Divergence is difference
Colin James's Business Herald column for 13 July 2005
Paul Hutchison looks like a buttoned-down sort of chap. But actually he hates wearing ties. So is he the man to loosen up health policy?
Under Helen Clark and Annette King the health system has edged back closer to the old "public" model. That is an article of faith with them. The state-centred model is at the core of this government's social policy approach.
National's Hutchison wants more elbow room for GPs and more scope in the hospital system for private funders and providers. That is an article of faith for the would-be lead party of the next government: more choice and flexibility.
This difference underlines the theme that has become dominant in this election: the size and role of government, how much tax should be taken and in what ways should it be spent. Despite the moderate tone of Don Brash's would-be administration, there are real choices.
ACT offers starker choices, which it demonstrated by scoffing at Bill English's tax concessions for parents of children in childcare centres. ACT said tax cuts should be across the board Concessions narrow the tax base and so offend the principles of the 1980s tax reforms.
So English has cut into John Key's across-the-board cuts. Will there be more concessions to favoured constituencies? Key says not.
The lesson is that National fudges principle, compared with ACT. Nevertheless, clear distinctions with Labour are emerging. For example, English's promise of a return to bulk funding of schools and more attention to parental choice (which is also the base for the childcare tax concessions) contrast with Labour's state-centred education.
Health provides a similar contrast, though in a minor key.
First, Hutchison is a mild fellow. More important, he is constrained by reform-weariness in the health industry -- what he calls "restructuring fatigue" after the Simon Upton reforms of the early 1990s and the Clark-King reversals this decade.
Hutchison would ideally restart from 1999 when the Health Funding Authority bought health services for the public and independent practitioner associations (IPAs) set the standard in primary care. But he can't.
So district health boards (DHBs) will stay if there is a National-led government. So will primary health organisations (PHOs), Labour's half-pie socialisation of GPs.
Stuck with those structures, Hutchison focuses on efficiency and productivity. He needs to: as Michael Cullen has worried, health costs and demand have been rising faster than inflation and threaten the integrity of the Budget.
So post-election Hutchison would aim to spell out what treatments the state is prepared to fund -- so as "not to fool the public into expectations that cannot be fulfilled".
He would facilitate DHBs amalgamating (where that can occur "naturally") to develop critical mass or at least pooling purchasing and information technology activities to secure efficiencies.
He would want more efficient management of PHOs. Those with IPAs behind them have one third of the management costs of those which don't, he says. He also notes that GPs' incomes have eroded by comparison with other health professionals and yet still there is not "free" primary care.
Hutchison would revisit the universal subsidy (why should the well-off get subsidies when funds are restricted?) and tax deductibility for health insurance, for which he detects a "large constituency" though he would need to be convinced that that would "help the whole sector and relieve pressure on the public system".
He also sees room for employers to offer packages of treatment for simpler conditions that might otherwise keep employees off work. In a tight labour market that might be attractive.
Tie that in with a return to contracting out routine operations to the private sector. DHBs tell him, for example, that they do not do varicose vein, gall bladder and hernia operations unless they turn really serious.
That is not only undesirable for the people concerned but bad for the economy if they can't work. ACC uses private hospitals to get accident victims back to work faster. And Social Development Minister Steve Maharey has a scheme for jumping sickness beneficiaries up the queue and so back to work more quickly.
(ACC policy is another example of difference with Labour but moderacy in approach: by contrast with Murray McCully's forced privatisation in 1999, ACC spokeswoman Katherine Rich proposes permissive deregulation.)
Hutchison also sees scope for the private sector working alongside the public sector -- as, for example, the proposed "co-located" private oncology radiation centre at the North Shore hospital which the government barred. This would permit benchmarking of quality and costs for the public system.
None of this is revolutionary. Hutchison is wary of Britain's experimentation with GPs as "budget-holders", taking responsibility for people's hospital as well as primary care (and thus, the theory goes, incentivised to keep them out of hospital through more proactive primary care). A doctors group in Tauranga was working towards this end when National went out of office in 1999 but had not got approval from the Health Funding Authority.
Instead, Hutchison insists he wants a strong public system and would not risk it losing critical mass by hiving off too much to the private sector. He wants instead to enhance the public sector, enhance health care generally and enhance the range of funding and service options.
So Hutchison's approach should be seen more as a tendency than a jump, a start on what he calls "range of options to increase private sector activity". Over time, in office, his path and Labour's would diverge.
And that divergence is the underlying message in this election. It's a soft message but a real one.