More user-pays could help, ministry tells new minister

Essentials

• Officials from government departments write briefing papers for their newly appointed ministers.

• Briefing papers from the Ministry of Health and Health New Zealand Te Whatu Ora, dated January, were made public yesterday.

• They touch lightly on many controversial topics, including user-pays, health insurance and improving primary care.

Government officials are offering to advise health minister Simeon Brown on boosting user-pays and insurance funding of the health system.

The offer is made in the Ministry of Health’s briefing to Mr Brown as incoming minister following his appointment in January.

The context of the offer is the increasing cost of publicly funded healthcare. Treasury forecasts health spending will grow from around 7 per cent of GDP in 2020/21 to more than 10 per cent by 2061, unless the model of health service is changed. The increase is driven by the rising cost of healthcare and increasing demand, including from an ageing population structure.

“The Government has options to change this dynamic and address the affordability of the health system, such as investigating a greater role for user-pays health care or insurance, changing models of care or increasing targeting of services. We can provide advice on these topics as requested.”

The briefing paper notes the many infrastructure problems. It says much of the physical and digital infrastructure of the health system is in poor condition or is no longer fit for its purpose. Hospital capacity nationally is estimated to have a 500-bed deficit.

“Many of our digital infrastructure networks and security systems are outdated, do not talk to each other and are unable to manage increased cybersecurity issues, or support evolving health service delivery in the home and within community facilities.”

Dated January and made public yesterday, the briefing foreshadowed the minister’s primary care announcements in March.

“Cabinet is soon to consider the implementation of the Primary Care Tactical Action Plan to improve access to primary care,” the briefing says.

“Achieving primary care transformation will require further changes to system settings. There is a need to improve how performance is driven, through sharper focus on accountability settings, changing the way we commission services, and targeting investment to ensure services are meeting New Zealanders’ needs. We will look to support you to progress a Strategic Plan that will further transform primary care for consideration by Cabinet.”

“Cabinet is soon to consider the implementation of the Primary Care Tactical Action Plan to improve access to primary care”

The briefing paper from Health New Zealand Te Whatu Ora for the incoming minister was also published yesterday.

It identifies roles for primary care in helping Te Whatu Ora to achieve some of the ministerial Health Targets.

One of the key actions under way to help with the emergency department waiting-time target is listed as “stabilising urgent care by addressing inconsistencies in availability, funding models, and integration with other services (eg primary care)”.

On reducing waiting times for a first specialist assessment, a key action under way is, “Working more closely with private practices and primary care to leverage capacity to undertake specialist assessment”.

The ministry briefing paper’s table of contents tantalisingly indicates a section is devoted to “opportunities to reset legislative settings”. Sadly, the whole section is a blacked-out secret under the “confidentiality of advice” section of the Official Information Act.

The other reset – of Te Whatu Ora by commissioner Lester Levy – gets mentions in both briefings.

Te Whatu Ora says Professor Levy produced an 11-point Turnaround Framework outlining a hard-reset of the organisation. Then-chief executive Margie Apa drafted a plan to operationalise the reset in two parts: getting back to budget, and implementing the future operating model.

The briefing says the organisation is working to return to break-even by the end of the 2025/26 financial year. “Our December results (see table and graphs below [blacked out]) show monthly expenditure decreasing over the first two quarters, getting closer to matching revenue.”

However, the budget for next year (2025/26) has been portrayed differently in a newer document. The summary by Te Whatu Ora of its Delivery Plan to June 2026, released on 7 March, says, “By mid-2026 we will have achieved the 2025-26 budget of a $200 million deficit and be heading to a stable financial state.”

A quick calculation suggests a deficit of that size will be less than 1 per cent of the agency’s operational income – a large sum, but proportionally not far from break-even. Last year’s deficit was $722 million on total revenue of $27.18 billion (2.6 per cent), and this year’s deficit is budgeted to be $1.1 billion.