Researchers claim NZ health budget declining, publicly-funded surgery on way out

Will the public have to stump up for their own surgeries in the near future?

Will the public have to stump up for their own surgeries in the near future?

New Zealand's health budget has been declining for almost a decade and could signal health reforms akin to the sweeping changes of the 1990s, new research claims.

Six prominent industry health leaders and researchers contributed to the editorial in the latest edition of the New Zealand Medical Journal, after several months analysing Government documents and data.

Their analysis showed Government spending in health had steadily tracked downward since 2009, despite constant reassurances from health ministers that spending was increasing year-on-year.

The $16.1 billion 2016 Health Budget, announced on Thursday, was $170 million more than last year, including $124m for Pharmac, $96m for elective surgery and $39m for a new bowel screening programme.

However, the researchers' analysis of Budget data from 2009-10 found the country's health budget had fallen short of what was needed each year to cover new services, increasing costs and the Ministry of Health's cost-weighted index, which accounted for population growth and ageing.

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The accumulated "very conservative" shortfall over the five years to 2014-15 was estimated at $800 million, but could be double that, Canterbury Charity Hospital founder and editorial co-author Phil Bagshaw said.

Bagshaw believed the Government was moving away from publicly-funded healthcare, and beginning to favour a model that meant everyone had to pay for their own.

"It's very dangerous. If this continues we will slide into an American-style healthcare system."

Despite the health reforms of the 1990s failing to show obvious success, it was not clear whether "appropriate lessons have been learned", the editorial said.

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The reforms brought sweeping changes to health and the idea that hospitals should compete for patients and dollars, and area health boards were restructured as for-profit organisations.

Bagshaw said history "is repeating itself".

"The whole reason the charity hospital is there is they've been slowly getting out of elective healthcare," Bagshaw said. 

"The next bit of the plan is to start privatising more and more of the health system, and issuing contracts to the private sector. Back then it was done by shock tactics and now it's being done bit by bit."

Health spending was falling in proportion to overall gross domestic product (GDP), the research showed.

Between 2009-10 and 2014-15, Vote Health's operational expenditure increased by $2 billion, while core government spending increased by $8.8b. In the same period, GDP increased by $45.2b. 

Vote Health's operational expenditure decreased from 6.32 per cent to 5.95 per cent as a proportion of GDP in the same five years.

Government expenditure was set to continue falling overall, with New Zealand ranked 26th out of OECD countries for spending as a proportion of GDP in 2013. 

This meant further cuts for health spending, which was estimated to drop by about 4 per cent a year. 

"The continued under-resourcing of our health services . . . is not owing to unaffordability; it is a policy decision to reduce government expenditure overall and introduce tax cuts," the editorial said.

Bagshaw said the Government failed to realise the value of investing in health.

"One dollar you put into health you get $4 back. People become more productive, they don't get as many illnesses and they don't go into care."

Co-author and Association of Salaried Medical Specialists executive director Ian Powell said it seemed "commercially-competitive processes which were so destructive in the 90s [are] being brought back in a different way".

"Whether it's by intent or not that's the logical consequence."

He labelled it "high-risk territory" that had no previous success. Unmet need would then become a permanent and exacerbated problem.

"The Government's position is short-sighted and there is a premise there that if you financially squeeze the system you encourage innovation," Powell said.

"Innovation comes from investing in workforce, it doesn't come from a workforce that is overstretched."​

 - Stuff


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