Single Payer in New Zealand

SHANOOR SEERVAI: Hi everyone. Welcome to The Dose. I’m Shanoor Seervai, and on this show, we talk about health care in developed countries where everyone has coverage, and how their health systems are different from our system in the United States. Today we have Robin Gauld with us. Robin is a professor of health policy from New Zealand. In 2008, he came to the U.S. to study how health care providers work to standardize the performance of doctors, so that patients receive care of similar quality at the same hospital or clinic.

Robin, thanks for joining us. New Zealand has a “single-payer” health care system, which means that the government pays for health care with tax money. Could you tell us about how this works?

Single-Payer in New Zealand: Who Pays? What’s Covered?

ROBIN GAULD: Yes. So New Zealand, you’re right, has a health care system which is funded by tax, a very, very straightforward health care system when you look at it comparatively internationally. And we pay tax to the government. The government then makes some decisions around how much it will allocate to health care in any one year. And then they allocate that money out to 20 regions.

SHANOOR SEERVAI: All right. So New Zealand is divided into 20 regions, and each gets money from the central government, which is the single payer. Then each region has to make decisions to allocate how they’re going to spend that money?

ROBIN GAULD: Yes, that’s correct. The single payer is the government and the government pays over funding to the 20 regions based on the population characteristics of those regions. And then each of those regions in turn, which has a chief executive, makes a decision around what it’s going to fund for its population across a spectrum of services, with some exceptions.

SHANOOR SEERVAI: So do some regions have better health care than others, or would you say that it’s pretty standard across the country?

ROBIN GAULD: Well, it’s relatively standard. I mean, life expectancy is pretty standard across the board.

SHANOOR SEERVAI: In the U.S., there are big differences in life expectancy. Research shows that American men with incomes in the top 1 percent live 15 years longer than the poorest 1 percent. For women, the gap is 10 years. Do you think that the disparities in health are less in New Zealand because you have universal coverage?

ROBIN GAULD: Yes. So, we have universal coverage in principle. But in practice, that’s not the case. So in principle, or in theory, you might say, we have policy in New Zealand, and this is a long-standing policy, that no one will be denied access to care when in need. And the government does its best within a constrained funding environment to provide for the health care needs in the population. And public hospitals are free of charge. Anyone can go to a public hospital to receive emergency treatment.

SHANOOR SEERVAI: So what is not covered?

ROBIN GAULD: Where the system you might say fails people is people who have nonurgent service requirements. And that’s where you will sit on a waiting list, which is a characteristic of a sort of national health service model that we have, and the U.K. has, and lots of other countries have. So we will tend to have sometimes very long waiting times for most nonurgent treatments, and it varies considerably up and down the country.

SHANOOR SEERVAI: The National Health Service model you refer to is the system in the U.K., where the government pays for health care with general tax revenue and employs or contracts directly with doctors, nurses, and all providers to deliver care. New Zealand talked about a system that employs health professionals eighty years ago — ten years before the U.K. did. Why didn’t that work out?

ROBIN GAULD: The doctors at the time resisted the government’s model, and fought them very hard. And the agreement reached was that public-sector doctors would be salaried. But you’re also permitted to have a private practice. So almost half of our public hospital specialists also have a private practice where they work on fee for service, and generate substantially more income than they do in the public sector.

SHANOOR SEERVAI: So specialists have both a public and a private practice? Is it the same for primary care doctors?

ROBIN GAULD: In the primary care sector, our general practitioners, primary care physicians, work, again, on a historically a fee-for-service basis. And they will charge every single patient who comes in through the door to see them. And they can be quite expensive. It can be after hours, up to 100 dollars.

SHANOOR SEERVAI: Oh, wow.

ROBIN GAULD: During office hours, it’s probably around 45 dollars, 55 dollars, is what they’ll charge an average patient. It’s very, very complex fabric in primary care in New Zealand, especially around the charging, and it creates tremendous access barriers. And just coming back to how primary care is funded, because of this historic compromise, over the years, the government has subsidized general practitioners quite heavily. Today, it’s about 50 percent of the income of a GP, is from government subsidies. And then the other 50 percent, roughly, comes from fee-for-service, that every single patient who comes through the door is paying a fee to see the GP. And it creates, because of that fee for service, it creates very real access barriers.

SHANOOR SEERVAI: The barrier is that a patient who is paying may be able to see a doctor sooner than a patient who gets an appointment through the public system.

ROBIN GAULD: We have between about one in four and one in five patients, avoid seeking medical treatment because of the cost barrier. And that will be treatment in primary care, sometimes in secondary care if they have not been able to get timely treatment, or been denied treatment in the public sector, which does happen as well, because patients will be seen not to have high enough priority based on clinical assessment guidelines to be seen and treated in the public sector.

