Health

Key Points:

All healthcare facilities would be privatized and have to compete for patients in an open market
All residents and visitors to NZ would be required to purchase a minimum level of health insurance, with subsidies for low-income households
Health insurance providers cannot refuse to insure anyone, and must offer the same price to everyone in the same age bracket
Health insurance providers could offer discounts for clients who make healthy diet and lifestyle choices, incentivizing good health
Excise tax on alcohol and tobacco end, heavy uses pay extra for health insurance instead
Patients have to pay 10% of healthcare costs (up to a cap per event) to incentivize using cost-effective facilities and not making unnecessary visits

Details:

Despite being near the top in terms of health spending (both per capita cost and as a percentage of GDP), we rank much lower in terms of quality of healthcare and health outcomes.

The countries ranked as having the best healthcare systems in terms of outcomes are Singapore, Japan, South Korea, and Israel, yet three of these countries spend less than New Zealand, and the fourth (Japan) spends only slightly more than NZ for much better outcomes. There are two things all these countries’ healthcare systems have in common; firstly, they are funded by compulsory health insurance instead of taxes (with varying methods of subsidizing those on low incomes), and secondly, the healthcare facilities are private (or government owned but run like private) and must compete for patients on an open market. To achieve some of the quality and efficiency gains displayed in these top-class healthcare systems, I propose creating a similar system in New Zealand.

Health Insurance:

ACC would be expanded to cover all healthcare services currently provided by the government, private insurance companies would be allowed to compete with ACC, and once there is a thriving health insurance market ACC would be privatized. The current system of collecting ACC levies through multiple accounts would end and be replaced by individuals choosing the insurance company and policy that suits them best, with payments deducted from the UBI and forwarded to the insurance company.

Basic insurance (covering the same services as the current public system) would be compulsory for all permanent residents. International visitors must obtain insurance before entering NZ, but the compulsory level would only have to cover conditions that began while in NZ and provide the minimum care required to return the patient to their home country (they could pay extra for full cover). Insurance providers would not be allowed to refuse basic insurance to anyone regardless of their existing health conditions, and no price variations would be allowed on the basis of any existing health conditions, you or your family's health history, race, sex, genetics, employment, or hobbies. Prices could vary according to age, but the same price must be offered to everyone within each age bracket.

It is estimated that as much as 90% of health conditions (both physical and mental) are caused by or made worse by poor diets. To give a financial incentive to make healthy choices, insurance providers could offer discounts to those making healthy diet or lifestyle choices. Any metric that is used as a basis for these price variations must be able to be measured by medical tests, and the cost of these tests must be paid by the insurance provider. It also must be proven that the most significant influences over the metric are diet or lifestyle choices, and the insurance company must offer their customers information on how to change their results (the government would have no role in providing dietary or lifestyle recommendations). The recommended diet and lifestyle choices must be accessible and affordable for the vast majority of the population. Examples for metrics that could be used are blood tests that indicate levels of smoking or insulin resistance.

Tobacco and alcohol excise taxes would be ended; the financial incentive for limiting consumption of these products would come from health insurance discounts instead. This would make having a drink cheaper to all but heavy drinkers (who would face higher health insurance due to poor health metrics) and would benefit the hospitality industry.

Income support after an accident or malpractice incident would not be part of the compulsory basic insurance but would be an optional extra when choosing a health insurance policy (the UBI would provide a basic income for any who opt out of this). Legal litigation would remain banned for accidents and malpractice, with police responsible for prosecuting any crimes. Other optional health insurance extras would likely include cover for additional services, premium care, shorter wait times, and lower excesses.

Health Insurance Subsidies:

To ensure that those on low incomes could afford healthcare, the government would provide a subsidy equal to the average cost of the compulsory level of insurance for each age group, with the subsidy being reduced by 15% of gross household income (including the UBI). By fixing the subsidy to the average cost, any discounts or extra costs would be given in full to the customer, maximizing the incentive to make cost-effective choices. So that the children and non-working partners of high earners are not subsidized, and to remove any financial incentive for parents to separate, the income of both parents would always be combined regardless of relationship status (parents who have children with multiple partners would apportion their income). To ensure they are not worse off than under the current system, anyone who is eligible for the legacy superannuation top up would receive the full subsidy with no reduction based on income, but this group would eventually fade to zero.

Healthcare Facilities:

Healthcare services would be divided into different procedures by a national health agency, and a maximum price would be set for each procedure for each region. Any facility that wished to offer their services must register the procedures they offer and their prices, and patients would choose from the list of registered facilities based on the facility’s reputation, geographic location, wait times, and advertised prices. If there is not enough capacity for a particular procedure in a certain region, the agency would ask for bids to supply that capacity, and the lowest bid would be set as the new maximum price. If excess capacity is available, this will cause prices to fall as the facilities compete for patients, and the maximum price would be lowered to match. Facilities could not refuse to treat any patient for a procedure they had registered for, and insurance providers must reimburse the facility at their advertised price and could not restrict which facility a patient uses. International healthcare facilities could register their services within the system but must include travel costs in their advertised prices. Facilities could offer services above the maximum price for patients who have paid for insurance extras that cover premium care options (e.g. single rooms) or shorter wait times. Patients could also pay directly for upgrades, for services not covered by their insurance policy, or if they are international patients.

Primary and Emergency healthcare services could be used without prior approval from the insurance provider. Elective surgery and other non-urgent healthcare needs would be evaluated by the insurance companies, with claims being either approved or rejected. Rejected claims could be appealed to the national health agency, who could force the insurance provider to approve the claim if there is a genuine need.

To incentivize patients to choose the most cost-effective facilities, and to discourage unnecessary visits, patients would have to pay 10% of all healthcare costs up to a maximum of $250 per medical event.

To prevent a monopoly or anti-competitive actions, no license, membership, or registration from any professional body or government department would be required to offer healthcare services (it is probable that most practitioners would voluntarily pay for certification from a reputable body). Health facilities would have to register with the national health agency to be eligible for health insurance funds, but the agency could not deny registration to any person or company, and their role would be limited to reviewing facilities to ensure they are not falsely claiming any qualifications and investigating any claims of fraud or malpractice. The one exception to this would be the prescription of restricted drugs such as morphine, and the agency could require certain qualifications and other requirements before these could be prescribed. Otherwise, it would be up to patients to decide whether the facility was competent to perform a particular procedure (rating and review systems provided by the national health agency could help them reach these conclusions).

Fiscal Impact: The government currently spends $28 billion on health, and I estimate that health insurance would cost $6.4 billion, giving net savings of $21.6 billion.

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