Must health be a political illness?

Health is a political illness. Fixing up people’s ill-health bugs, and sometimes kills, governments, even those with buckets of money.

Making health politically healthy is Tony Ryall’s challenge. That makes his job one of the government’s biggest — alongside his 1990s ministerial “brat pack” mates, onetime Health Minister Bill English and Nick Smith.

Technology, affluence and longevity have conspired to greatly boost expectations, and so the cost, of health systems. The United States spends 15 per cent of GDP on fixing illness for a lower life expectancy than in New Zealand which spends half that. In the 2007 election in Australia Kevin Rudd made much play of ailing state-run hospital systems.

The Organisation for Cooperation and Development said in its report on the health system here last week: “Soon demographic ageing will be added to the list of pressures but it may pale against the forces of advancing technology, public-sector cost disease and ever-rising public expectations.”

It added: “Health care has its limits, whether in the share of production or taxes it can absorb or in how much it can achieve on its own. Lifestyles and environmental degradation harmful to health may warrant as much attention as allocating more money to treatment.”

And the rub: “While there is scope for efficiency gains, society also has a clear choice to make: should the supply and quality of health-care resources be improved and, if so, who should finance it?”

Ryall came to office with a large suite of measures to improve efficiency and productivity, which he is implementing.

Some continue or intensify what the previous government had begun (though in some cases in response to Ryall). Some aim to trim the “back office” and boost the “front line” and give clinicians more say in running hospitals.

Some aim to use private sector resources more, where efficiency gains can be made, and to beef up community health clinics to take some work off hospitals and do it more cheaply. Some aim to increase the supply of professionals and improve the attraction of working here.

Former Treasury Secretary Murray Horne’s review is expected to generate more pointers.

Ryall won’t restructure the muddled district health board system. He says restructuring saps energy and there has been too much in the past 20 years. Better, he says, to go on prodding DHBs to collaborate and to benchmark performance and to differentiate national, regional and local functions.

He is also leaving in place the primary health organisation (PHO) system but acknowledges the OECD’s criticisms of poor incentives and rewards and a lack of conditions attached to PHOs’ passing on of capitation fees to doctors. The OECD said the DHBs have lacked “accountability levers” and the PHOs have not carried out “their proper role as risk managers”, not least in improving illness prevention, the positive side of health policy. Fixing PHOs is a major challenge for Ryall.

One step backwards by the government on illness prevention was to abolish school tuckshop healthy food rules as Labour-Green nanny-state interference. The OECD report reflects other studies which suggest lifestyles, including what we eat, are piling up future chronic illness problems. If the state is to be expected to pay to manage those problems when children get to middle age, maybe it has an investment interest in nannying now.

And voters do expect the state to pay the bulk of health care. Ryall calls that a “cultural legacy” which no government can gainsay lightly. Taking the OECD’s figures, 80 per cent of the 7.5 per cent of GDP we spend on health is from taxes.

Moreover, we want more, if recent history in our sorts of societies is a guide: as they have become richer, people have wanted and paid for more personal services and convenience. In part this shows up in gadgets such as cellphones and iPods. In part it shows up in more fussing about “health” — not just curing ill-health but in a range of “discretionary” services, such as fertility and cosmetic improvements.

That suggests to some that taxpayers will willingly stump up. But taxpayers are also not keen on higher taxes. In part that is because much of tax-funded health spending is a redistribution from well-off to poorly-off, the well to the sick, and those who look after themselves to those who don’t or can’t.

On current projections state health spending’s share of GDP is projected to near double by 2050. Can today’s 25-year-olds assume today’s taxpayer generosity will apply to them at 65? Or will their choices narrow?

One hope for policymakers is that technology will at some point reduce costs faster than it increases them.

But that is not likely soon. Meantime a debate is looming about who pays for what and how that is to be managed in the longer-term. It is not a live debate yet in the government. But once this term’s fiscal squeeze is through expect some longer-range thinking.

If, that is, health is not to bug this government too.