Hark back to December 2023. National Cabinet endorsed a historic agreement setting the parameters for future Commonwealth-state sharing of public hospital costs over the next decade.

A repost from 4 October 2025

In brief, the Commonwealth share would increase to at least 42.5% by 2030 and then continue on a “glide path” to reach 45% before 2035. All this was to be enshrined in a revised National Health Reform Agreement.

The ink was barely dry — or the digital equivalent — before it began to unravel. Progress on fleshing out detailed clauses became enmeshed with negotiations on disability funding, and an election intervened. Most importantly, though, the Commonwealth’s estimates of how much it was all going to have to pay were blown out of the water by a decision by the Independent Health and Aged Care Pricing Authority that the so-called National Efficient Price — which determines how much the Commonwealth pays states for growth in the costs of public hospital services — was to increase by 12.3% compared to an average of 4.9% over the previous three years.

Setting the National Efficient Price is a protracted process. Hospitals provide their data to their state health authority sometime after the end of the financial year, states analyse it and tidy it up and give it to IHACPA and IHACPA then has to collate and analyse it. In the end, data for 2022-23, updated by estimates of cost growth subsequently, is used to set the price for 2025-26, a three-year lag.

The states were........

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