FINDING THE MONEY

VIRGINIA MILLS, SENIOR POLICY ANALYST

In August, ASMS’ policy team published an editorial in the New Zealand Medical Journal highlighting, despite the Government’s claims about record health spending in Budget 2024, the funding is at best only treading water.

In July this year, citing financial mismanagement, the Minister of Health sacked Te Whatu Ora’s board and appointed Professor Lester Levy as Commissioner. Levy has been tasked with finding $1.4 billion in savings.

At the end of May, the Government’s 2024/25 Budget trumpeted a $1.43 billion funding increase to meet health sector cost pressures.

That figure had been signalled in Treasury documents in 2023. However, in March 2024 Te Whatu Ora officials appeared before Parliament’s Health Select Committee and said Treasury’s figure would no longer be enough to meet cost pressures.

Following Budget 2024 ASMS conducted a line-by-line analysis of new money allocated to health for 2024/25, including a comparison with estimated actual spending for the 2023/24 year and identification of money that had been removed from other parts of the health budget.

What ASMS found is the cost pressure increase is barely enough to maintain the already underfunded status quo, with the actual net increase in operational funding in Vote Health a mere $93 million (0.4 per cent) on the previous year. Much of the money for new initiatives is recycled or relabelled money from discontinued time-limited funding streams and funding cuts.

ASMS also notes that capital spending including Holidays Act remuneration made up most of the net increase in the Budget compared to actual estimated spending last year.

ASMS published our findings in a report entitled Just Treading Water and, drawing on further details obtained under the Official Information Act, submitted an editorial to the New Zealand Medical Journal.

The media flurry generated by the editorial prompted a response from Commissioner Levy in the New Zealand Herald. He asserted ASMS was wrong and the $1.43 billion cost pressure funding hadn’t been directed to capital funding and Holidays Act remuneration. However, this is not the point ASMS made, and the figures in our analysis are easily verified in the Vote Health Estimates of Appropriations.

Equally Dr Levy did not address other revelations in the editorial. For example, no extra money was allocated to meet planned care targets - in fact $110 million previously allocated to address the planned care backlog from COVID-19, is not continued. That was despite the Minister of Health receiving a briefing that estimated an extra $723 million will be needed over 2024/25 and 2025/26 have no patient waiting more than 15 months for a first specialist assessment, and no patient waiting longer than 12 months for treatment.

New Zealand’s spending on health has become less transparent. Spending previously broken down by District Health Board has been aggregated under Te Whatu Ora. However, the Pae Ora Act 2022 requires Te Whatu Ora to produce a three-year costed health plan that also assesses population health need. The plan is yet to be published this year. The Ministry of Health used to publish Health Expenditure Trends in New Zealand to support informed debate on New Zealand’s health expenditure, including international comparisons. Unfortunately, the series ceased fourteen years ago.

ASMS welcomes the interest our analysis generated. We want to see a robust public conversation continue, and increased transparency of health funding information. That is why ASMS is calling for an independent inquiry into health funding – to look at both how governments have funded health to date, the social and economic consequences of under-investment and what needs to change for governments to invest in our system properly.

ASMS’ editorial in the New Zealand Medical Journal, “The cost of everything and the value of nothing: New Zealand’s under-investment in health”, appeared in the issue published 23 August 2024. See http://nzmj.org.nz/journal/vol-137-no-1601

See the New Zealand Herald’s coverage of the editorial at www.nzherald.co.nz/nz/health-nz-cantcut-14-billion-without-eating-into-front-line-analysis/5XDNEU2XJBGDFKHUDKWXIL7UCE

See Lester Levy’s response at www.nzherald.co.nz/nz/health-funding-we-are-getting-moremoney-we-need-to-ensure-we-get-more-value-lester-levy/235LLBOPQZFTFD37FKM3MD54EQ

To read ASMS’ analysis of Budget 2024/25, Just Treading Water, see asms.org.nz/health-budget-just-treading-water

The Vote Health Estimates of Appropriations are available at www.treasury.govt.nz/publications/ estimates/vote-health-health-sector-estimates-appropriations-2024-25