We wrote the book Health Cheque back in 2009, and it is surprising how little has changed in five years. In that book, we found that our health system performs pretty well on a tight budget, at least compared with other systems overseas. And yet, like many other countries we face huge challenges in coming years, with health spending expected to keep growing faster than our income. Eventually this will start to hurt – under National we have funded health by squeezing the rest of the public sector but that strategy can’t go on indefinitely.
Rising healthcare costs are driven by:
- Public expectations (demanding more treatment for the same condition),
- The ageing population (people dying is expensive for the taxpayer),
- New technology (docs like their new toys), and
- The rise of chronic diseases, like diabetes.
The question is whether we will deal with these issues before our health system becomes unaffordable. In the follow up Prescription for Change we set out three prescriptions for how this might be achieved:
- Increasing our investment in prevention. A dollar spent on prevention has four times the benefit in terms of healthy years of life added as a dollar spent on hospital treatment. The question is where will the money to invest in prevention come from? That is where the next two prescriptions come in.
- We need to better prioritise spending on hospital treatment. Many people receive treatment that has little health benefit, particularly at the end of life. How could we achieve this? For starters, patients need to understand the downsides of treatment – when they do, sometimes they turn down the treatment altogether. We should also extend the funding model that we use for Pharmac to all parts of the health sector, so our health dollar is spent on treatments that offer the greatest benefit to people.
- Our health system needs to be more efficient and effective in our delivery of treatment. This applies right through the system, but small regional hospitals are a particular challenge.
Prescription One – Prevention
True to past form, Labour and Greens are the strongest here. Labour have promised free GP visits, prescriptions and dental care for pregnant women. This is in recognition that the health of the mother has a huge impact on the destiny of the child. The question is whether it is too late to make any difference by this stage (which is why it is important to evaluate all of these policies if they happen). Labour are also stumping up for people with chronic disease, and the over 65s. People with chronic disease, such as diabetes, often end up in hospital so this investment makes sense. However targeting over 65s seems a little strange as they have low rates of poverty, and the greatest health gains come from preventing our young people from developing health conditions. This is probably why the Greens have promised free GP visits up to 18 yrs, and to put nurses in decile 1-4 schools. This last idea is crucial as it would bring healthcare to many that currently miss out.
Not to be outdone, even National is recognising the importance of prevention, with its offer for free GP visits for under 13s unveiled in the budget. Their use of targets for DHBs has also been very effective at lifting immunization rates. Thanks to Maori Party pressure, National have also raised their focus on afflictions that hit the poor hard – such as rheumatic fever and hearing problems. The question is whether these actions will be make a difference or are just the ambulance at the bottom of the poverty cliff.
New Zealand First and Internet Mana both have lots of prevention promises, but not much detail to lend any credibility.
Prescription Two – Prioritise
The only party really talking about prioritising healthcare spending is ACT. They call for Government to transparently state the public healthcare offer – a concept that would by definition involve setting out some priorities. They are also mooting co-payments for those that can afford it. This is an unsavoury idea for some but it does seem strange that we charge for the most effective part of the healthcare system (primary) while the expensive, less effective stuff (operations) are free.
Prioritisation seems too hot to handle for most political parties. National is hell bent on going the other way – throwing more money at surgery such as hip and knee replacements, and cancer treatment. The current Minister hasn’t even been willing to talk about the cost of end of life care, a conversation that is alive and well in the health sector. Labour is promising a ‘review’ of elective surgery – whatever that means.
Prescription Three – Efficiency
This has been the strongest aspect of National’s approach over the past six years in government. They have been focused on getting the system running better, and are doing some useful stuff. Shame the money they have saved has been reinvested in more hospital operations rather than on prevention. They have been particularly lethal on the administrative side, but have taken a slowly slowly catchy monkey approach to rationalizing regional hospital delivery.
This area was Labour’s big weakness last time around – they let health spending balloon without a close eye on where it was going. The Greens are similarly silent in this area.
New Zealand First are talking about reducing the number of DHBs, but it is doubtful that this is anything more than a continued attack on the myth of high administration costs. Contrary to belief, administration is a tiny part of the health sector bill. The main cost is the salary bill for docs and nurses. In fact, all of National’s savings in administration costs during their first term of government were swallowed in 3 months of health sector cost growth. That gives you some sense of the challenge we face in stopping health spending spiraling out of control.