The role of the Administrator of the National Health Funding Pool (the Administrator) and the National Health Funding Body (NHFB) in Australia’s health system was the result of significant public hospital funding reforms agreed by the Commonwealth and all States and Territories in August 2011, forming the National Health Reform Agreement (NHR Agreement).

The NHR Agreement outlines the shared responsibility of the Commonwealth, State and Territory governments to work in partnership to improve health outcomes for all Australians and ensure the sustainability of the health system. 

On 29 May 2020, the Commonwealth, States and Territories entered into a new agreement through the Addendum to the National Health Reform Agreement 2020–21 to 2024–25 (see page 10). The new Addendum maintains a commitment to ensuring equitable access to public hospitals for all Australians, and provides certainty for the role of the Administrator and the NHFB into the future. 

The new Addendum also includes a commitment by all Australian governments to a shared long-term vision for health reform, with reforms aimed to make it easier to provide flexible, high-quality care that meets the needs and preferences of Australians, and reduces pressure on hospitals.

Overview of health care agreements

National Healthcare Specific Purpose Payment Pre–2012

Prior to the NHR Agreement, State and Territories were paid a contribution for public hospital services from the Commonwealth via ‘block grants’ under the National Healthcare Specific Purpose Payment arrangements. These grants were calculated based on historical costs, negotiation and government decisions, with little transparency of the actual services delivered for the funding provided. 

National Health Reform Agreement 2012–13 to 2016–17 

In August 2011, the Council of Australian Governments (COAG) agreed to major changes in how public hospitals were to be funded by Commonwealth, State and Territory governments, including the move from block grants to an ‘activity–based’ funding system. These changes, detailed in the NHR Agreement, included establishing the Administrator and the NHFB to improve transparency of public hospital funding arrangements.

Addendum to the National Health Reform Agreement 2017–18 to 2019–20

In July 2017, amendments were introduced to the NHR Agreement through a time–limited Addendum. This reaffirmed universal health care for all Australians as a shared priority and committed parties to public hospital funding from 1 July 2017 to 30 June 2020. It also focused on reducing unnecessary hospitalisations and improving patient safety and service quality.

Addendum to the National Health Reform Agreement 2020–21 to 2024–25

In May 2020, through the signing of the new Addendum, Commonwealth, State and Territory governments agreed to four strategic priorities to further guide health system reform: 

  • Improving efficiency and ensuring financial sustainability;
  • Delivering safe, high-quality care in the right place at the right time;
  • Prioritising prevention and helping people manage their health across their lifetime; and 
  • Driving best practice and performance using data and research.

The Addendum will see over $131 billion in Commonwealth funding to public hospitals over the five years of the agreement. 

In conjunction with the new agreement, the Federal Government provided a funding guarantee (2019-20 and 2020-21) to all States and Territories to ensure no jurisdiction is left worse off as a result of the COVID-19 pandemic.

In addition, the Federal Government provided funding ($3 billion in 2019-20) to all States and Territories under the National Partnership on COVID-19 Response.

Legislative basis for functions

The Administrator and the NHFB are governed by the National Health Reform (NHR) Act 2011, State and Territory legislation, the NHR Agreement and the Addendum to the NHR Agreement (the Addendum).

The functions of the Administrator and the NHFB were established under the NHR Act. In line with the NHR Agreement, this legislation is supported by common statute provisions in each State and Territory. These provisions create the Administrator’s role and sets out its functions.