SHANOOR SEERVAI: Wait — so to see a specialist, a patient needs to demonstrate that it’s a high-priority case?

ROBIN GAULD: So these may be patients who have hip or knee joint problems, or eye problems. And their condition will be seen as not being severe enough to warrant being seen within the context of all the other patients whose conditions are much more severe.

And that’s because of the fixed amount of public funding that comes into the public system. And so there’s a kind of a rationing that takes place within the public system. Now, people with better financial means or with private insurance, may just go straight to the private sector and circumvent the waiting list.

Supplementary Private Insurance

SHANOOR SEERVAI: To clarify, on average, New Zealand has shorter wait times than almost anywhere else in the world. But this dual system means that the same specialist could provide the same service, but in a completely different time frame based on whether somebody accessed that doctor through the private system or through the public system.

ROBIN GAULD: That’s what can happen in practice, yes. So you might see exactly the same specialist, so you could wait four or six months for, or be denied an initial appointment within the public sector. You might see that same specialist within a week in the private sector. Because the private sector delivers in a very, very timely fashion. Of course, you have to pay. And the average sort of starting rate for a specialist consultation is probably 250 dollars and up. And then you’d be paying for treatment on top of that.

SHANOOR SEERVAI: How do people pay for this private care? Do they have private insurance?

ROBIN GAULD: Okay, about one-third of the population has private insurance coverage. And that’s insurance coverage that will cover private specialist treatments that are on offer. So in New Zealand, there is no private hospital that offers intensive accident and emergency services. There’s no private emergency departments in the country. So private hospitals are largely procedures. So they will do heart procedures. Not heart transplant surgery, but you’ll certainly get stents and valves and so forth done, bypasses. But anything serious that goes wrong with a patient in the process of care in the private sector is likely to be put into an ambulance, and sent to the public hospital, where the intensive care and trauma treatment services are available.

SHANOOR SEERVAI: So the services and the wait times are different based on whether it’s a public or private practice. But would you say that the quality of care is similar?

ROBIN GAULD: Yes, that’s right. Yes.

SHANOOR SEERVAI: How much would somebody pay per month for private insurance?

ROBIN GAULD: So the price per month, it varies — certainly by U.S. standards, it’s quite cheap. You might be paying for a family of four, perhaps around 3,000 dollars per year.

SHANOOR SEERVAI: Okay. How do people feel about the fact that they’re already paying for their health care through their taxes, but a third of them, on top of that, are paying more to have their private insurance?

ROBIN GAULD: So I think people take out private insurance for peace of mind, by and large. And that is because they probably understand that there are waiting lists in the public sector, and they want to be seen in a timely fashion, and have peace of mind that they will be seen and be treated privately. As you rightly pointed out, the quality of services is really no different between public and private. But it’s the timing that is the issue.

Wait Times in New Zealand

SHANOOR SEERVAI: Right. What’s being done about these waiting lists?

ROBIN GAULD: There’s been a huge amount of work now going on for 20 years to try and tighten up waiting list management. All sorts of innovations that take place around the country to try and reduce the numbers of patients on waiting lists. And periodically, waiting lists rear their head once again where there has been a situation where someone has perhaps died awaiting heart surgery or when they’ve had a particular cancer which has not been treated in a timely fashion, and they’ve gone on to develop metastatic cancer and probably die from it.

SHANOOR SEERVAI: When tragedies like this happen, how does the government respond?

ROBIN GAULD: So in my region, recently, we’ve had an ongoing problem with urology.

SHANOOR SEERVAI: Robin lives in the South of New Zealand. It has two main cities with public hospitals, and many small rural towns. Patients are regularly taken to the main hospitals by helicopter. Back to Robin’s story about the shortage of urologists in the region.

ROBIN GAULD: Only recently have they managed to appoint enough urologists across the region. In the meantime, there have been some men who have developed serious cancers as a result of not being seen in a timely fashion, or not being seen at all. What the district health board did is run some super-clinics, where they flew in urologists from around the country who worked all day Saturday and all day Sunday, and I think there were about 15 or 20 of them, and they just worked their way through the waiting list, and saw and treated all of the patients that needed to be dealt with that particular weekend. So we have these occasional innovations to try and deal with people who have fallen through the cracks.

SHANOOR SEERVAI: But that doesn’t mean that people don’t slip through the cracks. The Maori, the indigenous people of New Zealand, and the Pacific people, who come from different Pacific islands, have more trouble accessing health care than others. Robin, why do you think that’s the case?

