States shoot down hospital funding offer, claiming it amounts to a shortfall of 'billions'

State and territory leaders have shot down the Commonwealth's latest health funding offer, saying it will not be enough to cover their rapidly growing costs.

A new funding arrangement for public hospitals — which are run by the states and territories and part-funded by the Commonwealth — was first agreed in principle at national cabinet in 2023.

It would have seen the federal government increase its share of funding to 42.5 per cent by 2030, and 45 per cent by 2035.

In exchange, the states and territories would co-fund "foundational supports" with the Commonwealth, designed to take some people off the National Disability Insurance Scheme (NDIS) to rein in rapidly growing costs.

At the time, Health Minister Mark Butler said the deal would see funding to states and territories increase