Ageing and growing population drives health spending

At a glance, vote health is one of the  main benefactors in the budget. “Despite tight financial times, the Government is spending $14.12 billion in 2012/13 on health – the biggest investment ever,” Health Minister Tony Ryall says.

Budget 2012 includes an extra $1.5 billion for public health services over the next four years.
This includes $435 million for new initiatives over the next four years that will fund areas such as:

• $33 million for better, faster cancer treatment
• $16 million to speed up diagnostic tests for patients
• $48 million for more and faster elective surgery
• $20.5 million to strengthen maternity services including a boost to PlunketLine and WellChild services
• $133 million to improve services to those with disabilities
• $28 million to provide free after-hours doctors’ visits for under sixes
• $12 million to provide more support to the elderly
• $40 million for increased dementia services

It had been well signalled that health would fare well and that the good work done to date would not be compromised. Around $47 million of savings and under-spends in health have been shifted to higher priority front line public  health services in 2012/13 according to the minister. Increases in prescription charges signalled pre Budget will also partly fund the above initiatives. The tenor of budget policies around health would appear to be a continuation of the policies demonstrated in the last budget - spend more at the top of the cliff and then you need fewer ambulances at the bottom of the cliff.

Although it is not all targeted at ‘top of the cliff’initiatives with other lofty goals stated such as:

• Delivering 4,000 more elective operations a year
• Providing better services for cardiac and cancer patients
• Providing $12 million to reduce  rheumatic fever
• Investing $133 million in disability support services

Ageing and growing population

Budgets that devote a good chunk to health are likely to be an increasing trend into the future with our aging and growing population. As the demographic balance changes in New Zealand we will see our government spending a rising amount on older New Zealanders. The bulk of public health spending on an individual will be spent in the latter part of their life in most cases, and longer lifespans will increase the number of years that a person will live with a disability or chronic disease. The result of this is that greater spending will be needed on their health needs.

Short versus long-term focus

The question will always be asked: is merely throwing more money at health going to improve outputs?There is international evidence that changing the incentives that patients, providers and payers face can result in a better pay-off in the longer term.

Best practice in regard to health policy and its ability to deliver best value for money, generally has two common  facets: firstly policies will focus on improving the way health systems address the changes in epidemiology and rise in chronic disease; and secondly they seek to reward patients, payers and providers for the quality and efficiency of care.

A survey of health policies of other countries in the OECD demonstrates that no one has the perfect answer and many initiatives internationally are still relatively new and need close monitoring to assess which approaches truly do deliver value for money in the long term.

The real proof in the pudding for health spending today will be measuring the results in 10-20 years’ time.

Further enquiries, please contact:

Pam Newlove
National Director, Privately Held Business
T +64 (0)9 308 2570
E  Pam.Newlove@nz.gt.com