Demise of Medibank

If the election of the Fraser Government in December, 1975 meant that the demise of Medibank was inevitable, it is ironic that the early Fraser years, despite the rhetoric of New Federalism and the Commonwealth handing back States' responsibilities, led to a significant increase in Commonwealth control over the hospital system. In May, 1976 the Prime Minister declared the existing Federal-State hospital cost-sharing agreements to be invalid and after discussions with the States, presumably rather one-sided, the agreements were replaced with effect from 1st October by new arrangements which provided for the equal sharing between Commonwealth and States of agreed hospital net operating costs. While it could be argued that the new arrangements simply amounted to no more than putting an end to the previous openended and increasingly embarrassing commitment, this goal could have been achieved in other ways. The new arrangements provided for the Commonwealth to participate in detail in the preparation of States'hospital budgets and, by approving or rejecting proposals, to vary the nature and intensity of services to be provided. Administration of the agreements involved negotiation and discussion with the States on hospital budgets and their components, cost projections, development programs, hospital systems management and control, rationalisation of services, terrns and conditions of employment of hospital doctors, the admission of new dental services to cost sharing and monitoring adherence to the agreements and compliance with patients' rights, privileges and the level of fees.