Under that arrangement, the states and territories agreed to spend more on disability care to take pressure off the NDIS, which has quickly become one of the most expensive – and fastest-rising – items in the federal budget.

In return, the federal government pledged to fund 42.5 per cent of public hospital costs by 2030 and 45 per cent by 2035.

However, the deal is yet to be formally signed off, with negotiations still ongoing.

CAF, which is composed of all state premiers and territory chief ministers, including Prime Minister Anthony Albanese’s fellow Labor leaders Chris Minns, Roger Cook, Jacinta Allan and Peter Malinauskas, said the government’s latest offer fell well short of its initial promise.

“First ministers … are concerned that the Commonwealth does not intend to honour the December 2023 National Cabinet agreement, including the commitment that states and territories would be better off overall,” the CAF communique stated.

“States and territories remain committed to the deal struck in December 2023 – a key part of this deal was the Commonwealth’s commitment to fund 42.5 per cent of public hospitals’ costs by 2030 and 45 per cent by 2035.

“Under the arrangement now proposed by the Commonwealth, the actual share of Commonwealth funding will be closer to 35 per cent, falling tens of billions of dollars short of what is needed.”

A federal government spokesperson denied the claims that it wasn’t adequately contributing to the states’ and territories’ health bills, pointing to an extra $20 billion in funding it had put on the table.

“The Commonwealth remains committed to the December 2023 National Cabinet deal; and we are committed to making a fair contribution under the hospital funding agreement to give Australians better access to health services they need, when they need them and to reduce pressure on hospitals,” the spokesperson said.

“The Commonwealth’s most recent offer to states included an additional $20 billion over five years in Commonwealth funding for public hospitals.

“This is a $7 billion increase from the Commonwealth’s most recent offer to states.

“The additional $20 billion on offer is on top of the $195.1 billion the Commonwealth is already expected to contribute to public hospitals over the five years from 26-27.”

However, premiers and first ministers said the offer put forward would leave the states worse off financially and Australians without the hospital services they “rightly expect”.

“States and territories are acutely aware of the need to manage growing cost pressures and activity demands on public hospitals. First Ministers noted that these increases are largely driven by factors outside the states’ control …

“States and territories cannot address these issues alone. 

“While first ministers recognised the Commonwealth’s efforts to improve access to care and reduce pressure on hospitals, these efforts will not shift the dial quickly enough.”

The government said it was ready to negotiate in good faith and wanted a final deal signed off by the end of the year.