Remarkable progress since the bad old days of the 1980s, but still a way to go

“In the last year there has been plenty of disquiet in the health sector...Although the health vote has so far suffered only very minor cuts in the current reviews of government spending, it has been reined in tightly for some years and the events of the past year show that the pinch is certainly being felt. Some say that these are all symptoms of a system at breaking point, others would see it as nothing that a few million dollars won’t cure”

Inequitable funding across the country, hospital dominance of funding allocation, and cost barriers of access to primary care remain important issues today

The extract above seems to capture the zeitgeist of the New Zealand health system in 2018. Indeed, it was written in the aftermath of the Labour Party returning to lead a government after nine years in opposition.

You might be surprised to learn, then, that it was actually written in 1986.

The paragraph in question opens the seminal document, Choices for health care: The report of the health benefits review, written by sociologist Geoff Fougere, economist Claudia Scott and GP John Marwick, and commissioned by then health minister Michael Bassett.

I had reason to explore this report when preparing for an event organised by health system historians from London and Auckland. The “Witness Seminar”, held on 28 February in Auckland, invited key participants in health policy debates and reforms from 1984 to 1993 to reflect on their experiences and recollections of the time.

Panellists included former health ministers, interest group representatives, health managers and administrators, and the proceedings were recorded with a view to publication later this year.

Listening to participants, and reading Choices for health care, I was struck by how New Zealand’s health system had been allowed to drift, without policy leadership, for over 30 years.

The results, by the mid-1980s, were underutilised hospitals in small communities, the highest length of hospital stays in the OECD and enormous regional inequities in the distribution of health services.

Primary care was unaffordable for many, as the government paid only 20 per of the cost of GP services (ratcheted down from 75 per cent in the early 1940s) through the General Medical Services (GMS) benefit. And, most remarkably, the Government was spending seven times as much on pharmaceuticals in primary care than it was on the GMS benefit.

Choices for health care stands out for its clarity in outlining five options for New Zealand’s health system. The first was an “adjusted status quo”. The second described a greatly expanded role for the private sector in funding and provision, and a minimal role for the State in providing a safety net.

Option three was a system based on integrated health maintenance organisations, which would be regulated, but not owned by government. The fourth option involved the State as the dominant funder, with services delivered by public and private contracted providers.

And then came the fifth option, with the State funding and providing all healthcare services.

Pros and cons were presented for each option, with equity and efficiency the leading criteria used to evaluate them.

On these grounds, the authors favoured the third or fourth options, indicating Option four as more likely to emerge out of the existing system.

In 2018, we have ended up with a health system that resembles Option four. The route travelled, however, has been rocky and sometimes traumatic.

When National returned to government in 1990, some zealous reformers involved in producing the Green and White Papers of 1991 thought Option two, with minimal State involvement, was both and desirable.

After many highly public battles, we eventually arrived at the Option four destination with significant injuries to health-sector morale, goodwill and institutional memory.

In retrospect, New Zealand has made significant progress in addressing the key problems of the 1980s’ health system.

The single State purchaser model for pharmaceuticals mooted in Choices for health care came to life as Pharmac.

Inequitable funding across the country, hospital dominance of funding allocation, and cost barriers of access to primary care remain important issues today, although the extent of these problems is not quite as alarming as in the mid-1980s. And we still have some way to go in getting the best out of our model of public funding and mixed provision.

Another strength of that document of 1986 lies in the wisdom of its penultimate paragraph:

“Directions for healthcare policy properly and necessarily involve ideological choices. But these choices do not exhaust the issues: different ways of funding and providing health services, regardless of which values the health system ostensibly serves, can make a large difference to their equity and efficiency. The ideological debate is better served by not ignoring these factors, but by their exploration – a task we have attempted here.”

This encapsulates an ideal of policy advice at its best and most productive. Today, some commentators see a system in disarray, while others suggest there is nothing a few billion dollars won’t fix. Would it be too much to hope for an updated Choices for health care, setting out the options for the New Zealand health system of 2050?

Tim Tenbensel is head of the health systems group at the University of Auckland