Population Based Funding - A Two Faced Beast

by Selwyn Manning

The argument has been raging for years: it all boils down to two options.

 Should population based health funding be founded on principles of health status and need, or one of divvying out the health dollar by pure headcount.

 If this country was egalitarian to the point of common socio-economic status, then consideration may be warranted to the later option - but we all know that this country is not egalitarian. Far from it.

 Health status is not an elusive banner-brand that sits perfectly abstract within Ministry of Health reports in Wellington. It represents real life. 

Counties Manukau District Health Board chief executive, David Clarke [pictured right], is correct to publicly state that southern Auckland’s health status will get worse unless the Ministry of Health speeds up changes to the money allocated for health boards.

As the New Zealand Herald reported, the ministry has yet to set the final formula to allocate money.

Here in Auckland, in pockets of our suburbia, we know all too well what health status means. We see a lot of it. Its diversity is something that sends us reeling. It affects everyone - whether it be our own child coughing uncontrollably in our arms, or the child next to you in the supermarket checkout in bare feet with streaming nose, ears, eyes, and worrying spots on his or her skin.

 Today
statistics have been released that chronicle three years of research into southern Auckland’s health profile. It comes as no surprise that it’s not a healthy document.

 What it contains is a reminder to Wellington, to the Ministry, to the Minister of Health Annette King [pictured left], that Population Based Funding is a two-faced beast. It will caress and crush political longevity.

 If this coalition Government has an Achilles Heel, it is this. The problem existed under past governments. And the current coalition Government’s parties were largely critical of past failures. This Government has the social justice mandate to correct it once and for all. It must do so.

 Essentially, basing an area’s funding on a mere headcount is destined to fail. Here in southern Auckland we parade and pride ourselves on a diverse ethnic and racial mix: “The microcosm of New Zealand” one Labour MP is often heard to herald.

 But within the diversity is a complexity of varying health status determined directly from one’s ethnic makeup and socio-economic status.

 Put simply, if you are white pakeha, your health on average is much better than if you are not white pakeha. If you are Maori, your health status is worse than your pakeha counterpart. And, if you are Pacific Islands, particularly if you are a child, then your health status is deemed very very poor indeed.

 This means Maori and Pacific Islands people use hospitals more often, because they generally suffer ill-health more often than white pakeha.

 Population based funding designed around a $1 for $1 formulae, by design, avoids the fiscal cost of meeting health need in large population urban areas - especially so where ethnic, racial, and socio-economic mix is diverse.

 Granted, formulae have part-way addressed a percentage top-up for the proportion of Maori living within our communities. But it must also meet the health status needs of the Pacific Islands community. To fail to address this core problem, is to fail in healthcare delivery to all peoples. And it displays indifference and disregard for the social-justice ideals that the parties of this coalition Government campaigned on.

 Acute healthcare needs of Maori and Pacific Islands people mean hospitals like southern Auckland’s Middlemore Hospital [the largest trauma hospital in Australasia] see far more acute admissions each year - on a population basis - than other large hospitals around New Zealand.

 In essence this means large pockets of voters in Labour electorates are being denied access to a public health system that they expect, deserve, voted for, and need.

 A failing formulae blocks elderly from accessing elective surgical procedures - as acute costs drain resources from elective surgical coffers.

 A failing formula forces middle-income people to drive into private healthcare arrangements, because, due to lack of access, the public health system is no longer an option.

 A failing formulae adds to a widened ditch of haves and have-nots, to all the jealousies, bigotries, ignorance and racial slurs that surface from alienated and disenfranchised communities.

 Where high populations of white Pakeha live - the number of acute admissions are fewer. However, within those communities, differentials exist too. Often in the dicey elective surgery area. For example, the higher the percentage of elderly pakeha that live within a community, the lower its elective health status, etc etc..

 Population based funding is the calculation. The differential top up to the formulae ought to be determined by a community’s cumulated health status. Now that, would be a policy that would deliver.

 In southern Auckland, year after year, record numbers of largely Maori and Pacific Islands children are acutely admitted suffering varying strains of influenza, meningitis, rheumatic fever, measles, mumps, malnutrition, and general woeful poor health. The reasons are many, and in many ways are being addressed by correcting government policy. Causes are being addressed - this is commendable and honourable. Housing, education, law and order have benefited much from recent policy reform.

 And in health? Well, in health, it is right to address primary healthcare - we all know it has needed attention for decades. But it would be wrong to mask this population based funding issue in the shroud of improvement service claims - as the past National led government attempted. It would also be wrong of this current coalition Government to bask in primary healthcare improvements - to do so would be a shallow attempt to divert public attention away from the obvious.

 Back to the purpose of this article.

 At Middlemore Hospital, the wards clog up, especially in winter. This “Winter Crisis” has become well documented, predicted, expected. Not tolerated. The Ministry is well versed in this phenomenon. It’s predecessors: the Health Funding Authority, the Northern Regional Health Funding Authority all shrank back into the greyness of Wellington’s paper-weight to avoid advancing policy that this area of New Zealand has long deserved.

 This coalition Government must address the negative diversities that exist in our communities. If “Closing the Gaps” is to be buried in essence as well as in word, then let’s be honest about it.

 The differentials in health status must be acknowledged publicly and calculated in the country’s health funding formulae.

 A fix-it population based funding formulae must be inputted into the fiscal equation - it must place a calculation-top-up determined by each community’s deemed health status. This would take into account the cluster effect of cumulative community, ethnic, racial health status. This differential must be on top of the dollar for dollar per head of population that surrounds the status que.

 The consequences of not doing do will be neglect of the worst kind - and an election issue served up to opposition parties on a tin-plate-platter. The realisation would bite - this issue is a two-faced beast indeed.

See also earlier Scoop articles on Population Based Funding Formulae:
Scoop: No Prime Minister: The Buck Stops With You

Scoop: Survey Confirms Scoop Social Decline Investigation

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