Little for health in Budget 2021

Lyndon Keene | Health Policy Analyst

Beyond the big budget items relating to Covid-19 and the system restructure, there are patches of improvement but little sign of progress towards revitalising the health system after many years of under-investment. For DHBs, it’s more of the same, writes health policy advisor Lyndon Keene.

For all the big numbers headlining last month’s health budget, most frontline hospital staff are unlikely to see any relief from current workload pressures. This year’s boost for DHBs at first appears substantial ($914 million more than last year’s budget). However, after wage, demographic growth, and the cost of new initiatives, it falls well short of what’s needed to stand still, let alone make progress. And there is no explicit funding for additional nurses from the safer staffing initiative, and the New Zealand Nurses Organisation’s pending pay equity settlement, which will probably be in the hundreds of millions. In a letter to Finance Minister Grant Robertson in December last year, Health Minister Andrew Little argued: “Efforts to improve equity, coverage, service quality, and maintain safety could be undermined in an environment where providers are struggling to manage fiscal constraints, creating risks for the populations they serve.” Evidently Mr Robertson was not convinced. Services would be under even further pressure were it not for virtually all DHBs running deficits over multiple years – an indicator of structural under-funding – estimated to be around $650 million for 2020/21. Despite the Minister’s Letter of Expectations to DHBs emphasising they must “deliver break-even results by the end of 2021/22”, it is highly likely they will run up big deficits through to their final days. The line being run by the Government is that focusing more resources into primary care will take the pressure off hospital services (though the evidence does not support that assumption). Hence the primary health care strategy gets a $51 million boost (14 percent over 2020/21), though mostly to cover cost and volume pressures. Funding for National Mental Health Services, managed by the Ministry of Health, gains $42 million (21 percent increase) partly to fund the ongoing 2019 Budget initiative to expand access to mental health services in the community. Much of this, however, has been carried forward from “savings” and under-spends from the two previous years. The vast bulk of mental health funding – a ring-fenced portion of DHB budgets for specialist services – is not separately itemised in the Budget. There is no indication it has been increased, other than for the usual demographic and cost pressures. Putting aside funding related to Covid-19, national Public Health Service Purchasing, also managed by the Ministry, received just $4 million more than the final budgeted figure of $503 million in 2020/21 (an increase of less than 1 percent). A range of new initiatives include additional funding for public health units ($9 million), cervical screening ($7 million), breast screening ($5 million) and bowel cancer screening ($3 million), which will be part-funded by unspent money from previous years and partly at the expense of other services. The total budget for Public Health Service Purchasing amounts to 2.3 percent of Vote Health. Public health groups have been calling for it to be lifted to at least 5 percent. Health Coalition Aotearoa Chair Professor Boyd Swinburn says the Budget does not address decades of under-funding public health to reduce preventable diseases. “A status quo of under-investment in prevention is setting up the health care system for even more pressure.” The biggest area of new spending is the Covid-19 vaccination programme, announced earlier this year. Funding for this $1.4 billion programme began with $673 million allocated in the current year to June 2021, with a further $714 million budgeted for 2021/22. There is also substantial funding for other Covid-19 related measures: $2.2 billion over two years, including more support for PPE, MIQ facilities, surveillance, and testing. For the health system restructuring, $486 million is allocated over four years, including setting up Health New Zealand, the Ma -ori Health Authority, Hauora Ma -ori and locality networks for primary and community healthcare. This will almost certainly require more. Pharmaceuticals get an additional $40 million in 2021/22. And a further $140 million is provided over this and next year for “continuity of supply of medicines and medical devices”. National Disability Support Services, mostly provided by NGOs, received an additional $171 million (a 10 percent increase), but this is largely accounted for by cost and volume pressures, ongoing pay equity costs for support workers, and in-between travel costs. Of that, $7 million is provided to increase the availability of cochlear implants. Capital is mainly provided through a multiyear funding allocation; $5 billion from 2020-2025, of which $1 billion is estimated to have been spent this financial year, and a further $1.5 billion estimated for next year, leaving $2.5 billion for the remaining years. To put this in context: in 2018 DHB capital spending needs were forecast to exceed $14 billion over the following 10 years. Key areas that urgently need more attention include: • Workforce shortages: Investment in the health workforce is needed to address shortages across a wide range of occupations. • Mental health services: These remain in crisis mode, despite additional funding initiated in 2019 for mostly communitybased services (much of which is under-spent). Specialist mental health services continue to be funded to cover 3 percent of the population when there is long-standing evidence it needs to be 5 percent. • Prevention and promotion: Nationally administered public health services receive just 2.1 percent of Vote Health while New Zealand is facing significant public health issues. A major aim of the restructuring is to take pressure off hospital services. Effective public health services will be vital. • User charges: Eliminating primary care practitioner fees would improve access to services, especially for those who most need them, a key aim of government policy. Such a move would require recompensing practitioners accordingly.