health & science

Budget 2018: Plugging the health gaps

Budget 2018 unlocks hundreds of millions of extra funding to plug gaps in New Zealand’s creaking health sector, but Thomas Coughlan reports the long-term outlook isn’t rosy.

The Government has announced $2.2 billion additional spending to DHBs over the next four years. DHBs will also get a big capital injection with $750 million to be spent over the next 10 years, and $100 million available as emergency support.

This brings operational DHB funding to $13.2 billion in the 2018/29 year.

“That represents the biggest capital injection in health in at least the last decade,” said Health Minister David Clark.

The capital numbers look big, but considering the Dunedin Hospital rebuild alone is expected to cost $1.4 billion, they’re indicative of a big squeeze going on in the health sector to fund operational spending.

And Dunedin hospital itself is missing, appearing only as part of ‘tagged contingency’ spend for planning and design with funding for the build itself to be allocated in a subsequent Budget.

Treasury’s 2018 Investment Statement estimated that DHBs required $14 billion of spending over the next 10 years. The $850 million in additional capital expenditure budgeted here will not be enough to plug the gap.

Health was always going to be a big winner in Budget 2018. Labour had promised $8 billion in new health spending over the next four years and they unveiled $3.8 billion of that spending today. The remaining $4.2 billion will be allocated in following budgets.

Where does the money go?

Clark took a bullet for the Government in the lead-up to the Budget when he back-pedalled on a promise to universally reducing the cost of visiting a GP by $10 by July 1 this year. He said the proposal would be phased in.

Today we learned just how that spend will be ‘phased’.

Cheaper GP visits will initially be targeted to Community Services Card holders, estimated to number 540,000 people. Cardholders will see GP visits become $20 to $30 cheaper.

The Government is also extending eligibility for the Community Services Card to all Housing New Zealand Tenants, people receiving the accommodation supplement or income-related rent subsidy.

These two changes will cost $362.7 million over four years.

Free GP visits and prescriptions will be extended to children under the age of 14, an estimated 56,000 young people. This will cost an estimated $22 million over four years.

The National Bowel Screening Programme will be expanded to an additional five DHBs from the five where it is currently offered, costing $67.1 million over four years.

Disability Support Services will also receive $210.6 million over four years to cover “population growth, ageing and cost pressures”.

Labour’s two partners have small wins. The Green party has secured $10.5 million over three years for an Integrated Therapies Mental Health Pilot scheme for 18-25 year olds. Modelled on England’s Improving Access to Psychological Therapies it will provide “free counselling” and “evidence-based therapy” for young people.

New Zealand First has managed to secure $1 million to develop a free annual health check for SuperGold card holders.

Pay day for midwives

Midwives protested against low pay outside Parliament two weeks ago. The Budget has allocated $112.6 million of spending over the next four years for community support midwives. Clark said that about half of that money has gone to an 8.9 percent increase in fees for 1400 lead maternity carers.

Robertson would not be drawn into what money had been made available for other wage rounds before negotiations concluded. Under “other tagged contingencies”, Robertson has allocated $1.3 billion over the next two years for things like wage rounds, however that money can also be allocated to other funding proposals.

And where has it come from?

Health is also responsible for $330 million in reallocated spending. The bulk of this will come from Pharmac, which will be responsible for $194 million in savings over the next four years.

This saving will come from the drug purchasing agency taking greater responsibility for purchasing pharmaceuticals for DHBs, which had previously purchased pharmaceuticals themselves. Rolling this spend into Pharmac will allow the organisation to use its enhanced spending power to deliver savings.

This might be optimistic. US President Donald Trump has said he plans to take action against bulk-buying agencies like Pharmac who he accuses of ripping off the US pharmaceutical industry. If he is successful, Pharmac's costs might even increase.

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