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Brash: National's better path for health

Don Brash - National Party Leader

6 September 2005

National's better path for health Address at Chalmers Rest Home, New Plymouth

We are all too familiar with reports of a health system struggling to cope.

In spite of greatly increased funding, New Zealanders are forced to wait for surgery or treatment in life-threatening situations well beyond acceptable times.

We put up with a more limited range of modern drugs than we should.

We spend too much money subsidising GP visits for people who don't need help, and thus too little on the genuinely needy.

And we have under-funded the aged care residential sector to the point where 40 rest homes have closed in the past few years.

Yet a tremendous amount of extra money has gone into the health sector in recent years.

The economic prosperity which has resulted from a booming world economy has enabled New Zealand's health budget to be increased by more than 50% - from $6.1 billion to $9.7 billion in the six years to this current 2005/06 year.

I am not one who sees anything wrong with spending on health growing faster than other areas. Higher spending on healthcare is exactly what you would expect to see from a society that is gradually getting wealthier.

But as we have seen in recent years, it is not a question of the amount of money spent.

It is a question of getting value for money.

Looking back over the spending boom we have seen, one doctor summed it up by commenting that "when we consider the scale of spending over the last few years, it is devastating to see how little effect it has had".

We need a new set of priorities in health.

We need to move away from the ideological straitjacket Labour has imposed on the health sector.

Labour told the public they would fix the health system. Instead they ensured that there is minimal relevant information available, therefore minimal scrutiny, and therefore little accountability.

Labour said it would shrink the health bureaucracy, but instead expanded it.

The growth was disguised by moving functions around, some being merged into the Ministry of Health, some transferred to District Health Boards.

What we have now is a maze of bureaucracy. Its most notable feature is lack of accountability.

An incoming National Government will work to restore the productivity of our health system, while taking great care to avoid disrupting the health professionals in the front line. We want to work and consult with the health professionals involved.

The key steps in National's approach to addressing these issues will be:

* First, a full review of the functions performed within the Ministry of Health and the various entities which report to it, to streamline operations and improve efficiency. This review is not the precursor to yet another major restructuring of the health sector. We simply cannot afford to do that with a system that is in such a fragile state.

* Second, we should be seeking, as a matter of plain common sense, to remove unnecessary administration, duplication and fragmentation by better planning on a local, regional and national level. That will involve gradually rationalising bureaucratic waste and duplication, as it is identified, within the 21 District Health Boards and 79 Primary Health Organisations.

* Third, rather than putting roadblocks in the way of patient choice, we need to encourage the provision of greater choice by ensuring that, where the public system lacks the capacity to deliver services, recourse is available to other service providers. Thus a National Government will seek to expand partnership between the public and private health sectors to improve the overall productivity of the health sector, to get better utilisation of resources, and thus better value for taxpayers' money.

* Finally, we will focus our attention and our funding on the most vulnerable and fragile in our society. It is a scandal that funding of the aged care sector has shrivelled to the point where financial pressures are forcing rest homes to close. We will take a sensible middle path between a fully universal and a fully targeted primary healthcare system. We will maintain universal subsidies for doctor visits and prescriptions for the young and for the retired, but for people of working age it is more appropriate to target assistance to those who genuinely need it. In that way we can provide a higher subsidy than possible with universal coverage.

This is an outline of a programme to restore the productivity decline that has occurred in the health sector and get better value for taxpayers' money.

We believe in a strong public health system, but we don't believe in unfettered state monopolies any more than we do in private ones. We need a bit of competition, and we need alternate suppliers of much the same services, where that is possible.

How else can the public know that they are going to get value for money?

Today I am announcing four of National's five major priorities in health.

At a later date, I will also announce a package of child health, health promotion and disease prevention measures.

Residential care for the aged

I have previously made it clear that dealing with the developing crisis in eldercare facilities will be a top priority for National. Under Labour, the aged residential care sector has suffered enormous uncertainty and growing financial pressure, with 40 rest homes closing in the past few years.

