A Timely Call For A Social Contract In Health

Sunday, 11 May 2025, 6:45 pm
Opinion: Ian Powell

The term ‘social contract’ is occasionally used in Aotearoa New Zealand and in many other parts of the planet. It comes from an old philosophical idea that people consent to be governed which effectively means that people give up some freedoms.

It involves an implicit agreement among the members of a society to cooperate for social benefits. This might mean sacrificing some individual freedom for state protection.

Theories of a social contract became popular in the 16th, 17th, and 18th centuries among philosophers such as Thomas Hobbes, John Locke, and Jean-Jacques Rousseau. They considered it to be a means of explaining the origin of government and the obligations of subjects

It can be argued that in New Zealand there is a social contract between the government and the citizenry , where the government provides social services and support in return for citizens fulfilling certain obligations.

More specifically accident compensation (ACC) is a form of social contract. The right to sue for accidents and injuries is foregone for the right to compensation, including financial and rehabilitation support. 

In the context of the apparent never-ending but continually escalating crisis in our health system, an impressive group of 13 prominent figures have collaborated to publish in the New Zealand Medical Journal (2 May) an editorial under the heading ‘The common good: reviving our social contract to improve healthcare’: Reviving our social contract.

The lead author is Professor Phil Bagshaw, retired general surgeon and Chair of the Canterbury Charity Hospital Trust. The other authors include medical school professors, specialist doctors, economists, and the first Chair of Health New Zealand.

Polarising positions

The editorial starts from the standpoint of increasing polarisation around  into two philosophical positions over the direction of our health system. While I’m not sure I would describe it as ‘philosophical’, it is right about the polarisation.  

The first position is allowing or encouraging  privatisation to creep forward in our public hospital. The opposing position is that the government is doing its best against an ever-growing demand for an increasingly expensive service.

The authors argue that these two contrary positions can be constructively resolved by resurrecting the social contract between the government and the governed with the objective of achieving improved healthcare for all.

After introducing the concept of the social contract, the editorial discusses its inception with the beginning of the welfare state in Aotearoa in 1938. Specifically for healthcare it involved universal access to secondary (hospital) care. Primary care was still work-in-progress at that time in respect of being part of a social contract.

The 1990s became a turning point with “…the social pendulum has swung towards greater contractarian, individualistic immediacy…”

The background to this was the then National Government’s ideological decision to introduce market forces into public hospitals competing under the Commerce and Companies Acts. Competition replaced cooperation.

A point of difference

The editorial argues that:

Successive governments have followed this social trend and slowly abrogated their responsibility to provide the economic support necessary for the maintenance of the common good and an effectively functioning public healthcare system. 

I beg to differ somewhat. It is too much of a blanket generalisation. The new Labour-Alliance government ended the market forces experiment.

This included taking public hospitals out of the Commerce and Companies Acts. Cooperation was returned to as part of the system’s ethos.

For much of the 2000s overall government health spending increased in relative, not just absolute terms. During this period, I would argue that the social contract that stemmed from 1938 was resurrected.

Two qualifications, however. First, while relative health spending did increase, funding for the operational costs of running public hospitals did not do so well.

Second, a wave of hospital laboratory privatisations began in the second half of the decade started by a Labour health minister (Pete Hodgson). This wave is responsible for the debacle hospital laboratories find themselves in today as service provision and quality is trumped by profit extraction.

However, this fiasco was not ideologically driven. Instead, it was due to poor leadership judgement at the highest levels of the health system, including political.

Editorial really on the mark

Nevertheless, the writers are correct in evidence-based highlighting that:

…large international studies have shown, on the contrary, that, in the long-term, universal access to healthcare is the cheapest and most cost-effective system.

Further:

Indeed, investing in healthcare resources across 25 European Union (EU) countries has been shown to yield substantive fiscal multipliers.

And:

Creeping privatisation in Aotearoa New Zealand is facilitating a decline in government responsibility for comprehensive secondary healthcare.

They also note that:

To the surprise of many, data from both the United States (US) and the EU show that the private healthcare sector is not even more efficient than the public sector; indeed, the reverse is more generally true.

What is also pleasing about the editorial is its emphasis on the point that a good “…articulated philosophy to underpin our healthcare system is insufficient…”

Also required is that the “…system is built and maintained at an appropriate level of technical and managerial excellence.”

The solution

A solution is proposed

The editorial does not just call for reconstructing an “ethically normative” social contract for New Zealand’s health system. It goes further by proposing in general terms what this reconstruction might be based on. In particular:

• the philosophical and economic responsibilities of government that have been shown to be efficient and cost-effective elsewhere;
• a focus on equity of outcomes rather than equality of access;
• transparency at all clinical, commercial, administrative, managerial and political levels. They stress the importance of not allowing ‘commercial sensitivity’ to keep secret contractual details for public works;
• short-term political ambitions that are attuned to long-term social needs;
• the reciprocal responsibilities required of the “former egalitarian spirit” pursuit of the common good, increasing mutual trust; and
• incorporating  Māori world values of manaakitanga (respect, hospitality, generosity, kindness and care for others), kotahitanga (unity, togetherness, and solidarity), whanaungatanga (relationship, kinship and sense of family connection), and kaitiakitanga (guardianship, protection, and stewardship of the environment).

They then conclude with the following final paragraph:

Our initial steps in 1938 towards a universal open-access health system were world-leading but imperfect. Subsequent reform should have been focussed on widening the contractualist vision and providing the political and economic support to achieve universal equitable health outcomes. Nearly a century later, we are regressing to an increasingly contractarian philosophy. This will lead us progressively to a US-style health system that is prohibitively expensive, highly inefficient and unacceptably inequitable, and from which we will be unable to extricate ourselves. Right now, we have the opportunity and the capacity to revive the social contract. Do we have the courage and persistence necessary to do so?

‘Do we have the courage and persistence necessary to do so?

The editorial by Phil Bagshaw and his well-placed experienced and expert colleagues is a worthy document and a good read. But it is much more than this. It could not be more timely; again, it is much more than this.

The articulate advocacy of reconstructing a social contract goes to the heart of the severe crisis of our public health system and for overcoming it. That is its prime strength.

I do have a point of departure on one historical aspect, as discussed above, but this does not detract from my support for the thrust of the social contract argument.

Some of this difference might be explained by diverging views on what neoliberalism means (the term is used more than once in the editorial). My view was discussed in my politics blog Political Bytes (17 January 2021): Neoliberalism in New Zealand.   

The editorial ends by asking whether we have the courage and persistence necessary to revive the social contract. In the case of the current government (those who governed), it is not a question of courage or persistence. It is ideologically oppositional to all that the social contract might involve.      

However, in the case of the governed it would be a different story. The principles behind the healthcare social contract would resonate very strongly if the message can get out beyond this journal editorial.

Health professionals, their associations and their unions, should possess the necessary courage and persistence. Taking the social contract principles to the people could lead to them having the necessary understanding and confidence as perquisites for this courage and persistence.

The authors of the NZMJ editorial have provided an insightful foundation for a timely conversation. Let it get traction.

© Scoop Media

Ian Powell

Otaihanga Second Opinion is a regular health systems blog in New Zealand.

Ian Powell is the editor of the health systems blog 'Otaihanga Second Opinion.' He is also a columnist for New Zealand Doctor, occasional columnist for the Sunday Star Times, and contributor to the Victoria University hosted Democracy Project. For over 30 years , until December 2019, he was the Executive Director of Association of Salaried Medical Specialists, the union representing senior doctors and dentists in New Zealand.

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