Bruce Morrison: Better to foster private healthcare than enlarge ACC

Sir Geoffery Palmer. Photo / NZPA
Sir Geoffery Palmer. Photo / NZPA

Sir Geoffrey Palmer's recent comments about expanding the scope of ACC have prompted a useful discussion about the limits of public versus private healthcare.

Sir Geoffrey says it is a "longstanding injustice" that ACC does not cover disease and congenital disabilities. For example, if you fall off a ladder and are unable to work, ACC will provide compensation up to 80 per cent of your lost wages, while having a heart attack lands you with a sickness benefit and in potentially more financial hardship.

It may be surprising to hear a health insurer say that placing too much emphasis on the private system creates concerns about equity, but everyone must be able to receive urgent care when they need it.

Similarly, an over-reliance on public healthcare results in long waiting lists, rationing, and pushes costs on to taxpayers.

The Herald is right in its editorial "Disease step too far for ACC scheme" to warn that expanding ACC would mean "A large slice of everyone's taxation would become a health and disability levy".

Almost 20 per cent of the tax we pay is already spent on the public health system. Treasury has warned that the growth in health spending is unsustainable, and yet no one seems prepared to suggest that we re-align public expectations in regard to the focus and limits of public treatment.

Neither the public nor private system is going to be able to fulfil everyone's expectations, but part of keeping the cost of health under control - without cutting services for people who need them - is to ensure people who can afford to access the private sector choose this option.

If a critical mass within the private health sector is not maintained, the Government will - by default if not design - assume the total responsibility for all treatment expectations. The decline in New Zealanders prepared to purchase health insurance (from 48 per cent in 1990 to 30 per cent today) shows an alarming reduction in peoples' willingness or ability to meet the costs of their own health treatment needs.

If private health cover was extended to an additional 750,000 New Zealanders, it would save the Government around $400 million a year from treatment which became the responsibility of insurers. A big share of this saving would inevitably come from people advancing into retirement.

Australia has managed to boost the number of retirees with health insurance by providing a tax rebate for those who provide for themselves through health insurance.

A partial rebate of premium costs also allows many people who might not otherwise be able to afford insurance to make or maintain this commitment, while allowing a considerable amount of elective and non-urgent procedures to be taken out of the public system.

Re-weighting this balance between public and private systems will assist with cost management, public expectations, capacity demands and - if executed correctly - an overall improvement in the healthy lifestyles of Kiwis with a subsequent reduction in treatment needs. It would also help reduce - no doubt to Sir Geoffrey's relief - the need for ACC to expand into covering people for many of the same kinds of illnesses that private insurance would prepare against.

Private insurers see the value in preventing people from getting sick. Accuro provides education and financial incentives to help members reduce weight, eat well, stop smoking, join gyms and seek treatment before problems become acute - all of which are areas of concern across the insurance industry.

ACC is already a large potential liability in the Government books - in 2009 John Key's incoming government was alarmed at an apparent blow-out in its liabilities to $21.9 billion.

Enlarging the scheme is hardly likely to reduce the fiscal risk.

Instead of shuffling people from one form of government funding to another, we should be looking at how to look after peoples' wellness in the first place and - where problems cannot be prevented - shifting the cost where possible away from the system that we rely on to treat the victims of urgent, unavoidable, critical illnesses.

That would see more sustainable public and private health systems, publicly funded critical healthcare available to more people and fewer "longstanding injustices".

Bruce Morrison is chief executive of Accuro Health Insurance.

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