Labour ignored the PricewaterhouseCoopers Report of 2000, and this has led to the present crisis.

Health Care Providers New Zealand, the umbrella body for residential, dementia, and hospital aged care, has stressed that a first priority is to remove the uncertainty around negotiating an inflation adjustment with the 21 DHBs. National will ensure the inflation adjustment is passed on to the providers in a timely way so that they can plan with confidence. That will come at an initial annual cost of around $24 million, exclusive of GST.

National will also commit a further $35 million per year into the Aged Residential Care contract from 1 April 2006 as a second step towards redressing Labour's severe under-funding. This will give the sector further certainty before a comprehensive review of both the aged residential sector and the home care sector is achieved.

We will ensure that there is a mechanism in place to get the funding through the DHBs, and delivered to the sector.

National has already committed $19 million annually to fund homecare workers' travel costs.

I recognise that the demands on the services from this sector will grow very significantly over the next decade. It is essential that we plan for this, so that we have a sector which has the financial capability to grow to meet what will be a very strongly rising demand from an aging population.

I recognise, therefore, that this is just the start. National will work with the sector to find a sound basis for policies to sustain the sector in the future.

Elective Surgery

There are today nearly 180,000 patients waiting for surgery.

Nearly 120,000 patients are waiting for a first specialist assessment - one of the first steps towards receiving an operation.

And yet there are probably thousands more waiting for an operation who do not appear on such lists - those people culled from the long line of people waiting for their operation and sent back to their GPs for 'active monitoring'.

Almost 61,000 patients are lined up in the booking system, split into a variety of waiting lists. These patients sit in categories such as Active Review, Booked, Given Certainty, Residual, and Rebooked.

In Opposition, Helen Clark went around the country saying she would "blitz" the waiting list.

She didn't tell people that by "blitz" what she really meant was "re-label".

In spite of greatly increased funding, New Zealanders are increasingly forced to wait for surgery or treatment in life-threatening situations.

Behind these statistics are tens of thousands of anxious New Zealanders and their families, distraught that, having paid their taxes, the health system cannot provide for them in their time of need.

At present, patients with common ailments, such as hernias, varicose veins, haemorrhoids and gall bladders, will simply not be put on a waiting list unless their condition is very severe.

There were 7,800 patients as of June 2005 who had been given a commitment to receive treatment but who had not been treated within six months. Over 1,700 of these reside in the general surgery category with many likely to have severe cases of gall bladder disease, varicose veins, hernias and haemorrhoids. Many will have intense pain and will miss work. Delaying their operations will lead to greater complications. 1,200 of these patients have ear nose and throat problems and 800 gynaecological problems.

There were a further 11,500 high priority patients as of June 2005 waiting without a commitment to treatment.

Many of these patients are also in pain and are kept off work because of their condition.

This situation demands an urgent response.

Accordingly, National will commit an additional one-off $100 million three-year package to slash the backlog of some 20,000 patients in these various elective categories.

I recognise that to dramatically reduce the waiting lists will require us to put in place the necessary capacity. That is why this is a three-year package. We will work with the sector to ensure we get the maximum value for money from this additional funding.

The funding will come from the additional $1 billion in revenue projected in the Pre-Election Economic and Fiscal Update.

National's new commitment is over and above the current 'cataract' and 'orthopaedic' initiatives that Labour recently announced.

This funding will be contestable between the public and private sector. I would expect the bulk of it to be used within the public sector.

But my main concern is simply that the operations are performed as soon as possible.


I am announcing today that the next National Government will boost funding to Pharmac by $75m over the next three years to expand the availability of new drugs.

New Zealand's pattern of pharmaceutical use has diverged from other OECD countries, and we are falling behind in our access to innovative treatments.

It is likely that this is adversely affecting health outcomes, and shifting costs to more expensive end-stage interventions. It may well also be contributing to keeping more people on sickness and invalids benefits.

