Funding the Health Service

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One of the more pointless but recurring debates, no matter which government is in office, relates to the level of spending on the public health system.

Currently, Labour says there have been $1.7 billion of health cutbacks over the last five years, which National counters by pointing out that health spending has gone up by $4 billion over the same time. Ah yes, says Labour, but it should have gone up by at least $5.7 billion, so the difference represents the effective cutback that has taken place.

It is all quite pointless. The focus should be on the performance and productivity of the health sector, and the overall impact that is having on the health status of New Zealanders.

On that basis, performance against the Ministry of Health’s targets tells a good story, according to the latest results. Overall, although the performance does vary from DHB to DHB, stays in emergency departments are shorter; there is generally improved access to elective surgery, and faster access to cancer treatment; immunisation rates are rising; more smokers are quitting; more people are having regular heart and diabetes checks; and, children’s oral health is improving.

In international terms, we rate ahead of France, Canada and the United States, but behind Britain, Australia, and Germany, according to a 2013 study on healthcare outcomes by the Commonwealth Fund. So, while we have a good healthcare system, there is obviously room for ongoing improvement, which brings us back to the issue of funding. The same study showed we have the lowest level of per capita spending on health of the eleven countries surveyed, even though our overall performance rates much higher. The productivity of our health professionals is clearly better than most.

This year, the government will spend just under $16 billion on the public health system, around 10% of GDP, compared to just over 7% in 2000, and around 8.5% when it took office.

Now, one thing anyone who studies health spending and services knows only too well is that the demand for services is insatiable, and that any government, no matter how prosperous the times, will be engaged in some form or other of rationing to meet the budget.

Which is where service improvements, efficiency gains, better use of technology, and new forms of clinical practice come in. A recent telecommunications and technology study has estimated that more video-conferencing between doctors, patients and specialists will not only reduce the need for emergency room visits, hospital admissions and the long-term prescription of often costly medicines, thus providing better, faster and more convenient care for patients, but also has the potential to save about $6 billion in current health costs, releasing funds which could then be ploughed back into currently expensive areas of health care, like, for example, the cost of new medicines (like Keytruda?).

That is where the real debate about the future funding of our health services should be focused, rather than continuing the tired old games of “National says, Labour says”.

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