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Prime Minister Kevin Rudd has released his landmark plan for the ailing hospital system, saying it will end the blame game with the states.
Under the plan, the commonwealth would be the dominant funder of hospitals, contributing 60 per cent of all costs compared to the current 40 per cent.
The prime minister said his plan would be put to the states and territories at the next COAG meeting on April 11.
If they do not agree, Mr Rudd will call a referendum before or at this year's federal election 'to give the Australian government all the power it needs to reform the health system'.
'Today we're delivering on the most significant reform of Australia's health and hospitals system since the introduction of Medicare almost three decades ago,' Mr Rudd said in an address to the National Press Club in Canberra.
Mr Rudd said the reform package would deliver a health and hospitals network that would provide better health and better hospitals for all Australians.
It would be funded nationally and run locally, Mr Rudd said.
'For the first time, eight state-run systems would become part of one national network,' he said.
'The Australian government's decision to take on the dominant funding role for the entire public hospital system is designed to end the blame game, to eliminate waste and to shoulder the funding burden of the rapidly rising health costs of the future,' Mr Rudd said.
Under the government's plan, the hospital system would be run through local hospital networks with local professionals given the necessary powers to deliver services to their local community.
Mr Rudd said the government would place around one third of GST revenue in a special fund to be spent only on health and hospitals.
'At the moment we pay around 35 cents in every dollar of public hospital growth funding. Under our reform plan, we will be funding around 60 cents in the dollar.'
The current healthcare system was 'a total mess', with one in three emergency department patients waiting longer than the recommended timeframe for treatment.
'Too many of our public hospitals are struggling as demand on the system is rapidly outweighing supply,' Mr Rudd said.
Mr Rudd says waiting lists for similar operations differ significantly between states and cities.
An example he gave was an older man told that to wait a year for a hip replacement, when another patient only had to wait five weeks.
'Two different people, both in capital cities, but very different standards of care.'
Mr Rudd says the new network will deliver a set of national standards, including access to elective surgery.
'This means both (patients) would get their operations done within a similar timeframe.'
'If one of them can't get it at their local hospital then the local hospital network will find ...a bed at another hospital...or with a private hospital.'
Mr Rudd quoted Treasury figures showing that by 2045/46, spending on health and hospitals would consume the entire revenue raised by state governments.
'This means states will not be able to fund their health and hospital systems let alone meet their other responsibilities,' the prime minister said.
The federal opposition says the prime minister's health plan breaks an election promise.
Opposition health spokesman Peter Dutton said the failure of the government to commit to paying 100 per cent of hospital costs would create more tensions with the states and territories.
'The prime minister, clearly, has broken a core election promise from 2007,' he told reporters.
'The Australian public heard Kevin Rudd say he would end the blame game - this just pours petrol on the blame game.'
Mr Dutton criticised the policy document for failing to explain transitional and constitutional arrangements, or the science behind the 60:40 funding split.
'There must be, in all this, a swelling of the bureaucracy despite the prime minister's assurances today,' he said.
'It has to oversee hundreds of regional health services which are based on failed area health services in NSW.'
The coalition wants local boards for individual hospitals, with two to three hospitals allowed on a board in some regions.
The federal government is proposing local networks consisting of one to four public hospitals.
