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Later this week, the Minister of Health is going to announce one more reform of the healthcare system. He had an article in yesterday’s Sunday Star-Times which began with the confident statement that “It’s pretty clear what’s wrong with our health system – long waits for treatment, staff under pressure and a bureaucracy that can get in the way of doctors, nurses and other health workers caring for patients”.

And the implication of his statement is that, on Wednesday, he is going to announce some miracle formula to set things right. “Our health system,” he said, “should not be about structures but about people”. Who could possibly disagree?

I am old enough to remember at least three pretty fundamental attempts to restructure the health system in order to make it more responsive to the needs of New Zealanders but still, apparently, it doesn’t measure up.

The central issue is that, as David Caygill once told me when he was Minister of Health in the late eighties, humankind has only worked out three ways of allocating goods and services.

First, they can be allocated by the price mechanism – and this works pretty well for most goods and services. People are free to buy what they feel like and can afford, at prices which others are willing to sell at. But people don’t want health services provided that way, because that would mean that access to health services would depend entirely on being able to afford them. People would die for lack of relatively inexpensive treatment.

Second, goods and services can be free at point of “purchase”, and that’s largely how the public health service works in New Zealand and many western countries now: people front up when they are unwell, and are treated at no cost to them (as in public hospitals) or at very limited cost to them (as when they visit a general practitioner). The costs are largely picked up by taxpayers and, as the Minister noted in his article, these costs currently represent some 20% of all government spending – a proportion which may get higher as the population ages. The public enjoys the “free” health service but, as with anything which is provided without cost at point of “sale”, is never satisfied with either the quantity or the quality – there are constant complaints about waiting lists for non-life-threatening surgery, or delays in treatment at A & E wards.

The third option, once known as the Oregon approach after the US state which introduced this system, is for taxpayers to provide a wide range of clearly specified treatments free of charge to patients – but limited, or no, support for other treatments. For many situations this system works well, but of course it becomes more and more difficult to maintain the boundary between what taxpayers will fund and what they will not fund. The treatment of very rare but very expensive illnesses is not funded, and this leads to huge political pressures to support those who have these rare but very expensive illnesses – a bit like the approach Pharmac takes in the case of pharmaceuticals.

As David Caygill pointed out to me, the public don’t like any of those options in the case of healthcare – but there aren’t any others!

Having said that, I personally favour the approach Singapore has taken. Singapore requires all citizens to save into a special saving account specifically to fund healthcare, and to cover the cost of their own healthcare from those accounts. They also pay, from those healthcare accounts, a small insurance premium to cover the very expensive medical events which occur very infrequently. I understand there may be a very basic “safety net” for those who are unable to save at all.

The Singaporean system appears to provide a pretty good level of healthcare, with healthcare providers incentivized to compete for “customers” and the public incentivized to look after their own health and use healthcare only as needed. Certainly, by most measures Singaporeans are a healthy lot, while spending about half what New Zealand spends, relative to GDP, on healthcare.

I very much hope, for the sake of all New Zealanders, that the Minister of Health really does come up with a proposal which will provide better healthcare at a similar cost to that currently being borne by taxpayers. I’m not holding my breath however, having seen too many attempts to restructure the health system without actually changing the fundamental cost drivers.

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