Fears of privatisation by stealth in an overwhelmed healthcare system

More signs are emerging of New Zealanders turning to private healthcare as the public system struggles, with Southern Cross this week reporting unprecedented demand for insurance.
The not-for-profit group says it has had a jump in business as people go private to beat the waiting lists. Chief executive Nick Astwick predicts future growth in private sector healthcare complementing the public system, but some warn that it will exacerbate a two-tier system that favours the wealthy.
Whakatāne mayor Victor Luca has been scrutinising data on public and private healthcare for years and calls it privatisation by stealth. He says the impact on people of his district would be devastating if it continues, because many could not afford health insurance or private health care.
Luca, a former nuclear scientist, says he’s been asking the Ministry of Health for evidence that private is economically more efficient than public. He says sectors of the health service that are already close to fully privatised including pathology and other “ologies”. General practitioners are also private operations with government subsidies, surgeons and other specialists often work in both private and public, and the public system increasingly outsources operations to private hospitals.
The ministry has responded to Luca that it is not encouraging privatisation of the health service, but he fears New Zealand is heading towards the US model of healthcare.
“I have lived in the United States for a couple of years, that system is you beaut. It’s you beaut for 10 percent of the population.”
“Our district has got a high rate of deprivation. That would be devastating here. We’re quite lucky that we’ve managed to retain our hospital in this town, the hospital services a lot of the East Coast, Ōpōtiki, Kawerau area, but it could have been taken away with the same ethos of condensing and stripping back services.”
Robin Gauld, a health policy professor at Otago University, says further privatisation is not a done deal and there are other ways to fund an increasingly hungry health system.
He says the current split in health spending is 80 percent public, 20 percent private.
“But then we’ve got health insurance and historically about a third of our population has had insurance. That has been creeping upwards of late,” Gauld says.
He explains to The Detail that insurance contributes to the 20 percent private health spending, and the rest is from co-payments for GP visits, pharmaceuticals and uninsured people who pursue the private option over public.
People assume that the public private split in healthcare works well for everyone but it is “very inequitable”.
“This is the challenge that we face in New Zealand is that our health system is deeply inequitable, so people of lower socioeconomic status are going to have much less access to healthcare to those who can afford to pay or who have health insurance. It’s geographical as well, and by ethnicity.”
But Gauld says there is a growing push from influential people in New Zealand for a new social insurance funding model for the health system, similar to the Accident Compensation Corporation, which collects levies from employers and employees and then provides accident and injury coverage and compensation.
“A social insurance funding mechanism for health would be very, very similar. Countries that have social model insurance, there tends to be a reasonably strong role of government to ensure those who can’t pay, there is a contribution coming in for them.
“But what social insurance does very importantly is it solves the equity problem.”
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