The work, carried out by Auckland University professors Paula Lorgelly and Tim Tenbensel looked at how New Zealand’s health system was financed and how that spending stacked up against other similar countries.
It will probably be no surprise they found the health system had been comparatively underfunded and this was historical. If it had kept pace with the 16 comparator countries between 2013 and 2019, New Zealand would have needed to increase its spending by more than $1 billion a year.
Even though spending has increased in recent years, we have not caught up.
The researchers said the consequences of falling behind comparable countries in terms of GDP spending on health, both public and private, for an extended period helped to explain current pronounced health workforce shortages, significant delays in upgrading infrastructure, and increasing co-payments for primary health care.
As a result of the report, the Association of Salaried Medical Specialists, is calling for an extra $1 billion a year, on top of cost pressures, to be invested in the health system, over the next four years.
The timing of this report’s release by ASMS coincides with the decision of its members to strike for two days later this month. Like their nursing counterparts, the senior doctors and dentists are not prepared to accept a pay offer which they say would mean a real pay cut for most members and which will do nothing to ensure New Zealand can recruit the workforce it needs to address short-staffing.
Whether the government will be any more enthusiastic about finding some more money down the back of the couch for them than it is for nurses, teachers, or other health workers remains to be seen. All the same, there is much in the report, which covers from 2000 to 2023, the government should pay attention to.
Researchers found there was a sustained period from 2013 and leading up to the Covid-19 pandemic where New Zealand’s health expenditure as a percentage of Gross Domestic Product (GDP) declined considerably, falling behind that of comparable countries.
It estimated the New Zealand government spent 9.15% of GDP on health in 2022 and 8.83 % in 2023.
However, the research showed when OECD over estimates and the temporary impact of Covid-19 were adjusted for, government spending was more likely around 7.5 % of GDP in 2022 and 8.15% in 2023.
The report raises the issue of the inclusion of goods and services tax in the OECD’s estimates of New Zealand’s tax-based health expenditure and how this affects comparisons with other countries.
If apples are not being compared with apples, we need to know if this results in overestimation of tax-based health spending, and to what degree, the report says.
It suggests the inclusion of GST may mean parity with the 16-country average percentage spending of GDP and the amount spent per head of population has not been reached.
About 80% of health spending is publicly funded (including 10% through the Accident Compensation Corporation) and 20% from private spending.
The report comes down on the side of the tax-based system of funding, despite its vulnerability to political cycles. It found there was no evidence mandatory insurance systems performed better for access, equity, and health outcomes. Such insurance systems also had higher administrative costs.
The issues raised in this report about the adequacy/lack of OECD data reporting by the Ministry of Health need to be addressed, particularly when this information is used to brief health ministers and in other communication.
This is part of a pattern around public health data which is concerning. Although this instance involves the Ministry of Health, we are increasingly finding Health New Zealand Te Whatu Ora cannot provide data in a timely way, or sometimes at all. It needs to be addressed urgently.
