes profitable for entrepreneurs to find ways to reduce carbon emissions.

Because the arguments for harnessing markets to cut carbon pollution are essentially the arguments for free markets themselves, the opposition to emissions trading has historically come mostly from the left of the political spectrum. Yet today, we have the odd spectacle of a supposedly market-friendly party advocating a climate change policy that looks awfully like command-and-control. If you think that we can cut smoking rates more effectively by subsidising celery sticks than by taxing cigarettes, you’ll love Tony Abbott’s Direct Action plan. On one estimate, the only way the Coalition can meet its own emissions target is by spending many billions buying permits from other nations.

Among many in the Coalition, a commitment to markets is frighteningly fragile. Sitting in House of Representatives these days, I sometimes feel as though I’ve passed into a parallel universe in which Labor is the only true defender of free market economics. In recent months, Coalition MPs Michael McCormack, Ken O’Dowd and Karen Andrews have called for protectionism for agriculture, fishing and surfboards respectively. George Christensen believes income taxes – one of the government’s most efficient sources of revenue – should be abolished.

One of the essential lessons from first year economics is that the best way of addressing a negative externality is to put a price on it. But getting the design right will be critical. For households, we need to craft an appropriate assistance package. For businesses, it will be vital to ensure that emissions-intensive trade exposed industries can remain competitive. And for energy generators, it will be important to provide certainty as they go about transforming themselves into cleaner producers.

As it deals with these issues, the Multi-Party Climate Change Committee could doubtless benefit from the ideas and experience of many in the Coalition – if only they were allowed to participate. Let’s hope Mr Abbott takes the chance to constrain his conservatives and liberate his liberals.

Andrew Leigh is the federal member for Fraser.
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Randomised Trials Motion

I moved a motion today on randomised trials:
DR LEIGH: To move—That this house:

(1) reaffirms this Government’s commitment to evidence-based policy making;

(2) notes that:

(a) the Productivity Commission has highlighted the importance of rigorous evaluation in assessing the impact of social, educational, employment and economic programs; and

(b) randomised policy trials are increasingly being used as an evaluation tool in developed and developing nations; and

(3) supports measures to increase the quality of evaluations, and calls on the Government to consider whether randomised policy trials may be implemented to evaluate future Government policies.

Here's what I had to say:
Evidence-Based Policy – Private Members’ Motion
28 February 2011

No government has been more committed to evidence-based policy than ours. In areas from water reform to climate change, from foreign aid to schools reform, activity-based health funding to fiscal stimulus, Labor has drawn on the best knowledge of experts in the field. What drives those of us on this side of the House is not a love of particular programs, but a hope that our time in public life will help leave Australia more prosperous and more tolerant, with a cleaner environment and jobs for the future.

To achieve these goals, we need to keep finding better ways to evaluate our policies. As a former economics professor, I can assure the house that this is particularly hard in the case of social policies. Unlike scientific experiments, evaluations of social policies are particularly tricky. We don’t always get the right answer from simple before/after evaluations, nor from comparisons of those who opted in with those who opted out.

A great advantage of randomised trials is that participants are allocated to the treatment or control group by the toss of a coin. The beauty of randomisation is that, with a sufficiently large sample, the two groups are very likely to be identical, both on observable characteristics and on unobservable characteristics. The only difference between the treatment and control groups is the intervention itself. So if we observe statistically significant differences between the two groups, we can be sure that they are due to the treatment and not to some other confounding factor.

In Australia, our farmers have used randomised evaluations for over a century, and our medical researchers have used randomised evaluations for over half a century. Yet social policy random evaluations are much rarer.

One exception is the New South Wales Drug Court trial, conducted in 1999–2000. Offenders were referred to the Drug Court from local or district courts, underwent a detoxification program and were then dealt with by the Drug Court instead of a traditional judicial process. At the time it was established, the number of places in detoxification was limited, so participants in the evaluation were randomly assigned either to the treatment group or the control group. They were then matched to court records in order to compare reoffending rates over the next year or more. The evaluation found that the Drug Court was effective in reducing the rate of recidivism, and that while it was more expensive than the traditional judicial process, it more than paid for itself.

In the case of the Drug Court, many of us probably had an expectation that the policy would reduce crime. But high-quality evaluations do not always produce the expected result. Staying for a moment with criminal justice interventions, take the example of ‘Scared Straight’, a program in which delinquent youth visit jails to be taught by prison staff and prisoners about life behind bars. The idea of the program — originally inspired by the 1978 Academy Award winning documentary of the same name — is to use exposure to prison to frighten young people away from a life of crime. In the 1980s and 1990s, several US states adopted Scared Straight programs.

Low-quality evaluations of Scared Straight, which simply compared participants with a non-random control group, had concluded in the past that such programs worked, reducing crime by up to 50 percent. Yet, after a while, some US states began carrying out rigorous randomised evaluations of Scared Straight. The startling finding was that Scared Straight actually increased crime, perhaps because youths discovered jail was actually not as bad as they had thought. It was not until policy makers moved from second-rate evidence to first-rate evidence that they learned the program was harming the very people it was intended to help.

