What does the Budget Mean for Healthcare?

Gareth MorganHealth

Healthcare was the big winner in the budget, signalling that it remains a priority for the Government. With a ‘health inflation’ rate of about 4%, this budget will still probably feel like a cut for most DHBs. Yet this budget perpetuates a key health sector problem – shovelling money at those that bleat loudest, while others miss out.

In other words health continues to soak up bigger and bigger chunks of the Government’s budget, without any sign of the demand being quenched. This underlies the need to urgently rethink our approach to healthcare in general. The Government’s administrative efficiency savings have made little difference to this trend. It is time to tackle the real drivers of healthcare spending – reducing demand for services, rationing access to services and encouraging the sector to deliver in the most efficient and effective way possible. We set these three ideas out in our Prescription for Change a little under a year ago, but the ideas remain relevant today. It remains to be seen whether any political parties will seize this particular nettle in the upcoming election.

As for the content of the budget, most of the spending was more of the same with the Government continuing its obsession with reducing waiting lists. Very little investment was made in preventing conditions which could lead to future demands on the health system.

There were a few exceptions to this – including increased spending on maternity initiatives, mental health and on the prevention of rheumatic fever. This last item may have been in response to NZMA statements on health inequities. Rheumatic fever, normally a disease associated with the Third World, has never actually been eradicated in New Zealand’s Maori and Pacific communities because of poor housing and overcrowding. It all starts with a sore throat (‘strep’ throat), which is pretty easy to treat with antibiotics and rest. However if it is not treated, for reasons we don’t fully understand the body’s immune response can attack the heart, which is rheumatic fever. Rheumatic fever can cause permanent damage to a child’s heart valves – rheumatic heart disease. At worst this can mean death, or at the least a whole lifetime of medical problems, and an enormous cost to the health system.

Many diseases are linked to poverty, but rheumatic fever is probably the most striking example. Maori are 20 times, and Pacific people 37 times more likely to be admitted to hospital with first time acute rheumatic fever than people of European or other ethnicity. It is good to see the Government finally tackling this problem. However, the high rates of rheumatic fever among Maori and Pacific Islanders is  just one example of our health system’s inequities. Most money goes to health issues that are the concern of the white middle class, as we saw in Health Cheque. The poor and voiceless get overlooked while those that bleat the loudest get their treatments regardless of the costs and benefits. Rheumatic fever kills twice as many people each year as cervical cancer – yet there are no prizes for guessing which we work harder to prevent.

What does the Budget Mean for Healthcare? was last modified: December 15th, 2015 by Gareth Morgan
About the Author

Gareth Morgan

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Gareth Morgan is a New Zealand economist and commentator on public policy who in previous lives has been in business as an economic consultant, funds manager, and professional company director. He is also a motorcycle adventurer and philanthropist. Gareth and his wife Joanne have a charitable foundation, the Morgan Foundation, which has three main stands of philanthropic endeavour – public interest research, conservation and social investment.