Taxpayers paying millions of dollar for private healthcare – study

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Taxpayers are footing the bill for private healthcare to the tune of millions of dollars a year.

Hospital beds. Hospital. Patients. generic

The study’s lead author, Dr Erin Penno, says the presumption privately funded healthcare came at no cost to taxpayers was shown to be untrue. (File image). Photo: Unsplash / Daan Stevens

A recently published study, in the international journal Health Policy, showed patients who needed public hospital care after private inpatient treatment cost $11.5 million in the 2013/14 year.

The study is the first of its kind for New Zealand, as previously data on the private sector was not available.

Lead author Erin Penno said the study rubbished the presumption privately funded healthcare came at no cost to taxpayers.

“There has been an argument used by the private sector that it takes the burden off the public sector and, I think, people holding private insurance think that as well … but the research does show that’s not necessarily the case and there is a risk that if we increase the use of the private sector that there is potentially a flow-on effect to the public system and there’s a risk that could end up crowding out those that are less able to afford insurance.”

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Just over a third of New Zealanders hold private health insurance, but Dr Penno said that proportion was growing and it was disproportionately held by those who were better off.

“They tend to be non-Māori, non-Pacific and in less deprived groups,” she said.

“There is a risk that it [growth of the private sector] would end up disadvantaging those who don’t traditionally hold insurance.

“There is an equity argument there that if you were to increase the private sector provision that it could be to the detriment of those who are worst off in our system already.”

About 2 percent of private inpatients were subsequently admitted to a public hospital, Dr Penno said.

“That’s the equivalent of 1800 patients moving from the private to the public health care system,” she said.

“Given the billions of dollars spent on health care in New Zealand annually, $11.5 million could be interpreted as having a minimal impact, but to put that into perspective it’s the equivalent to the average total annual costs of health care for a small town in New Zealand, or it would fund 760 hip replacements.”

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Health care in New Zealand is publicly funded and provided, and available privately for those who have health insurance or can pay for it themselves. According to the health and disability system review, about 5 percent of health spending in New Zealand came from private health insurance and about 14 percent from out of pocket.

“We might expect the cost of private hospital care be borne entirely privately, but our study suggests that is not always the case. Millions of dollars of public money is being spent on providing acute follow-up care for patients who have received care privately,” Dr Penno said.

“While we should provide health care to those who need it, our study highlights that the financial boundaries between the private and public health sectors are blurred. Our findings also suggest there is a risk that increasing use of the private sector may put more pressure on stretched public hospitals, crowding out those less able to afford private care and, in effect, increasing existing inequities in access and outcomes of care.”

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The most common reason for patients seeking public health care after a private healthcare treatment was after elective procedures such as hip or knee replacements, for haemorrhage, infection, and disorders of the circulatory and digestive system.

It was important to acknowledge some readmissions were unavoidable, but international evidence suggested up to a third were preventable, Dr Penno said.

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