No ‘big bang’ in pae ora reforms

"Ambitious health-reform policies generally mutate into something much more incremental, and rarely meet their stated objectives"

In most commentary on the current round of health reforms in Aotearoa, there hasn’t been a strong sense that “the grass is greener elsewhere”.

In one sense, that’s a good thing. Those of us who research health policy in an international context typically point out that lessons from one country can’t be picked up off the shelf and transferred to others.

Nevertheless, our collective understanding of the reforms could certainly benefit from a little more interna­tional perspective and a little less insularity.

Most commentary has portrayed the reforms as major and once in a generation with potentially tumultuous and far-reaching effects – for better or worse, depending on who is telling the story.

So let’s put these reforms into some sort of internation­al perspective. Recently I co-edited a book, Health Reforms Across the World, which looked at 12 small and medium-population countries.¹ This can help to peg how the Pae Ora (Healthy Futures) Act 2022 reforms stack up in terms of scope of ambition, pace of change and likelihood of lasting change.

We can boil down the content of major health-policy reform to whether they involve major change to:

• how the money to pay for health services is sourced – through tax, through social insurance, private insurance or user-pays
• how providers get paid – fee for service, capitation, activity-based budgets or “paying for value”
• how health services are provided – by government organisations, or by private for-profit or community non-profit, and
• how the whole health system is governed.

This might seem like a rather dry list. Why not focus on the values that underpin health-system reform? The short answer is that changes in values, in themselves, change very little unless they instigate change in one or more of the big four above.

The current Government’s reforms do not moot changes in financing: our mix of tax and private financing has been remarkably stable for a long time.

Of the 12 countries covered in the book, only Taiwan initiated a major transformation in health-system financing. Many countries – for example, Switzerland, Netherlands, Czech Republic, Israel – were trying to make significant tweaks to how their insurance-based systems worked. Lower-income countries such as Ghana and Tanzania took halting steps towards universal coverage of health services.

In New Zealand, universal coverage of primary care services is still out of reach (unlike in most other high-income countries), and there are no pointers towards it in these reforms.

It’s unlikely the reforms will change how hospital services are paid for, at least in the short term, although there is potential for major changes in store regarding primary and community services.

The move to three-year funding and contracting cycles announced in Budget 2022 is important, but hardly counts as a major reform.

Health minister Andrew Little and many of the reform designers certainly hope the reforms will induce changes in the way health services are provided, but they have not specifically designed the detail of any such changes. That will be up to Te Aka Whai Ora – Māori Health Authority and Te Whatu Ora – Health New Zealand.

It’s really only the fourth of those critical areas – being health-system governance – that is the immediate object of the reforms. When we look at how the system is run, the scale of change is significant, but not enormous.

For scholars of health-policy reform, centralising or decentralising a health system is not particularly notewor­thy, despite the disruptive and energising effects it can have on those caught up in the change.

What about the pace of change? In terms of speed, the reform vehicle is more a Mazda Demio than a Maserati.

Key elements of the changes, such as the introduction of localities, are to be phased in over three years. The effects on hospitals of the abolition of DHBs will also take a few years to emerge.

The Government’s pace is nothing like the “big bang” reforms of the 1990s, although it is worth remembering that those reforms eventually followed a much slower and meandering path than was intended.

How will these reforms register on the international health-policy landscape?

It’s the creation of Te Aka Whai Ora that international health policy experts are likely to take a keen interest in, particularly in other countries where indigenous peoples experience significant inequities.

I suspect introduction of localities will also attract international attention, but that will depend on progress in implementation.

One main takeaway from our analysis of health reform across 12 countries is that ambitious health-reform policies generally mutate into something much more incremental, and rarely meet their stated objectives.

This assessment certainly applies to past health reforms in New Zealand, such as those of the early 1990s and the Primary Health Care Strategy of 2001.

Attempts at health reform are still an important catalyst for improving a health system. Important changes take place that, when considered in retrospect, have their origins in policy reforms.

There are plenty of international examples of this phenomenon, but the two Aotearoa examples that stand out are the creation of Pharmac and the growth of Māori health providers in the 1990s.

Neither of these were part of the big-bang reform blueprint of the time. Most elements of that blueprint did not materialise. Yet those two important developments would not have happened without the catalyst of a reforming government.

In the world of health-system reform, therefore, shooting for the stars increases the chances of ending up on the moon.