Opinion: Grant McLachlan
The biggest problem with our health and welfare systems is that we have so many of them.
District health boards, private health organisations, private hospitals, health insurance, ambulance and rescue services, Pharmac, ACC, Work and Income, Oranga Tamariki, superannuation, Veterans’ Affairs, Working for Families, KiwiBuild, Housing New Zealand, tax rebates, and business welfare all aim to achieve the same thing: social security.
The problem is that they often work against each other at the expense of those they are designed to protect.
A recent example exposes the absurdity of the system. A pensioner, who had health insurance, accidentally broke an ankle. A specialist at the DHB recommended ankle replacement surgery. ACC sent the patient to a range of “their” specialists looking for excuses to decline cover. They found one (“degeneration”, because the patient is old) but withdrew the excuse on review. The health insurer tried to avoid paying the full cost of the surgery.
After more than nine months incapacitated in a temporary cast, the deteriorating patient instead had the ankle fused at the DHB, resulting in permanent impairment. ACC, which lent a wheelchair and ramp, asked for them back before the patient returned home from the hospital.
The health insurer increased premiums because the patient now had permanent impairment.
The DHB ended up doing most of the work. It even lent a new ramp and wheelchair during recovery. ACC covered the ambulance part-charge while the insurer covered the medication that ACC and Pharmac didn’t subsidise.
Taking into account all the assessments and paperwork, ACC and the insurer must have each spent more money avoiding paying for the operation than the operation would have cost. ACC covers accidents but not illness or disability.
That demarcation wastes a lot of time and money. ACC was formed on the basis of replacing the risk of litigation for personal injury with a “no-fault” income protection social insurance scheme guaranteeing cover of 80 per cent of income earned at the time of injury.
The number of complaints involving ACC obfuscating claims now exceeds the litigation that the scheme replaced, resulting in many injured resigned to the sickness benefit.
It was never meant to be this way. President Roosevelt’s “Second New Deal” Social Security Act of 1935 in the United States was a social insurance income-protection scheme where a separate payroll tax assisted the elderly, the poor and the sick. New Zealand’s First Labour Government’s Social Security Act in 1938 went further by providing universal healthcare and housing.
Formed during the Depression, social security was meant to lift the vulnerable out of poverty. Today, unemployment benefits are less than a third of the minimum wage – well below what the OECD considers the poverty line.
While home ownership is decreasing and social housing waiting lists grow, there is an added silliness that, of ACC’s $37 billion and the NZ SuperFund’s $38.5b of investments, they focus much of their New Zealand portfolios into investment property, further inflating property prices.
When inequality is growing, it is unacceptable that tentacles of the Government’s own social security system could be exacerbating it. It is inexplicable that crumbling hospitals are overworked and crying poor while ACC wastes so many resources frustrating their legislative mandate.
Social security is insurance against needing charity, yet too much of our system relies on it.
Take, for instance, first responders. The fire emergency service is funded by insurance levies and charity. Rescue helicopter and ambulance charities’ operating costs are 70 per cent funded by the Ministry of Health, ACC and DHBs.
Private health insurers and providers — many of them operating as not-for-profit charities — pitch themselves as an option for those dissatisfied with the public health system to “jump the queue” or “top-up” services provided. Policy holders are effectively paying twice for a level of service they would or should have otherwise received from their taxes or ACC levies.
The root of the problems with our social security system is a fragmentation of where funding comes from and where it should be spent. Taxes just seem to be chucked into a pit that politicians and agencies fight over.
Over half of the Government’s annual expenditure ($43.3b) and 17 per cent of our economy is spent on health and welfare. Meanwhile, dissatisfaction with the system has seen an increase in private insurance policies to over 27 per cent of New Zealanders.
If every New Zealander had a single health and income protection insurance that covered accidents, illness, and disability, there wouldn’t be all this nonsense and there would be an incentive to treat patients sooner.
It would also pool resources and lower the costs of public and private insurers and providers.
Such a suggestion isn’t far-fetched because we once had such a system. The Sixth Labour Government should touch up on its history as, today, social security isn’t working.
• Grant McLachlan is an infrastructure specialist.