Will serious health reform now go the way of the emissions trading scheme? The signals are that fundamental health reform is seen as too complex, wrapped in too many uncertainties and too likely to upset powerful interests in difficult times.

Like most of its predecessors, the Rudd Government is more focused on the narrow economics of health insurance rather than the wider social and economic implications of health and wellbeing. Unless there are some major signals otherwise in tomorrow’s budget, my fear is that serious health reform will end up in the too-hard basket, along with the ETS.

Just to recap for those who haven’t been following the debate closely: Australia is saddled with a 19th century health system that is spectacularly ill-equipped to cope with the 21st demands of a rising tide of chronic diseases.

It rewards procedural services delivered by acute care hospitals and high-cost specialists, while neglecting team-based forms of sub-acute and community-based care. Vast sums are spent in the latter stages of life on treatments and procedures offering small gains.

Relatively little is invested in providing those major health, education and social services for children and young people that will reduce their risk of serious health problems and chronic disability later in life.

The system cries out for a major shake-up, not more fiddling at the edges. Means-testing the private health insurance rebate is a small reform.

Real change requires a Government with the political will and detailed knowledge of the sector to stare down the powerful entrenched interests that dominate the current landscape. Those interests are not limited to the private insurance and hospital sector but also include a wider range of professional groups, State and Federal bureaucracies and other hospital-centric interests.

For years, health reform advocates have been arguing the case for systemic change that confronts resource allocation, topples the dominance of fee-for-service arrangements and challenges restrictive work practices. The Howard Government made it clear that it no intention of working with the States to correct the gross inequalities that characterise the system.

The Rudd Government went to the last election promising real reform but provided little detail. It initially aroused hopes with its emphasis on preventative and primary care, construction of the National Health and Hospitals Reform Commission (NHHRC) and a range of other appointments and reviews. But it’s also clear that health is not central to this Government’s agenda as compared with education or industrial relations reform.

By contrast, the new Obama Government has made investing in new health services and related medical research key elements of its stimulus efforts.

It’s very clear to mental health experts that the economic downturn will have significant negative impacts on health. As in previous slumps, this is likely to include a rise in suicide rates. But we haven’t done the serious health policy planning to start to address these sort of issues. We rarely hear the Prime Minister or the Treasurer mentioning adverse health impacts in the same breath as the GFC or stimulus packages.

Of course, we will get a much clearer signal tomorrow night. At least some of the delayed infrastructure announcements for new hospitals, health and medical research infrastructure are now expected. Importantly, there is great public support for this much neglected area of public investment. Whenever the community is asked, it says it supports health investments over tax cuts and cash handouts.

In truth, the Government needs urgently to go much further than simply introducing more regulation of our highly dysfunctional public and private insurance systems. It needs to allocate substantial funding now to underpin the reforms signaled by the NHHRC. Otherwise we can all sit on our hands till after the next Federal election.

At this stage, the Federal Government’s management of the health portfolio has focused largely on managing the politics rather than driving reform.

We’ve all been carefully managed to expect delays, lower expectations and welcome distractions (most notably, “the bionic eye”). While this may be smart in the short term, the Rudd Government would do well to remember that the community still has high expectations. Those expectations were fueled directly by the Prime Minister’s tough words prior to the last election.

If this proves to be a pre-election budget, the lack of progress on real health reform during its first term may well return to bite the Government where it really hurts.

Most notably, this will be in those marginal electorates in the outer suburbs and regional communities where the combination of high out-of-pocket health care costs and lack of access to high-quality services are apparent to all.

Professor Ian Hickie is Executive Director of the Brain and Mind Research Institute