New Zealand's very tight rein on pharmaceutical spending has undoubtedly kept costs down, and Pharmac has served New Zealand well in achieving this.

But the evidence is growing that the cost savings from a tight pharmaceutical budget are now starting to be offset by increased costs elsewhere in our society from a lower quality of life, higher levels of disability, and more end-stage interventions. Some estimates suggest these costs are likely to be very significant, even as high as hundreds of millions a year.

Although this is a matter for the clinical experts in the area to decide, the sort of drugs that could be available through this increased funding would be new drugs for breast cancer, brain cancer, arthritis, mental health, multiple sclerosis, and new antivirals for hepatitis B.

National will undertake a review of New Zealand's pharmaceutical policy to consider the trade-offs between pharmaceutical and other forms of treatment, and to explore options for providing patients with a greater choice of drugs.

Primary Health

National will retain the PHO system, not because it is a well designed or implemented system, but simply because there has been a vast investment in developing it. The primary health care system should not have to endure yet another upheaval.

But National will step back from the universal subsidy system Labour has been introducing. A fully universal subsidy system is simply too expensive, and means that the genuinely needy get less assistance than they could with better targeting.

As I have mentioned, National will take a sensible middle course on this issue.

We will retain universal doctor visit and prescription subsidies for the young and the retired; in other words, for those below the age of 25, and for those aged 65 and over, there will be no change.

But for the working age population we will target subsidies to the genuinely needy.

A targeted system will allow us to provide cheaper visits to the doctor for those on lower incomes than is possible under a universal system.

We will not rollout the proposed universal subsidy arrangements for Interim PHOs that Labour has planned. Too much of this expenditure will go to those who do not require it. It is not focused on those in genuine need.

This will save approximately $180 million annually by 2007/08, and we will reinvest that saving in the areas of greatest need that I have outlined today.

We will end the anomaly of there being only a $15 subsidy to those relying on the Community Services Card, whereas higher income people enrolled in an Access PHO receive almost a $27 subsidy.

The Community Services Card will be replaced by a new Health Card, with simplified administration, higher qualifying income thresholds, and a boost in the value of the subsidy to $30.

This will still leave the anomaly of the Access PHO universal subsidy. This anomaly has existed since the inception of the subsidy rollout for PHOs in 2002 and would have continued until 2007 under Labour's plans.

The subsidy structure for Access PHOs will be subject to a full review and renegotiation with Access PHOs, particularly in respect of achieving better targeting of subsidies to those with the most need and ensuring that the increase in the subsidy to low income groups through our new Health Card is channelled through to them appropriately.

Clearly we will need to reassess the universal component of funding within Access PHOs, as it is inconsistent with our approach. There will inevitably be some losers, but they will be amongst higher income groups. I make no apology for that.

The benefit will be that the lower income groups covered by Access PHOs will gain from a higher average subsidy than currently. How quickly we can simplify the unfair funding structure that Labour has implemented cannot be stated with confidence from Opposition, but we will be working to get the higher subsidies through to the most needy as quickly as possible.

As we unwind the universal subsidy structure in Access PHOs, we intend to reinvest those savings back into primary health care, boosting the subsidy level for those age groups receiving universal coverage up to the $30 provided for Health Card holders, and working to reverse the recent erosion of free GP visits for under 6 year olds.

Of the $180 million saved by not rolling out universal subsidies to the Interim PHO population, around $70 million will be returned through increased subsidies to the genuinely needy, via the Health Card.

The rest will be spent on expanding the range of subsidised pharmaceuticals, on improved funding of aged care facilities in New Zealand, and on a range of childhealth, health promotion and disease prevention measures to be announced shortly.

But our most immediate priorities are the package of moves announced today:

* better funding for care of the aged,

* increased spending on pharmaceuticals,

* a major assault on the waiting lists for elective surgery,

* and better targeting of primary health care subsidies for those of working age, coupled with a boost in subsidies to those with genuine need.


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