National Competition Policy and Australia's Health Care System: A Look at the Policy Landscape with New Eyes

Australia spends nearly 10% of its gross domestic product on health services. With such a substantial financial commitment, even relatively minor improvements in efficiency, effectiveness and productivity can increase community welfare. Competition is a well-recognised policy lever implemented to achieve these goals in market economies. However, it has for many years struggled to gain traction in the health care sector. This article traces recent attempts to promote competition principles in Australia's health care sector. Highlighting where these attempts have stalled, it compares Australia's recent health reforms with those instituted in the United Kingdom's National Health Service where a sector-specific competition regulator has been in place for several years. It concludes that there is room in Australia's regulatory landscape to improve public reporting and increased choice in health care. A sector-specific regulator is envisaged to support these important competition-based initiatives.