Health insurance can help bridge public funding gap

Health insurance can help bridge public funding gap: NZIER

Health insurance could be funding up to three times the present level of healthcare in future, according to a study by the New Zealand Institute for Economic Research (NZIER) released today.

The report, commissioned by the Health Funds Association (HFANZ), said New Zealand’s health system would face increasing demographic and fiscal pressures in coming years, placing the public health budget under severe pressure. Treasury’s projections confirmed this, with it inevitable that New Zealanders would be asked to increase personal responsibility for their health care.

NZIER said private health insurance (PHI) currently contributed $1 billion annually to total health expenditure, and that if health insurance coverage increased to the same level as in France – where 96 percent of the population had insurance – that contribution could triple.

“While there is no ‘best practice’ international model, international evidence shows that PHI can play an important complementary role,” the report said.

It explored a number of comparable overseas examples, together with high level policy options. It suggested that accelerating New Zealanders’ return to work after sickness was where health insurance could add the greatest value.

NZIER found that increasing the number of workers covered by health insurance by 20 percent could save around $60-$110 million in lost output, because having their health issues dealt with privately meant they bypassed the public waiting lists and were treated much sooner.

It said an estimated 42,300 New Zealanders were prevented from participating in the workforce due to ill health in 2010, a loss of 88 million hours of labour force productivity amounting to $1.754 billion, or around 1.2 percent of GDP.

“Having large numbers of people on waiting lists for elective surgery imposes costs on society that could be avoided with private health insurance, without imposing further costs on the public health system,” the NZIER report said.

A TNS survey conducted for HFANZ in 2013 found the average waiting time from GP referral to surgery in the public system was upward of 224 days. A quarter of the adults surveyed who were waiting for surgery in the public system said they had taken an average of 5.1 weeks off work, and more than a third had required care or assistance while off work, much of which was unpaid leave taken by a family member. Private patients were seen promptly, and the TNS survey found they had often had their surgery, recovered, and returned to work while public patients with the same complaint remained on the waiting list.

One way to increase PHI uptake by 20 percent would be a subsidy or tax rebate targeted at employees, similar to the existing charitable donations rebate, NZIER suggested. Workers could also be automatically enrolled in workplace-based health insurance schemes and given the chance to opt out if they wished.

NZIER considered other options, including a Kiwisaver-type compulsory scheme, general subsidies, the removal of fringe benefit tax on health insurance, a surcharge on high income earners who don’t have PHI, and the Crown purchase of elective services from private providers, but each had a number of pros and cons.

“Private health insurance can play a part by getting people back to work quicker and keeping the workforce healthy. We have found that there was no strong public policy case for any particular individual option when considered on its own. However, a well-designed mutually reinforcing package of measures could make a difference. A series of complementary measures will provide additional improvements leading to better health and economic outcomes,” the report said.

HFANZ chief executive Roger Styles welcomed the report and agreed with the NZIER’s recommendation that further development of these ideas and wider public debate was needed.

ENDS

© Scoop Media