Cash warning to health sector

By ANGELA GREGORY health reporter

The health sector has been warned its voracious appetite for extra funding cannot be sustained much longer without causing economic growing pains.

In his Budget speech, Minister of Finance Michael Cullen noted by far the single largest item of increased expenditure was Vote Health.

The upward trend was driven by an ageing population and the availability of new surgical services and drugs, he said.

But there was a limit to the extent to which Vote Health could grow much faster than nominal GDP without placing excessive money pressure on future governments.

Dr Cullen warned it was crucial that health sector people understood the building into the expenditure baseline of substantial increases did not represent an opening bid to which they might respond with higher bids.

"The sector and the Government will need to cooperate to ensure spending is kept within the forecast path."

Total health expenditure had risen from 5.2 per cent of GDP in 1989/90 to 6.4 per cent in 1999/2000, and was expected to be 6.8 per cent in 2004/05.

As a proportion of government spending, it was forecast to have gone from 13.9 per cent to 21 per cent over the same period.

But an Auckland health academic said an increase in spending was not necessarily a problem.

Department of General Practice and Primary Health Care associate professor Bruce Arroll said the key question was whether the country was getting better value for the money spent.

"You can't just look at the costs, you have to look at the benefits as well ... the Government has to look at both sides of the ledger."

Mr Arroll said Canada spent twice as much per capita on health as New Zealand, and America three times as much.

But that was not reflected in the quality of health care the residents of those countries received.

Mr Arroll said difficult decisions had to be made about where to spend health money, and whether taxpayers would contribute more.

He thought the elderly were likely to miss out the most because they were the most needy but least able to afford private health care.

"They are likely to get stuck on long waiting lists ... superannuation is a huge health issue."

Mr Arroll said there was no easy solution in balancing the wants of primary and secondary health care.

"We are not so much in the business of curing, but controlling, and it is an expensive business ... a person may avoid a heart attack and then later slowly and expensively die of Alzheimer's.

"If I was talking about this 10 years ago I would be saying the same thing ... except to add that competition for funding is not a sustainable way to work."

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