Being surprised by policy findings is perfectly healthy. Indeed, we should be deeply suspicious of anyone who claims that they know what works based only on theory or small-scale observation. As economist John Maynard Keynes once put it when asked why he had changed his position on monetary policy during the Great Depression: ‘When the facts change, I change my mind. What do you do, sir?’

One common argument made against randomised trials is that they are unethical. Critics say: when you have a program that you think is effective, how can you toss a coin to decide who receives it? The simplest answer to this is that the reason we are doing the trial is precisely because we do not know whether the program works. The great benefit of a randomised trial is that it gives us solid evidence on effectiveness, and allows us to shift resources from less effective to more effective social programs.

We should not lightly dismiss ethical concerns about randomised trials, but they are often overplayed. Medical researchers, having used randomised trials for several decades longer than social scientists, have now grown relatively comfortable with the ethics of randomised trials. Certain medical protocols could be adapted in social policy, such as the principle that a trial should be stopped early if there is clear evidence of harm, or the common practice of testing new drugs against the best available alternative.

One example, again from New South Wales, helps to illustrate this. Since 2005, an NRMA CareFlight team, led by Alan Garner, has been running the Head Injury Retrieval Trial (HIRT), which aims to answer two important questions: Are victims of serious head injuries more likely to recover if we can get a trauma physician onto the scene instead of a paramedic? And can society justify the extra expense of sending out a physician, or would the money be better spent in other parts of the health system?

To answer these questions, Garner’s team is running a randomised trial. In effect, when a Sydney 000 operator receives a report of a serious head injury, a coin is tossed. Heads, you get an ambulance and a paramedic. Tails, you get a helicopter and a trauma physician. Once 500 head injury patients have gone through the study, the experiment will cease and the results will be analysed.

When writing a newspaper article about the trial, I spoke with Alan Garner, who told me that, although he has spent over a decade working on it, even he does not know what to expect from the results ‘We think this will work’, he told me in a phone conversation, ‘but so far, we’ve only got data from cohort studies.’ Indeed, he even said, ‘Like any medical intervention, there is even a possibility that sending a doctor will make things worse. I don’t think that’s the case, but [until HIRT ends] I don’t have good evidence either way.’

What is striking about Garner is his willingness to run a rigorous randomised trial, and listen to the evidence. Underlying HIRT is a passionate desire to help head injury patients, a firm commitment to the data and a modesty about the extent of our current knowledge. High-quality evaluations help drive out dogma. As US judge Learned Hand famously said, ‘The spirit of liberty is the spirit which is not too sure that it is right’.

Naturally, randomised trials have their limitations. Not all questions are amenable to randomisation. Like the kinds of pilot programs that we run all the time, randomised trials do not necessarily tell us how the program will work when it is scaled up, and they’re not very good at measuring spillover and displacement effects.

Because of these limitations, it is unlikely that we would ever want 100 per cent of government evaluations to be randomised trials. Most likely, the marginal benefit of each new randomised trial is a little lower than that of the previous one. At some point, it is indeed theoretically possible that we could end up doing more randomised trials than is socially optimal.

However, this is unlikely to ever occur, at least in my lifetime. My best estimate is that less than 1 per cent of all government evaluations are randomised trials (excluding health and traffic evaluations, the proportion is probably less than 0.1 per cent). Another way to put this is that, to a first approximation, Australia currently does no randomised policy trials. Governments throughout Australia could safely embark on a massive expansion of randomised policy trials in Australia before we come close to the point where the costs exceed the benefits.

Finally, one way that we might expand randomised policy trials is to learn from the US, where federal legislation sometimes sets aside funding for states to conduct randomised evaluations. The Second Chance Act for rehabilitating prisoners, the No Child Left Behind school reform law, and legislation to improve child development via home visits are just some of the US laws in which the federal government explicitly puts aside a portion of program funds for states to run random assignment evaluations.

What we need in Australian policy today is not more ideologues, convinced that their prescriptions are the answer, but modest reformers willing to try new solutions, and discover whether they actually deliver results.

Update, 14/3: Thanks to Ross Gittins for a generous mention in his column.
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Climate conference

I'm speaking on 31 March at an ANU climate change conference being organised by Frank Jotzo. Details here.
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When I gave my maiden speech to parliament last year, I promised to speak more about randomised policy trials, which I've managed to do on a couple of occasions.

But just to make sure that people don't think I've dropped the randomista ball, I've moved a private members' motion, which the House of Representatives will be debating on Monday.
DR LEIGH: To move—That this house:

(1) reaffirms this Government’s commitment to evidence-based policy making;

(2) notes that:

(a) the Productivity Commission has highlighted the importance of rigorous evaluation in assessing the impact of social, educational, employment and economic programs; and

(b) randomised policy trials are increasingly being used as an evaluation tool in developed and developing nations; and

(3) supports measures to increase the quality of evaluations, and calls on the Government to consider whether randomised policy trials may be implemented to evaluate future Government policies.
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Arts and Sports

I spoke in parliament yesterday about the role of community arts organisations, and the importance of local sporting clubs. Both speeches are below.
Arts, 24 February 2011

Amidst the hurly-burly of busy lives, it is sometimes easy to forget the transcendent power of the arts. Great art can inspire us and remind us of what truly matters in our lives. It can take us to new places and evoke strong emotions. The work of Fred Williams and Arthur Boyd, Clifford Possum Tjapaltjarri and Sidney Nolan can be truly breathtaking. For artists, producing artworks can bring enormous pleasure and fulfilment.

