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Health funding path extended

Hon Annette King
Minister of Health

Health funding path extended

Budget 2003 allocates another $535 million to carry the government’s $3.3 billion three year health funding package into 2005-06.

The allocations for the first three years were $400 million in 2002-03, $800 million in 2003-04 and $1.2 billion in 2004-05.

Health Minister Annette King said the new funding brought to $1.735 billion the amount allocated to the funding path since it was established in the 2002 budget. In addition, $229 million had been allocated in 2003-04 and $356 million the following year to cover anticipated demographic changes and accident costs.

“This level of new funding and the certainty it provides have been warmly welcomed by the health sector and will further move District Health Boards to their fair share of funding under the Population Based Funding Formula,” she said.

“Total spending under Vote Health in 2003-04 will reach $9.61 billion. This is made up of new funding as well as funding transferred from the previous year, for example money for the meningococcal vaccine.

“In fact, almost 23 per cent of the $7.55 billion in new operational spending entered into since the government came into office in 1999 has been allocated to Vote Health with the result that it now accounts for 20 percent of all government spending.”

Ms King said District Health Boards were now being funded at unprecedented levels. “That doesn’t mean they will not have to make difficult decisions. That will always be the case in Health, particularly as DHBs must stay within their indicative funding path.

“But they now have the ability to work with their local communities to implement the government’s strategic priorities by using the available funding in the most appropriate ways. Combined with the introduction of improved ways to deliver primary health care, this will significantly raise the overall health status of New Zealanders.”

The Primary Health Strategy component of the health funding package would be increased from $50 million in 2002-03 to $165 million in 2003-04 and to $195 million in 2004-05.

“We have known for some time that one of the biggest barriers to care for many New Zealanders has been the cost of seeing a GP. The government recently announced a $19.8 million initiative to continue to address this problem,” Ms King said.

She had secured cabinet agreement to focus on the next stage of implementation, which would provide low cost health care for people over 65. “My aim is to begin the roll-out in 2005-06.

“We will allocate $11.2 million of the $19.8 million to all PHOs through the new Care Plus initiative. Care Plus is being piloted this year and is expected to begin from 1 January, 2004. It will cater for many older people with very poor health as well as those under 65 requiring high levels of care.”

The balance of the $19.8 million would go to allowing Interim PHOs to charge low fees for patients under 18 from 1 October, this year and to reducing prescription fees to a maximum of $3 for all children aged between 6 and 17 enrolled in interim PHOs and for patients of all ages enrolled in Access PHOs [PHOs in population areas of greatest need.]

Specific revenue funding commitments for 2003-04 include:
- $22.1 million to meet increased costs in accident treatments for DHBs
- $15 million for the sanitary works scheme (subsidy), announced last year
- $1.25 million for counter terrorism preparedness
- $1 million to assess quality and safety in residential and community care
- $600,000 for drug and alcohol services in Christchurch
- $15,000 for health resources for the National Drug Intelligence Unit
- $58 million for the development, purchase and delivery of the meningococcal vaccine (part of $200 million over four years).

$103 million had also been budgeted to begin removing asset testing on long-term geriatric care in 2005-06.

Capital spending:
The government has appropriated a mix of direct cash and approved lending totalling $656.9 million over the period from 2002-03 to 2005-06 for major hospital developments. A substantial amount of this funding has been allocated for major building projects in:
- Auckland (completion of ADHB) new hospital and ambulatory facilities
- Capital & Coast (regional hospital, Kenepuru and other developments)
- Nelson Marlborough (Nelson hospital)
- Canterbury (Women's Hospital)
- Southland (new hospital)
- and a number of smaller projects (Burns Unit at Counties Manukau and Orion project at Waitemata.)

Construction continues on a number of these projects and many significant milestones are expected to be reached in 2003-04, including the opening of the Auckland City Hospital.

The remaining funding is to be prioritised over the next three years – 2003-04 to 2005-06. A National Capital Committee is being established in conjunction with the sector to ensure best value is gained from this funding. Projects under consideration for prioritisation include proposals from (amongst others) Waikato and Mid Central DHBs.


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