The Federal Government will today offer an extra $30 billion for public hospitals over five years, but some Labor states could refuse to sign up.
State and territory leaders are in Canberra for the year's first Council of Australian Governments (COAG) meeting and a new row is erupting over health funding.
Several Labor states say they will not sign up to the Government's $128 billion package, until the billions of dollars cut by the Abbott government are restored.
Federal Health Minister Greg Hunt told AM the Commonwealth's growth in spending would be capped at 6.5 per cent over five years from 2020.
"Given that health inflation is at 4 per cent, it's not just a good deal, it's a deeply profound and generous deal," Mr Hunt said.
But South Australian Labor Premier Jay Weatherill argued the Coalition had "ripped out billions and billions of dollars" from the health system.
In 2016, the states and territories signed up to the Government's offer to cover 45 per cent of hospital funding, with growth capped at 6.5 per cent a year.
"We've given ourselves a long lead-in period but it's far and away the greatest value of any deal in Australian history," Mr Hunt said.
"But, most importantly, the figures are very, very clear. A $30 billion increase which will allow an 5 million additional patient services each year."
As an incentive for states that sign up today, Mr Hunt is offering an additional slice of its $100 million health innovation fund.
But Mr Weatherill was not interested.
"No, it's chicken feed," he said.
"Given the billions that have been ripped out, the idea that somehow you'd throw a few shackles on the table just to get an agreement.
"There needs to be a commitment for meaningful reform, functional and financial reform that actually sets us on a new pathway, not just signing some insubstantial document to give the Prime Minister the illusion of a victory."
Sources have told AM Victoria and Queensland are unlikely to sign up today, but West Australian Labor Premier Mark McGowan appeared open to negotiation.
"Obviously we'd want to get a secure arrangement for WA. I haven't given up hope on that but that's one of the issues, I'll talk to the other premiers about that," Mr McGowan said.
New South Wales Premier Gladys Berejiklian was also receptive, saying she was "looking forward to discussions" and was "always optimistic".