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Double strength spin from Armstrong

Written By: - Date published: 5:17 pm, July 4th, 2009 - 13 comments
Categories: health - Tags:

Former journalist John Armstrong runs National’s line on health today:

The Cabinet’s loosening of rules on district health boards farming out non-urgent surgical operations to private hospitals is the logical step to take for a Government trying to get more from less…Monday’s decision is a step towards public and private providers eventually competing for the health dollar, thereby (in theory at least) providing more operations more cheaply through increased efficiency and higher productivity.

Such blind praise built on no actual evidence. The most important statement in that quote is the bit in brackets – “in theory”. Well, neo-lib ideology dressed as ‘theory’ has been telling us the private sector is this wonderful, flawless deliverer of efficiency for decades. We’ve yet to see it.

 Armstrong dismisses opponents of greater privatisation with:

The few plaintive cries from the likes of the senior doctors’ union focused on the likelihood of already-scarce medical staff drifting away from public hospitals to better pay and conditions in private ones.

Yeah, what would the doctors know about what’s good for healthcare? No wonder National broke it’s promise to listen to the doctors when making decisions. Then, out comes the old saw:

The Clark Government effectively doubled the money going into health services during its nine-year tenure. Labour delivered in terms of primary care for the young and the old, but it struggled to cut waiting times for operations.

Um. No.

In Budget 1999, National budgeted $6.8 billion for health. In Budget 2008, Labour budgeted $12.4 billion. An 83% increase. If that’s ‘effectively double’, well, let’s just be happy Ryall and Armstrong aren’t structural engineers. Anyway, that’s only the beginning. The population has grown over 12% and there has been nearly 30% inflation since 1999. Take them into account and the increase is only 24%.

On top of that, the aging population increases the demand per head (can’t find a disaggregated number on that), health sector inflation has run higher than general inflation, and there’s a constant cost of new medical innovations, which mean better outcomes for the same number of procedures, and the effective funding increase was even smaller than that. Labour had to put in a huge amount of money just to keep per person services at the same levels and make small but important improvements.

Labour focused on putting the money where it counts – into primary health. No, it’s not sexy and it’s not as easily countable but primary health is where you invest to keep if you want the best bang for your buck, if you want maximum value for money in achieving the health system’s purpose – keeping as much of the population as healthy as possible.

Unfortunately, politics gets in the way. Ryall knows that it’s the waiting lists that get attention from the likes of Armstrong. So the money goes out of primary health and into electives. It’s like buying more ambulances to put at the bottom of a cliff by cutting spending on fence maintenance at the top. It’s dumb. But if you’re looking for a political win, not for improvements to the population’s health level, that’s what you do.
– Marty G

13 comments on “Double strength spin from Armstrong”

  1. lprent 1

    Good post. Nice to see some numbers rather than the usual political bullshit. About 24% in real terms sounds about right..

    Labour did a pretty good job of keeping the healthcare system focused on the longer term objectives. It didn’t pander too much to whining from people wanting to favour themselves or their families. Public healthcare is a rationed system.

    It is pretty obvious that with this government, whomever squeals the loudest will get served first- regardless if it is benefical to society as a whole.

  2. Ianmac 2

    I do believe that over the last 9 years there was significant increase in infrastrucure and unfortunately this does not show in sexy elective figures. (Sexy???) So Tony will no doubt focus on elective figures to prove how clever he is. And Armstrong will back his figures of course.

  3. jcuknz 3

    The sad thing about Labour’s position on health care is its black and white position of no private care funded by the state, no co-operation. I look at my personal position with regard to healthcare and appreciate greatly the care I have received over the years about which I have few complaints. But I believe that there are those who wait in pain becuase healthcare is a rationed service … either by money or availability … and the B&W approach is ideological stupidity on the part of Labour.

    I am quite sure that many could help to cover the cost of healthcare, risen from 1/6d in the pound to around 54% of GDP by paying a proportion of the costs. Likely they couldn’t afford to cover the entire cost of a neccessary procedure but they could cover some of the cost … those contributions would help to swell the health budget and enable more to be done..

    You could say that this is happening already with those who can pay for insurance, but as far as I can see insurance is a confidence trick with people being sucked in with low premiums when they are young and health and spat out on retirement with premiums reflecting their then likely cost of care. It is obvious to me that the only satisfactory system is whole-of-life level premiums and the best way to do that is through taxation or SOE type organisation. An organisation paying for appropriate services from all organisations, private and public, in the country.

    • Draco T Bastard 3.1

      Private providers inherently cost more due to having to make a profit. As the government is trying to save the taxpayer money why would they pay private providers?

      • ROFLcopter 3.1.1

        In some cases….

        In most cases, being a smaller private provider removes layers of management not required, smaller overheads, and a more responsive service. They can still turn a decent profit and yet be less expensive than the public service on a per-head-through-the-door basis.

        • Anita

          One of the problems with your argument is that lots of small private providers may individually have small management overheads, but to use them the public sector requires a significant management overheads. 100 different contracts for 20-40 procedures each requires much more management than a single provider doing 3000 procedures.

          Private providers may look low cost, but that’s only because they transfer huge amounts of cost to the public sector in terms of both management and back-stop services.

          To give an example of a well known issue with private providers, every hip operation has a low very chance of complications leading to needing ICU facilities.

          When we cost public provision of a hip op we cost in a part of the cost of public ICU services. When we cost private provision we don’t, but we have to pay for the public ICU costs on top of the private hip op charge. That’s the first issue with the private provider efficiency they rely on expensive back stop services being provided by the public sector. So we screw the costing model so that the private provider can make a profit off every hip op that goes well, and the public system ensures them against additional costs for the unavoidable not-so-good outcomes. Privatise the profit, socialise the loss!

          The second is that there is additional cost in transferring a patient with complications from a private provider to a public ICU  we’re not only screwing the cost model to the benefit of private providers, but we’re actually incurring extra costs to do so.

  4. andy 4

    Got to feel sorry for Armstrong, its like the longest job interview ever, for a Nat spin doctor.

  5. Ron 5

    We can have theories about this to our hearts’ content. The bottom line is that everywhere in the world the growth of private health delivery has had a corresponding decline in public health services. A decline in the public service has a corresponding reduction in health services to most of the population – especially lower socioeconomic groups. That’s the pattern. I don’t know why NZ (once again) thinks it can do it any differently

  6. felix 6

    jcuknz: “The sad thing about Labour’s position on health care is its black and white position of no private care funded by the state, no co-operation

    What the hell are you talking about?

    A massive amount of private sector healthcare is funded by the state every day in the form of GP visits.

    Thanks, Labour.

    You’re welcome.

    • jcuknz 6.1

      It wasn’t Labour’s choice but forced on them by the medical profession who refused to work for the first Labour government. The comments in this thread seem to back up my statement.

  7. roger nome 7

    “The population has grown over 12% and there has been nearly 30% inflation since 1999. Take them into account and the increase is only 24%.”

    lol – looks like Ryal and Armstrong have taken the David Farrar course in manipulation by deceptive use of raw statistics. More is the shame for New Zealand.

    • jcuknz 7.1

      Judging from statements during the last Government both sides are equally manipulative when it comes to statistics, so don’t give David the credit 🙂

  8. gingercrush 8

    Where is Ryall taking money from Primary Health into electives. Or is this just more bullshit from you? You’re so desperate you’ll doing anything that paints Labour as good and National as bad. The fact elective levels are where they currently are is disgusting and Labour should be ashamed of themselves.

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