Health is a Killer
Health, ironically, is the killer portfolio in all ministries. Over the last 30 years this country has had 16 ministers of health. None has had a second term. These days, when relieved of their responsibilities, they feel they've been freed from the public stocks. Why? Our health system is dysfunctional, and until some proper financial disciplines are put in place, it will continue to burn off ministers and managers, and waste taxpayers' money. When Annette King's time comes, she won't wish her portfolio on her worst enemy.
Underpinning the 1938 Social Security Act was the idea that no one should be deprived of access to health care by poverty. Over the following decade, governments negotiated an array of benefits that minimised the cost to users of services. It was a great system while the economy was robust, and there was a reasonably small number of surgical, diagnostic and pharmaceutical services available. But new procedures, better drugs and tests kept raising public expectations. Costs accelerated at a faster rate than inflation. Nurse training was altered (expensively) to suit gender agendas, and hospital doctors used their muscle to get better pay and conditions. Waste, and occasionally theft, became an endemic part of the state system. With encouragement from diagnostic laboratories, GPs ordered batteries of diagnostic tests, many of them unnecessary. Some surgeons helped themselves to public hospital supplies for use over the road at their private facilities. And there was a small but steady stream of bogus claims for subsidies.
Slowly the public and professional mentality changed from one of gratitude for the new system to a feeling that health care was an open-ended entitlement. Government money was nobody's in particular, for use (and abuse) by everyone. The darker sides of human nature addled Peter Fraser's brilliant vision. Not surprisingly, health consumed more and more of the budget, crowding out other demands for education and housing.
During the 1950s and 1960s ministers made piecemeal efforts to curb costs. Arnold Nordmeyer and Don McKay seriously considered part charges for some pharmaceuticals. They came in the 1970s, but I was the first to introduce a $1 flat charge on all prescription items from 1 February 1985. Helen Clark and her successors extended it, thereby restraining the pharmaceutical bill. It wasn't the end of the world as some predicted. It was an extension of the principle behind GP visits where a charge always deterred New Zealanders (unlike Australians and Canadians) from over-using services.
But flat charges still don't apply to diagnostic tests. Figures supplied to me show that overseas-owned diagnostic providers creamed the system during the 1990s. Excessive use will continue until a flat charge is introduced. It was the same with Winston Peters' "free to under six" GP services. They were over-used by people who could afford to pay until fees above the state subsidy were allowed.
Successive governments have worried about our hospitals. They ate up more than 70% of the entire health budget as recently as 1990. But the flow-on costs from "free" services, plus the new system of nurse training of the early 1980s, and high wage settlements, always cost more than savings made around the edges. This explains current hospital deficits. Public hospitals are an accelerating budgetary juggernaut, snatching precious dollars from the taxpayers. They will continue to do so until someone tackles the fundamentals.
This is an age of user-pays. Services for which there are no charges are rare. Sadly, "free" services will always be treated in a cavalier manner by users and providers. There should be a charge for all health services. Moreover, savings will emerge only if management within publicly-owned hospitals is taken away from bureaucrats and delegated to the private sector. Nurses and doctors will scream blue murder. They enjoy manipulating the media against public-sector management. Once everyone pays something at the point where a service is used - GP, diagnostic, public hospital - then the public will scrutinise staff claims more carefully. Their money will be at stake. Cost blowouts should reduce as people weigh more carefully whether they need a particular service. These days their provision is extremely expensive.
Help for big users of health services, or for the genuinely poor, is not hard to provide. Community service cards were pioneered years ago. But as a general rule, most people should part out with something when using a service; cards can provide the top-up. If flat charges encourage more consumers to take out health insurance, so be it. The days of the free ride should have gone long ago. Unless, that is, our goal is to allow health one day to consume the whole national budget. Taxpayers, managers, ministers, and others competing for state assistance could all breathe more freely if there were better disciplines within the health sector.
Michael Bassett, historian and author, was Labour's Minister of Health 1984-87.