The New Zealand Way

It seems that patient dissatisfaction is not unique to the US. Last week in New Zealand’s third- largest city, Christchurch, a middle-aged family man named Neville Toohey, decided to go on protest-mode after a long simmering feud regarding a claim with New Zealand’s ACC (Accident Compensation Corporation) for back problems. His public demonstration consisted of climbing the Christchurch Cathedral steeple, barricading himself inside, and unfurling a banner stating how he felt he had been mistreated by ACC (he used a less genteel word) and then directing further inquiries to his website. Probably more germane to my previous blog posts is not so much the detail of the disagreement, but how the New Zealand authorities dealt with this act of civil disobedience. The predictable appeals to Mr. Toohey to abandon his protest were made both by church authorities and the police. He declined to obey. Eventually, it was negotiated that Mr. Toohey would descend the cathedral tower at noon on the following day. He complied with this, was arrested for trespass and bail was immediately posted pending a hearing. He was released to go home. Mr. Toohey expressed remorse at lost revenues for the Cathedral (the tower climb is a fee-based tourist activity ) and made a contribution to the church to offset these losses. Most notable was what didn’t happen: there were no SWAT teams, teargas, snipers, or any of the other increasingly militarized tactics employed by police in the US in lieu of rational discussion. This outcome, to me, seems to mirror the reasonable civility and rational approaches to problem solving I’ve seen here so far--even in the face of substantive disagreements.

But just what is the ACC?

The ACC is one of several pillars on which the New Zealand health care system is based. It is a no-fault national insurance program funded directly by the government to cover medical expenses stemming from any accident that occurs in New Zealand. In addition, the rules of the ACC preclude further litigation because both medical expenses and subsequent compensation are provided for. Thus, the absurdities and excesses of an adversarial litigation-driven system of compensation such as that found in United States are simply rendered irrelevant. And even though health policy academicians--frequently law school professors and economists rather than medical clinicians-- downplay the impact of litigation on costs to the US health care system, the corrosive effect of this lawyer-driven adversarial system is pervasive. Just ask any clinician. In a future blog I will address this issue more comprehensively, but for now let’s continue to look at what else makes the New Zealand health care system tick.

As we discussed earlier,a well-organized and well trained primary care base is vital to the rational utilization of healthcare resources. Surprisingly, at the initial point of access, which is often a physician-owned practice, the patient is expected to pay some or even most of the cost of the encounter. Many patients, however, are able to obtain a community health services card so that the co-pays are on a sliding scale based on income. There are also further subsidies available for patients with chronic illness who have more than 12 visits per year.They are granted a high user health card, or HUHC. Despite these subsidies, I was rather surprised to see computer prompts linked to patient accounts which commented on bad debts and previous payment status, but this seems to be generally accepted as a necessary evil to maintain financial viability and overall fairness in the system.This is the only part of the system that requires out-of-pocket payment. And despite the potential barrier to access posed by these copays, my experience thus far is that it doesn’t seem to be a problem--at least in the sites I saw so far. I do want to continue to observe the potential effects of this system. But that’s where the potential financial barriers end.

After being seen by a primary care doctor, all laboratory investigations, radiology tests, emergency hospital evaluations, hospitalizations and surgery are paid for. No deductibles, no co-pays, no maximums.

Recent changes in subsidies have further included “free care under six”, full prenatal and obstetrical care, and recently a nationwide capitation scheme for the state’s share of primary fees. These costs are administered through primary health organizations, or PHOs. PHO’s are one of the primary conduits of the annual national health budget which directly pay GPs and other primary providers.

Another recipient of government funding is the District Health Board, or DHB, which pays for hospital and laboratory services. (This is a simple mandate on paper, but as with hospital systems everywhere, efficient, fair allocation of these funds is an enormous and politically charged task. In fact, the Health Minister Mr. Ryall, recently announced significant budget cuts to the DHBs, stating that more funds are to be devoted to clinical care.)

A third entity that makes up the foundation of the health system is PHARMAC, the Pharmacy Management Corporation. PHARMAC is the national formulary and pharmaceutical supplier. It negotiates directly with pharmaceutical manufacturers for supply and pricing of essential pharmaceuticals. All covered drugs are $3.00 NZ ($2.10 USD) per prescription.This includes at least one, if not more, representative drugs from virtually every modern therapeutic class of medications utilized in modern medical practice. In my three weeks of prescribing in New Zealand, I have yet to feel constrained by the PHARMAC formulary. Labeled on-patent drugs are still available, but at substantially more cost to the patient--just like the situation virtually every patient faces in the US who does not benefit from the advantage of collective bargaining.

Finally, there is a private sector. Occasionally, patients feel that wait times are excessive for elective surgery such as joint replacements. They can then opt to be treated through the private sector, and frequently the wait times are indeed shorter for such elective procedures. The general perception is that there is no quality difference between the private and public sectors, just differences in timing. The spector of a two tiered health system doesn’t seem to have arisen. Not surprisingly, there is a growing health insurance industry for those who seek their care in the private sector. In general, the insurance industry is better regulated here than in the US, but I have heard stories of the usual limitations, asterisks, exclusions, fine print, etc., etc. that have become the stock in trade and major source of profitability of the Health Insurance Industry in the US.

So to summarize, a medical patient in New Zealand can expect the following:

• some amount of copayment, if not full payment to access the GP.
• If lab tests, investigations, emergency treatment, hospitalization, or surgery are required it is free.
• If the patient is pregnant, prenatal care and delivery are free.
• If the patient is injured in an accident, the care is free (and subsequent compensation is provided for).
• if medications are required, each prescription covered by the formulary is $3.00.

Is everyone in New Zealand happy with this scheme? Obviously not ---at least Neville Toohey isn’t--- but by and large people seem to be satisfied with the basic provisions available to them. There is occasional grumbling, but when I ask New Zealanders if they would rather have a system like that in the United States, the response is a unanimous and unequivocal “NO”.

The New Zealand health system is not socialism. This is an example of an intelligent educated population and leadership understanding that one of the cornerstones of a human rights-based society, as well as, incidentally, a healthy productive creative society, is the social provision of healthcare.

I see words like “landmark” and “historic” used to describe the recent health care legislation signed by Pres. Obama. Compared to the NZ system these legislative reforms are functionally inadequate and morally lacking.

I hope to gain deeper insight into this system as I continue to work here for the next two months. As I do I’ll share them with you. This includes problems and shortcomings, but also the kind of problem-solving that is taking place to keep the citizens of this country healthy and productive.