Matthew Hooton on health reforms: Andrew Little’s bold plan shows the way


Andrew Little’s health reforms represent a return to when political leaders were prepared to act boldly in the public interest rather than cower behind vested interests.

Neither he nor they will like the comparison — and their ideologies clearly diverge — but in being willing to consider matters beyond the next polls, Little may be the true heir of the great reformers of the mid 1980s and early 1990s rather than the succession of middling, piddling, pointless governments that have followed.

As Little put it on Wednesday: “I think being scared of the size of the problem and the solution is not good government.”

If this philosophy infects Little’s party or, better still, spreads through Parliament, there’s an outside chance New Zealand’s 25-year malaise could be over. With luck, Finance Minister Grant Robertson or National’s Andrew Bayly might yet be prepared to boldly confront New Zealand’s chronic productivity disease or our clogged infrastructure arteries that are incompatible with 21st century life.

Even if they lack Little’s fortitude, the overwhelmingly positive response to his plan at least removes the quarter-century excuse that doing anything difficult but worthwhile is politically terminal.

Everyone has known for two generations that the health system must become more efficient. The fiscal menace of the baby boomers has always been less about their superannuation payments and SuperGold indulgences than the enormous demands they will place on health.

Unlike their Greatest Generation parents, they are hardly self-sacrificing types likely to gallantly forego unreasonably costlycare in the interests of the debt-to-GDP ratio.

At the same time, life expectancy leapt ahead rapidly through the late 1980s and early 2000s, largely as a result of radical but expensive advances in health technology. On average, today’s 60-somethings now have a good 20 or 25 years ahead of them. The main exception are Māori, who have filed more than 200 claims with the Waitangi Tribunal on its health services and outcomes inquiry.

The growing sophistication and cost of healthcare has also left rural and provincial New Zealanders with unrealistic expectations about how often the most advanced services can be duplicated across the country.

The 1990s solution was the funder-provider split. Four Regional Health Authorities (RHAs) were set up to purchase services off 23 competing and for-profit Crown Health Enterprises (CHEs) or from the private sector. Where possible, individuals could choose which services to use, theoretically giving them some influence over the system as customers.

Free-market purists liked the model because it should have delivered ever-improving quality at lowest cost. Māori providers and others who were against one-size-fits-all regimes also liked it because it allowed alternative providers to be funded on the same basis as the CHEs.

The reforms failed, partly because Simon Upton and Rod Carr thought it was a good idea to tax people for using their local hospital. More substantively, the reforms involved centralisation around the four RHAs and 23 CHEs. That incentivised them to amalgamate services, including by closing small, rural hospitals.

Nothing really changed when Winston Peters insisted the RHAs be merged into one Health Funding Authority, and that the CHEs be renamed Hospital and Health Services and no longer be required to make a profit. They were never going to make one anyway.

The Clark Government abolished all this and established the District Health Boards (DHBs). Instead of the Government and public influencing health services as funders and customers, their voice would be heard through appointed and elected directors.

From the start, this was an unsatisfactory halfway house, driven by Helen Clark’s political caution. The DHBs were unaccountable, powerless and wasteful.

John Key thought they should be abolished but wasn’t interested in making a fuss. His priority was keeping health out of the news. As intended, Clark and Key ossified the status quo.

In most senses, Little’s approach completely rejects the 1990s model. His Health New Zealand is a UK-style National Health Service that will run pretty much everything. While champions of markets and competition will despair, at least a decision has finally been made about which road we are taking.

Moreover, under a single, centralised system, there will be no doubt that accountability lies with the minister, rather than being diffused through other structures. And the UK system has worked well enough since 1948 that Labour and the Conservatives compete over who loves it most.

But two important aspects of the failed 1990s effort have re-emerged.

First is centralisation, which will again force more rational choices about where money will be invested and services located. Little insists his reforms will end the “postcode lottery” in health services, but in reality, Auckland will always have the best tertiary services anywhere in New Zealand.

It makes no sense for a population of 5 million to duplicate advanced care. Expect to see the Starship model rolled out for adult services, with people transferred from any hospital in the country to receive specialist care at an Auckland-based centre of excellence. That risks political controversy of the sort Jacinda Ardern will find unsettling and new, but hopefully she holds her nerve. Better ambulance and helicopter services will be needed.

A second 1990s idea lives on with the planned Māori Health Authority (MHA) operating under a funder-provider split model. According to Little, the MHA will not just monitor the state of Māori health and write policy papers, but directly commission health services for its stakeholders. This, says Little, is “a real step towards tino rangatiratanga in health”.

The political right has already savaged the MHA as special treatment for Māori at odds with “one law for all”, but there may be a smarter strategy for those against Little’s socialist road. If the MHA succeeds, why shouldn’t other communities of interest be given the same opportunity to benefit from a similar model?

Perhaps those in a particular geographical area or with a common chronic disease could opt out of guaranteed coverage by Health New Zealand and establish alternative arrangements to take care of their particular needs.

Reflecting on such possibilities is beyond the current National Opposition, which has bizarrely thrown its lot in with the despised DHBs. But it could be something for Act or the New Zealand Initiative to consider in formulating intelligent responses to Little’s plans.

After all, Little has given the whole political class licence to think beyond the shackles of the last 25 years.

– Matthew Hooton is a public relations consultant based in Auckland.

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