LINDSAY MITCHELL: Scrapping $5 fee makes no sense
Yesterday, as part of the Wellbeing Budget 2023, the government announced the scrapping of the $5 prescription charge. This will cost $170 million annually covering around 29 million scripts.
They have done this because an estimated 3 percent of adults apparently do not collect their medicine because they can't afford the $5 fee (which is capped at $100 over a year).
But the vast majority of patients DO collect and pay for their medicines.
Yet again Labour has introduced a universal policy to solve a non-universal problem. Prior examples of this folly include the Winter Energy Payment for all superannuitants and the Best Start payment for all parents of babies aged under 12 months. Throwing money at people who do not need it is hardly testament to good governance.
But it gets worse. In this instance the government has also thrown money at businesses that don't need it.
Around 10-15 percent of the prescription market belongs to relatively new entrants into retail pharmacy. The best known is probably the Chemist Warehouse.
To gain a commercial advantage and market share the Chemist Warehouse did not charge the $5 prescription fee. They paid it themselves. By scrapping the fee Grant Robertson has effectively handed the non-chargers a $17 million subsidy (at minimum). Far from leveling the playing field for all pharmacies, the 'big boys' now have even more disposable dollars to promote their chain and on-line services which have, by the way, been very successful due to superior product pricing and choice.
But back to the problem of people not accessing medicine due to prescription costs, the problem the Finance Minister is claiming to solve.
According to Work and Income, "If you or a family member can't cover your prescription costs, we may be able to help with a Special Needs Grant." A Special Needs Grant is not repayable.
Another option was for the patient to use one of the non-charging pharmacies if an outlet was convenient.
This move also comes against a backdrop of minimum and living wage hikes, and benefit increases. Yes, there is a cost-of-living crisis but set at $5 the fee was also inflation-proofed.
All things considered it is difficult to understand why the Labour government has chosen now to scrap the fee for low-income individuals - let alone the wealthy.
Then again, it is election year. And simplicity makes for easy soundbites and headlines. Stupidity takes a little longer to uncover and understand.
Lindsay Mitchell blogs here