Gordon Campbell on the 1990s retro proposals for our health system

Reviews are under way that could transform the New Zealand health system into our very own version of the Eurozone, whereby DHBs that fail to meet their budgets will be treated like Greece, and punished accordingly. As we learned yesterday, the reviews propose that the democratically elected representation on DHBs should be reduced, such that community wishes will be able to be over-ridden by political appointees. In today’s revelations, the reviews also propose a return to the destructive competitive health model of the 1990s. Funding would flow to the best performers and be withheld from financially underperforming DHBs – and the door would be opened for private providers to cherry pick the most profitable bits of the service in regions that fail to meet their budgets.

So far, the details of the review process – led by former Treasury secretary Murray Horn – remain sketchy. What RNZ has obtained is a three page Health Ministry précis of a more comprehensive review. (That same precis has been sent to the chief executives of each of the country’s DHBs who, reportedly, have not yet seen the wider document.) The retro nature of the proposals is hardly an accident. Horn was a leading figure at Treasury during the 1980s and was Treasury Secretary during the National government’s health, welfare and labour reforms of the 1990s. Some of the worst aspects of those early 1990s health reforms look set to be re-introduced:

The review reveals the Ministry of Health would hand out funds to DHBs on achievement of planned milestones. If those targets were missed the money would be withheld, and would then go to other providers. Four pools of funding would also be created under the plan….

Those four pools of funding would be dispensed by central government according to its “milestone” priorities – which, as mentioned, will have been rendered immune to alteration by the communities affected, thanks to the proposed changes to DHB board representation revealed yesterday.

These extreme measures might be justified if health funding was running out of control. Certainly, the government spin machine works overtime to create the illusion of a rapacious health system gobbling up more and more funds. In fact, the health system has been systematically underfunded for the past five years, and the difficulty that some DHBs are having in meeting their budgets is a direct reflection of that reality. As I pointed out at the time of this year’s Budget:

Some $320 million of extra funding has been set aside in the coming year for DHBs. Yet according to the Association for Salaried Medical Specialists, the amount for spending on health services is…..actually $260 million below what’s required merely to maintain the status quo in the public health system, given (a) a projected population growth of over 2% (b) rising costs for new technology and pharmaceuticals and (c) rising salary costs, now that pay levels in public health have been allowed to fall substantially behind those in the private health sector.

So…. rather than an adequate response to the healthcare needs of an ageing population that is already suffering from large swathes of unmet need, Budget 2015 offers a recipe for further cutbacks by DHBs in the range and quality of the services that they currently offer.

On paper, the further cutbacks that the DHBs will now need to pursue will have been compounded by the new services announced in the Budget. These include $98 million more for elective surgery, $12.4 million for extending a bowel cancer screening pilot ( but no national screening programme) and $76.1 million more to hospices for better end-of-life care. ….In sum, this still means that the 20 DHBs will be expected to meet their new challenges from a shared pool of only $300 million in new funding, or $15 million each. That is patently insufficient at a time when – as mentioned – the public health system is under extreme cost pressure, and when major health needs in the community are already going unmet.

The underfunding of public health is quite deliberate, and is being ideologically driven:

There is no evidence that the cost of our health services is outpacing the country’s ability to pay for them. In fact, Vote Health has been declining as a proportion of GDP since 2010, and that ratio will decline further in the wake of this Budget. Meaning : We do not face an ever-expanding level of spending on Health needs. Instead, public health is receiving an ever-declining share of an expanding economy. In this year’s Budget, if the allocation for Vote Health’s operational funding had been allowed the same ratio of GDP that it enjoyed in 2009/10, there would have been an additional $1.2 billion in operational funding. See the evidence here and also here.

This is the real problem in the health sector: the chronic and systematic government underfunding of health, during a time of rising patient need. (Also: planning for an ageing population will be virtually impossible in the climate of short term, budget-driven competition that the Horn review is proposing.) The funding shortfall in the public health system is glaringly obvious to everyone who works in it and everyone who uses it. Unfortunately, all that the Horns of the world can do is (a) suggest ways to further tighten the funding screws, and (b) create a fresh raft of profit opportunities for health corporates. Hey, forget Greece as an analogy. This is more like one of those zombie movies where the undead from the 1980s and 1990s come lumbering back into view. It reviews. It cuts funding. It enables its own. It follows.

Song for Today

And in that same 1990s spirit, here’s a song for Murray Horn, and for the grand old crew at Treasury…

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