The health needs of our society are the subject of continual discussion in the media. Those of us treating patients see the problems in front of us each day. The increasing restrictions on what the publicly funded health system will provide, the long waiting lists for surgery and first assessments, and the inability of public hospitals to see patients referred by general practitioners, are all problems claimed to be causing an “epidemic of unmet need”.1 The under-resourcing of health has been repeatedly addressed by reorganisation of the delivery of healthcare services. Many see this process as similar to the reorganisation of the deck chairs on the Titanic. The time has come to look at the funding issues behind health more closely, and consider whether it is necessary to spend more on health.

Doctors tend to see the inability of the system to deliver needed, quality, effective and timely healthcare as their problem. It is not; it is a political, economic and social problem, yet as our patients’ advocates we feel it is our responsibility. The New Zealand healthcare system is now so lean that it has become mean. Many patients with medical and surgical problems are no longer put on waiting lists because, as the government has said, it has become more important to be brutally honest and admit “we don’t have the money, we can’t help you”. For some patients, this strategy will work; the general practitioner armed with this knowledge will help the patient get by, others will find a way to go privately, some will find their way back into the public sector, and yet others will just have to put up with their problems.

There is increasing recognition by the media that the amount of money spent on health may be the issue. To quote from a recent editorial in The Press:

“As a community, a consensus is needed on whether current health funding, which is about 8 per cent of GDP, is sufficient to meet growing health needs...While most New Zealanders support publicly funded and provided hospital care, blind ideology should not prevent exploration [of alternatives]...”2

Health expenditure is said to be a mix of social, political and economic factors, and no single figure is the “right amount”.3 In 1999, New Zealand spent 8.1% of GDP on health. The OECD average was 8.3%. New Zealand was ranked 16th of 29 OECD countries in terms of percentage of GDP spent on health, the highest being the US with 12.9%, and the lowest Turkey with 4.5%.3

Health expenditure in New Zealand in 1999 was certainly bigger than it was in 1989 (6.6% of GDP), but increased health expenditure may not result in increased services. Health expenditure contains both price and volume components, and high ratios of health expenditure to GDP can reflect a higher price rather than a higher volume of healthcare services. The difficulty with making comparisons on the basis of GDP is that it varies among countries, as do the costs of staff and equipment. Health economists have developed a system called purchasing power parties (PPPs, per capita health expenditure in $US) to help us see past these variables. PPPs allow for currency conversion, and their application to the data results in New Zealand’s fall to the position of 20th of the 29 OECD countries (18=Ireland, 19=Finland, 21=Portugal, 22=Greece).3

The percentage of healthcare provided in the public sector in NZ in 1999, was 77.5% compared with 85.8% in 1989. We ranked 10th highest in the percentage spent on publicly funded health in the OECD in 1999.3 Luxembourg ranked highest (92.9%), and the Republic of Korea lowest (43.9%).3 While in the 1960s there was a trend for more healthcare to be publicly funded in OECD counties, the right wing politics of the 1980s saw this increase slow, and the trend has reversed in recent times. New Zealand has followed OECD trends.3 The health strategies supported by the New Zealand government are explicit and the policies for implementation clear.4

Figure 1. Relationship between GDP per capita and health expenditure per capita. This figure indicates that the higher a country’s GDP per capita, the greater health expenditure per capita is likely to be.3 (Figure 1)

The exercise of making comparisons between countries is fraught with difficulties. The reasons for this listed by the Ministry of Health are variations among countries in: health service costs; intensity of treatment; rates of various invasive procedures; rates of introduction of new medical technologies; population demographics, culture and religion; welfare philosophies and private insurance cover; and litigation related to medicine.

New Zealand spends 8.1% of a low GDP on health. Increases in expenditure have slowed in the 1990s. The majority of healthcare is provided through state funding and as a result rationing is a reality in public healthcare in New Zealand. There are many areas outside the health sector competing for funding. If New Zealand wants to spend more on healthcare, it needs to address its funding issues. It is time to look at new models of funding, and we hope to highlight some of the issues surrounding these and the current system in future editorials in the NZMJ. It is clear that it is unlikely that there are any significant gains to be made through further rearrangement of our deck chairs.

Correspondence: Professor Frank A Frizelle, Department of Surgery, Christchurch Hospital, Private Bag 4710, Christchurch. Fax: (03) 364 0352; email: frank.frizelle@cdhb.govt.nz