On the north side of Lake Burley Griffin, there are a plethora of hardworking artists and small art galleries. These include Craft ACT, Craft and Design Centre, the Canberra Museum and Gallery, the ANU School of Art Gallery, the Watson Arts Centre, the Chisholm Street Gallery, the Helen Maxwell Gallery, the Canberra Contemporary Art Space, the Australian National Capital Artists, Megalo Print Studio and Gallery, the Strathnairn Homestead Gallery, the Aboriginal Dreamings Gallery, Aarwun Gallery, the Graham Charlton Studio Gallery and the Belconnen Arts Centre. And apparently there is even some good art displayed on the south side of the lake.

I am proud to have in the public gallery today my mother-in-law, Anna Marie Newman. She is here with my father-in-law, Robert Newman. Anna Marie is a talented and prolific artist, and the ‘critters’ she makes bring great joy to and admiration from others. I want to pay tribute to her and to all the artists and craftspeople whose work enriches our lives.

Sports in Canberra, 24 February 2011

Canberra is the sportiest city in Australia. We are not just the national capital, the cultural capital and the research capital but also the sporting capital. At the last Commonwealth Games Anna Flanagan, Alicia Coutts, Ellie Cole and Luke Adams, amongst many others, continued a proud tradition which saw Canberrans at the Games bring home more medals than those of any other Australian city. Admittedly, having the Australian Institute of Sport tucked away in the suburb of Bruce, in my electorate, does provide a little help.

We are all familiar with the dent in the national pride at the 1976 Montreal Olympic Games which led to the opening of the AIS, in 1981. Since that the time the AIS has become a world renowned institute, the envy of the nations of the world for the sporting supremacy which it has helped Australia achieve, so much so that other nations around the world have started to replicate the AIS model, including the United Kingdom, which hopes to overtake us in the medal tally at the 2012 London Games—though, of course, we know the Aussies will prevail in the end. But, as the folks at the AIS remind us, the race for sporting supremacy has no end. It is an ongoing pursuit.

The AIS is not all sports: it is a community, a support network and a family. This shrine of sporting excellence fosters and develops the sporting talents of our young athletes as well as their education. A myriad people—from coaches and training squads, house parents, athletes’ own parents, massage therapists, sport psychologists, sport scientists and administrative staff to chefs—deserve our thanks for their efforts. This professionalism of the sporting talent at the AIS is complemented by the sporting enthusiasm of Canberrans. Whether it is cheering the Raiders, the Capitals, the Brumbies, Canberra United, the Comets, the Canberra Strikers or the Lakers—at the national level—or the Magpies, Ainslie, Eastlake, the Gungahlin Reds, Bel West, Majura Football, Ginninderra Tigers or any of the many other proud local sporting teams, our city loves sports. But we do not just like to watch; we love to strap on the boots and have a go. More Canberrans participate in sports than those of any other state or territory in Australia. Thirty-six per cent of Canberrans participate in sports, with the Australian average being just 27 per cent.

But sport is more than just a game. Our sporting teams are made up of people who are members of our community. For all the negative headlines about sportspeople, there are so many more unwritten stories about the role models, the heroes and the community service.

Sport is a great egalitarian pursuit, a social tool that helps us fight prejudice in our society and understand one another. Late last year, I hosted a gathering of officials from the many sporting teams in my electorate. Among those who attended was John Gunn from Multicultural Youth Services ACT. A few weeks previously, when I visited the MYS to see some of the young refugees in Canberra and the support that MYS was providing them, John told me how sports helped the young kids settle in and how great they were at it. He was astounded not only by their ability but by the happiness it brought, and he just wished there were some way he could get them into the local teams.

At my office, amongst the discussions of successes and challenges faced by the various teams and codes present, John rose to tell the group about the refugees at MYS. Straight afterwards, one of the group, a coach from Gungahlin, piped up: ‘No problem, mate. Send us the names. We’ll give them a pair of boots and a jersey and see how they go.’ He added: ‘After all, North Melbourne just picked Majak Daw as a rookie, the first African migrant to play AFL and someone who came here as a refugee. Who knows, we might have a couple of Majaks here.’

Sport in our nation is not just about the medals or the trophies; it is about much more. Our love affair with sport is about more than the entertainment. We love it because of the opportunities it gives our kids, the contribution sport gives back to the local community and the escape it provides. But we also love it because, on the sporting field, prejudice disappears. All are equal on the field. The team is our team. We all become mates, whether we know the supporter next to us or not. This is why sports give our nation so much pride.
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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.