Review of the New Zealand Health System Announced

Dr Hayley Brown, Research Fellow, discusses the newly announced review of the New Zealand health system.

In May of this year, NZ Minister of Health David Clark announced a review of the New Zealand health system which will be headed by Heather Simpson who is known in the capital Wellington as ‘H2’ due to her long-term working relationship with former NZ Prime Minister Helen Clark known as ‘H1’. Simpson worked closely with Clark for thirty years including acting as her chief of staff for the nine years that she was Prime Minister and then going with her to the UN as a special advisor to Clark who headed the UN Development Programme for 8 years. Prior to working for Clark, Simpson taught health economics at the University of Otago.

In August 2018 the final terms of reference of the review were announced along with the full membership of the review panel which along with Simpson comprises of Shelley Campbell (CEO of the Waikato/Bay of Plenty Cancer Society), Prof Peter Crampton (Dean of the Otago Medical School), Dr Lloyd McCann (CEO and head of Digital Health at Mercy Radiology), Dr Margaret Southwick (former nursing Dean and Pacific nurse leader), Dr Winfield Bennett (former DHB funding and planning manager) and Sir Brian Roche (former Chief Executive of NZ Post).

The purpose of the review is to “identify opportunities to improve the performance, structure, and sustainability of the system with a goal of achieving equity of outcomes, and contributing to wellness for all, particularly Māori and Pacific peoples”. In particular the review panel are to consider the future needs of the population both in terms of growth and ageing, the increase in chronic diseases, the importance of primary health, the role of public health and the opportunities and risks associated with current and emerging technologies. For anyone familiar with New Zealand and its health system the focus of the review is not surprising, and many of the issues to be considered are problems faced by other countries including the UK.

Interestingly, given concerns about Māori health, there are no Māori on the panel. There is, however, a concurrent inquiry being heard by the Waitangi Tribunal – the Health Services and Outcomes Kaupapa Inquiry – which the health review must take into account. The Waitangi Tribunal is a permanent commission of inquiry that makes recommendations on claims brought by Māori relating to Crown actions which breach the promises made in the Treaty of Waitangi. As Māori were granted citizenship rights in the Treaty, and healthcare is a right of New Zealand citizens, poorer health outcomes for Māori in comparison to the rest of the population can be seen as a breach of the Treaty.

The current NZ health system, which is very similar to the NHS in that it is a universal health system funded from general taxation, was founded by the First Labour Government in 1938. The most significant difference from the NHS is that patients pay a part charge for GP visits as this was the agreement which that government reached with the NZ branch of the BMA in 1941 despite wanting to make visits free to patients. Overtime the proportion of the cost covered by patients increased but in recent years there have been moves by both major parties to reduce costs for certain groups, in particular children and those on low incomes.

The first significant review of the health system came in the mid-1950s, however little significant changes were made as a result of this. The one-term Third Labour Government issued a white paper in late 1974 which outlined significant proposed changes, but Labour were voted out of office the following year before they had a chance to implement change. Taking up some of the ideas in the white paper, albeit in a modified form, the National government introduced a new structure to the health system in the form of Area Health Boards (AHBs) in 1983 to replace Hospital Boards, but on a voluntary basis. The move to AHBs was made compulsory by Minister of Health Helen Clark in 1989 (Labour had returned to office in 1984). There had been 31 Hospital Boards at the beginning of the 1980s which had been reduced to 14 AHBs by 1990. Hospital Boards’ members were elected locally, a system that had been in place since 1883 and the AHBs continued this practice. The Fourth Labour Government (1984-90) commissioned two major reviews of the health system – The Health Benefits Review (1986) and the Gibbs Report (1988), however for various reasons no reforms were implemented on the back of these reviews.

In late 1990 the National party won the general election and almost immediately set up a number of social policy taskforces including a taskforce to examine health services. Its recommendations were published in a green and white paper in mid-1991. Shortly afterwards the elected AHBs were disbanded and replaced with four (unelected) Regional Health Authorities. The role of the RHAs was to purchase health services for their populations, from either the public or private sector, thereby introducing an internal market. While there were some benefits to the changes implemented, in general the reforms were not well-received by the general public, and there were significant costs involved in contracting and enforcement.

The last major restructure of the health system occurred in 2000-01 when the Clark-led Labour government reversed many of the changes made by the National government in the 1990s and reintroduced 21 elected District Health Boards, which also had government appointments. National had already undone some of the changes that they had introduced in the early 1990s like hospital charges as they had proved so unpopular with the electorate and in fact the administrative costs exceeded any revenue generated. It had then had to enter into a coalition with the NZ First Party in 1996 following NZ’s first MMP election and a condition of the coalition agreement was to replace commercial profit objectives with cooperation and collaboration.

This current review of the health system is only one of a number of major reviews being conducted by the Labour government – there is also a review of the tax system which is headed by former Labour Minister of Finance, Sir Michael Cullen and a number of reviews examining the Education system. Historically Labour governments have been inclined to implement greater reform than National governments (with the exception of the Bolger-Shipley government 1990-99) and this Labour government is following in that tradition.  The review will deliver an interim report to the Health Minister in August 2019 and a final report in March 2020. Given that NZ has a general election every 3 years and the next election will likely be in September/October 2020 any recommendations from the report will only be implemented if Labour win a second term. It is likely that the recommendations made will be viewed favourably by the current government as the review is headed by a long-term senior Labour advisor, but Labour also needs to be able to win the support of its coalition partners – currently NZ First and the Green Party in order to implement reform. In view of the long-term focus of the review, it would be beneficial for the country if one of the outcomes was a cross-party consensus on the health system and services, particularly between the two major parties, though it remains to be seen if this is achievable.

Hayley is currently working on a Wellcome-funded project which compares the NZ health system to the NHS, 1938 – 2000: