A Policy A Day: Healthcare Co-payments

In the lead-up to the election, we are going to examine one policy per (working) day. We've selected policies to be as balanced as possible across a range of policy areas and across the political parties. The idea is to explain the background, analyse the policy to investigate the pros and cons, and give a verdict on the policy at the end. Inevitably, some opinion will make its way in and we make no apology for that - after all, we're voters too. Also, I say 'we' because this series will feature some guest posts from other young people, to share their thoughts and ideas as well. A list of all the articles is available here. Enjoy!

Today's post is by Taylor Mitchell.

Amongst ‘Dirty Politics’ and first home buyers, healthcare policy is one of the biggest areas of discussion in this year’s election. National in particular has put great emphasis on their extension of free doctors visits and prescriptions for children up to the age of 13 as outlined in their May Budget. Healthcare providers are particularly concerned with implications of the Trans-Pacific Partnership on medical resources, and most players are addressing our growing elderly population and the effect this will have on healthcare spending.

However today's focus is going to be on the policy of healthcare co-payments, a tool that is currently used to some extent within our healthcare system but which some parties (namely Act) wish to see used far more prevalently in lieu of government spending.

So what are co-payments, and how are they currently used in New Zealand?

Co-payments in health care are the supplement of our otherwise free public healthcare system with user charges for certain services and goods. You may be more familiar with them as the concept of subsidies provided by the government towards some healthcare services, rather than funding it outright. Obviously such co-payments can be found across a wide range of areas in New Zealand’s health, but there are a few areas where we currently see co-payments at work to the most significant extent:

The first, and most significant for the individual, is the payment towards primary health care by the public. This is the visits made to GPs, costs of which can run up to $50 a visit at some practices. This is because GPs are largely run as private businesses, receiving some government funding depending on which demographic they are providing to – with clinics in lower decile neighbourhoods generally receiving more support. Other services to which individuals have to contribute include physiotheorapy and like treatments, treatments which ACC will only contribute a subsidy towards in the case of an injury.  

Tied into this cost for primary health care visits are the $5 copayments required for all prescriptions made by residents over the age of six. You may remember that as of 1 January 2013 this cost was boosted from the prior maximum of $3 per prescription, a policy lead by the current National government. This raise resulted in a maximum of $40 per family paid extra towards prescriptions per annum and saw a $20 million dollar boost in the first year, and an expected $40 million per year from now on in government revenue. 

What are the policies surrounding co-payments for the 2014 election?

There are a number of policies across the parties that deal with the issues of copayments in healthcare. Of these, the most extreme is Act, who suggest widening the use of copayments across the health sector. For the key areas in which they are already used – primary health care and prescriptions – they suggest a removal of any subsidy by the government except in cases of extreme need. And here their policy is very limited – saying that if a doctor feels a person is truly unable to pay for their service then they can choose to waive the fee. It is unclear whether this cost is to be covered by the GP or through government support, but either way seems to have relatively limited protection for those vulnerable.

In addition to this, Act has used the idea of co-payments to deal with the ever-present issue of our growing elderly population. It is expected that by 2050 health, pensions and residential care for our elderly to rise to some 20% of our GDP spending. In particular Act would extend the scope of current residential care subsidies and co-payments so that residential homes for the elderly are not expected to cover medical costs – instead these would be picked up by the individual. Their reasoning for this is that no one expects free residential care, and the current system is giving very little choice to our elderly as to the sort of residential care they want to live in. Instead they propose scaled residential facilities – with some providing at the bare minimal for those who have little to spend, and more ‘luxury’ options for those with the means to pay.

So how viable a policy is this?

This policy falls completely in line with the majority of Act’s principles – cutting back government spending in favour of a more market and consumer lead economy. Their main gripe with the current system is that it does not provide enough choice to consumers, leaving them ‘stuck’ with current residential and primary health care packages. Such an approach would drastically cut health spending (to what exact extent I am unsure as Act has not specifically addressed what they would change), so if you are in support of a smaller state and a health sector where costs are carried more by the individual then this sort of policy is for you.

At the end of the day I believe it comes more down to this matter of principle than current misgivings in our structure. In terms of choice for elderly residents there are a large number of private hospitals/residential blocks as well as in-home services available to those who have the wants and means to pay for it. By removing the inclusion of basic treatment and doctor visits from our residential elderly homes we are going to see the more vulnerable members of that demographic choosing instead to do without these basic provisions.

In regards to primary healthcare, New Zealanders are already paying more in the form of copayments than the majority of OECD countries. Boosting the costs for many to visit the doctor, or to pay for prescriptive medicines is effectively going to disincentivise people from making the trip. While this might seem fine from a financial point of view at face value – meaning people only come if they have a serious issue – it could result in greater problems and costs in the long run as illnesses would have the chance to develop into much more serious risks, ultimately resulting in costlier treatment.

From a purely political standpoint, the transferring of such costs to the majority of New Zealanders, and in particular to the retired population, seems semi-suicidal for any major party to pick up. This has been reflected in the approach of the rest of the parties to co-payments across the board. In fact many are doing the opposite of Act and reducing the payments required from individuals, in particular targeting our most vulnerable demographics of children and elderly.

o   Both Labour and National are campaigning to make GP visits and prescriptions free for children under the age of 13, while the Greens and Mana propose to extend this age up to 18.

o   Labour and the Green Party both propose to boost the funding for Primary Health Care and help reduce or eliminate the cost for the most financially at-risk communities.

o   The Green Party wants to remove any co-payments currently required under ACC, while Mana wants to do the same for prescription costs.

This is just a taster of the parties’ efforts to reduce costs of health-care and it seems New Zealand’s political climate is reluctant to drive healthcare costs any further onto the individual than it does currently. While coming governments will need to address the costs that come with the aging baby-boomer demographic, we need to be careful at what social cost that comes. Are we as a society fine to let our most vulnerable go without support for their basic health? Personally I’m inclined to think not.

Taylor Mitchell is a student at the University of Auckland studying Law, Politics and Art History. While left-leaning she doesn’t associate with any one party in her activities. In her spare time you’ll find her sipping cappuccinos and browsing blogs. She is a relative newbie to health-care politics so excuse any missed areas of interest!