Late last year, when the ACC ructions were underway, the professionals working in the sector warned that people would die as a consequence of the reforms mandated by the new Clinical Pathway on the assessment and treatment of sexual abuse victims.

Since then, and on the basis of the pathway, ACC has taken to declining claims despite publicly claiming consistently throughout the past six months and as recently as today that there was no cost-cutting imperative. This has resulted in a drop of more than 90% in the number of claims approved year-on-year. Explain that, if you can. Nick Smith couldn’t, though he tried to do so during Question Time. It has also caused a chilling effect in which people are simply not applying, since they’d have to undergo the trauma of the exhaustive documentation and excessive review required by the pathway only to have their claims declined.

It’s impossible to separate these reforms from the overarching government plan to privatise — partially or wholly — ACC, and when viewed in this light it becomes clear what’s going on: this is how insurers make their profits. And, just lilke it said on the box, people are dying. It’s a good thing there’s going to be a review, but what’s better is that the sector is organising their own review in parallel. Should make for an interesting compare-and-contrast. I am aware that certain senior National party MPs are aghast at the conduct of ACC, so there may begin to emerge some pressure from within the party for change, as well as from outside. We’ll see.

L

National are, true to prediction, privatising health provision. Also true to prediction they are doing so in a way that gives all the wins to the private sector and keeps all the financial risk for the taxpayer. Private providers may look low cost, but that’s only because they transfer huge amounts of cost to the public sector in terms of both management and back-stop services.

To give an example of a well known issue with private providers, every hip operation has a low very chance of complications leading to the patient spending time in an ICU.

When we cost public provision of a hip op we cost in a part of the cost of public ICU services. When we cost private provision we don’t, but we have to pay for the public ICU costs on top of the private hip op charge. That’s the first issue with the private provider efficiency – they rely on expensive back stop services being provided by the public sector. So we screw the costing model so that the private provider can make a profit off every hip op that goes well, and the public system ensures them against additional costs for the unavoidable not-so-good outcomes. Privatise the profit, socialise the loss!

The second is that there is additional cost in transferring a patient with complications from a private provider to a public ICU – we’re not only screwing the cost model to the benefit of private providers, but we’re actually incurring extra costs to do so.

Third problem? No matter who actually does the surgery “bureaucrats” are required to manage the provision, the eligibility, the bookings, the payments, etc. If one region uses eight small private providers then while each provider might look cheap and light on management there’s going be a team somewhere in the public system making sure that all the patients are allocated and treated, that the contracts are negotiated and the bills are paid and so on. Again, more inefficient that a single large provider responsible for both allocation and provision, again designed to make the private sector look lean and efficient, and the public sector bloated with bureaucrats.

Why, when so many other countries have proved that private healthcare provision is neither cheaper nor more effective thanpublic provision, when our largely private primary health provision is failing to meet demand, and when it is obvious that the private sector would only involve itself in healthcare so it could turn tax dollars into a tidy profit, is National pushing on with privatisation?

Part of the answer is ideological blindness, but part is also the make up of National and its closest friends. The links between National and the private healthcare lobby go back decades. In recent times the fundraising, personal and lobbying ties between National and the Private Hospitals Association are well documented in The Hollow Men, and a quick glance through the list of current National MPs shows just how entwined they remain, from Michael Woodhouse (ex-President of the NZ Private Surgical Hospitals Association), to Jonathan Coleman (a consultant in the medical sector) the list of Nats with personal interests in the profiteering of the private healthcare sector is deep and long.

Between ideology purity and self interest it looks like we’re on a long journey to inefficient expensive and ineffective privatised healthcare courtesy of Tony Ryall, John Key, and friends.

[This borrows from a comment I made on this thread at The Standard. Marty G has some great analysis on just how much of the current National spin about healthcare costs is … just spin]

Out-perform the private sector or join it.

This is the ultimatum I’m reading into Simon Power’s letter to SOE chairs.

I think it’s entirely right for the government to expect the most responsible and diligent business practice from SOEs – but I don’t think it’s reasonable to expect them to outperform the private sector which is unconstrained by the same responsibilities borne by a state-owned business. The private sector is responsible only to the profit motive of its shareholders, without the constraints of the triple bottom line and exemplary standards of conduct, transparency and long-term commitment.* Inasmuch as these constraints represent economic profitability traded off against other types of value, they require a SOE to operate at a disadvantage compared to private concerns when performance is measured purely in terms of the raw numbers.

If the ultimatum is delivered (as I expect it will be) in more certain terms during the 9 April meeting, it will mean two things: first, it should drive substantial changes in culture and efficiency, which is a good thing, and is the stated purpose. Second, if the different constraints under which SOEs operate are not taken into consideration and the performance evaluation is undertaken on strict terms of profit (and given the Prime Minister’s decree that electricity prices won’t rise) then they will be set a task at which they cannot possibly succeed, and their expected failure to outperform the market will prepare the groundwork for them to be sold during a second term.

L

* You might think that these constraints are a load of old bollocks, but that’s a different argument, since the government’s stated position is that they’re just fine.

In a number of threads people have brought up the idea that our existing publicly provided health system is fundamentally flawed and should be replaced by a privately provided healthcare system. Every time I read that argument I want to make a single (bold face) point:

The vast majority of our healthcare is provided by private providers.

The vast majority.

Take me for example, I see my GP (private provider), I have blood tests (private provider), scans (usually a private provider), take medication (private provider) and see a number of specialists (my main one is public but occasionally other public or private specialists). All except the specialists are private providers at least partly funded by the government.  One specialist is a public provider entirely publicly funded.

The only surgery I ever had was in a private hospital fully funded by the government.

So why, if the current health system is so broken, does anyone think that private provision is the answer?

I can see three possible reasons National and Act are arguing for “private health provision”:

1. Transfer the last of the public money to the private sector to create private sector profits for shareholders.
2. They don’t mean “private provision” they mean “private funding”, they actually want to cut the government spend and rely on individuals funding their own healthcare. Advantageous for the wealthy (who already have health insurance and would benefit from the tax cuts), disastrous for the poor who can’t afford private cover or care and don’t get tax cuts from the Nats.
3. Ideological blindness.

Two are awfully cynical and the other requires a level of stupidity I don’t believe they have, any other offers?

In the United States for a long time the Christian Right and the Economic Right existed in parallel trajectories. They campaigned for different things, they didn’t co-ordinate, and they didn’t overlap in membership. Then they started flirting, they each recognised the political power the other had. The issue that brought them together was public funding to religious schools; it was something they both wanted. For one it was direct funding, for the other it was tax payer subsidisation of the education of the rich. The Republicans, keen to draw in the conservative Christians hugely increased the state funding of private (religious) schools

In Australia as John Howard built his brand off his Methodist values, rolled back liberal measures and developed and used the conservative Christians, his government hugely increased the state funding of private (religious) schools.

In New Zealand, as the Brash and then Key led National Party fought against a liberal incumbent and developed its relationship with the conservative Christians both leaders promised church groups that they would increase funding to religious schools. Now they have been elected and are promising to nearly double the funding to private (religious) schools.

Roger Douglas was on Morning Report this morning, once again banging on about how we should privatise more stuff to save ourselves. I was interested to hear him complaining that National led government isn’t doing what he said they should, given that they clearly are. They have plans for

• privatising more health provision
• private prisons
• increased funding to private schools
• private competition in work accident insurance
• privatisation of many local government services
• private provision of social welfare services

Exactly what is Douglas concerned National is unwilling to privatise?