ROBIN GAULD: Very complex question. The reasons I think are, you know, they’re multifaceted. And they’re not fully understood, nor agreed upon. Arguably, they would be to do with access barriers, and both financial barriers, though often geographic barriers. Poorer populations in New Zealand seem to be less well-served by GPs especially. In Auckland, for instance, the most impoverished part of Auckland, South Auckland, which has a very high proportion of Pacific people and Maori people, high unemployment rate, very high rates of diabetes and rheumatic fever has appeared there in recent years as well.

Delivering Care in Remote Areas

SHANOOR SEERVAI: Hmm. If it’s that bad in the city, what is it like in rural New Zealand? Can people find a GP, general practitioner, or primary care doctor there?

ROBIN GAULD: The health care workforce has failed to penetrate some of the most difficult parts of the country. Often, if you go into rural areas, it’s very, very difficult to get GPs to go and work in those areas. So, there are access barriers.

SHANOOR SEERVAI: And as we discussed earlier, cost must be a barrier, since the Maori and Pacific people are relatively poor. What are the other barriers?

ROBIN GAULD: There are very real cultural barriers, in that Maori people especially, but also Pacific, often find that, or feel as though, the service has not treated them in a way that makes them feel at ease and comfortable. And so they won’t want to go back to the GP again. So they will avoid going to receive treatment.

SHANOOR SEERVAI: Everything that you’re saying about disparities in New Zealand rings a bell with some of the disparities that we have here in the United States. African American and Hispanic populations have worse access and health outcomes here. Did you observe similarities — or differences — between disparities in New Zealand and the U.S.?

ROBIN GAULD: Yeah. I think we in New Zealand have confronted and been very, very upfront about the issues, accepted them, and tried to do something about them. So we’re quite fortunate in that regard, and it at least seems to be bipartisan political support for taking action. So I think in New Zealand, we’re probably quite a long way ahead of the United States, but still there’s a long way to go.

Addressing Health Care Disparities

SHANOOR SEERVAI: Well, could you talk about some of the things that New Zealand is doing concretely to address these disparities? I know the government is putting money into primary care.

ROBIN GAULD: The government also invested a huge amount of time into developing a primary care strategy, which had at the very, very forefront in its opening words that inequality, which especially impacts on our Maori and Pacific populations, and people of lower socioeconomic status.

So outreach clinics, for example, where, you know, a doctor and a public health physician and a health promoter, a nurse, would go out into a remote community and work with that population and try and put health care plans in place, educate the population, ensure that they are in regular contact with them, screen them for various diseases and so forth.

SHANOOR SEERVAI: Is it working?

ROBIN GAULD: This is very, very complicated, and even in a small country like New Zealand, we have had very limited success.

SHANOOR SEERVAI: Let’s shift gears and talk a little about your experience with the U.S. health care system. When you first arrived, what was most surprising to you about the way that the U.S. health care system is designed?

ROBIN GAULD: Yeah. I think the complexity is what was so surprising. The understanding that you’re going to be getting the world’s best health care. You know, specialists in every subspecialty area galore and then some. But what surprised us, and we had very, very good health insurance through the Commonwealth Fund, extremely good, Rolls Royce health insurance. And yet we still felt as though no one was really looking after us. That there was no on coordinating care.

SHANOOR SEERVAI: And in New Zealand, you would have had a primary care doctor coordinating, right? Did you need medical care for something when you were here?

ROBIN GAULD: My wife, in fact, had an encounter with the health care system towards the end with a sort of rheumatoid arthritis or reactive arthritis. And she was most definitely bounced around the system, where no one sort of took hold of her and said, “Right, we’re going to sort out what’s going on here, and coordinate the different specialists that you’re going to go and see, and the different recommendations and findings from lab tests and so forth.”

There was no sort of primary care physician who was providing that level of coordination. It was only a neighbor who was a primary care physician and a runner who said to my wife, because she was a runner as well, he said, “Stop running right now. I’m going to — if you don’t mind, I will try and sort out what’s going on.”

SHANOOR SEERVAI: And so, returning to New Zealand, if you had to choose between your health care system and ours, which one do you think you’d pick?

ROBIN GAULD: Look, I would pick the New Zealand one. I think we — but I say that with some caution. I think we have the fundamentals right. And those are a strong focus on primary care and general practice, and family practice. We have a very, very strong tradition of that over many, many decades. We have a very good publicly oriented public health system, and the people understand that they work for the public service and the people, and not for profit. But where we fall down is that the amount of funding going into our system is just not enough.

And so the whole system is strained. And that’s what puts me at — that’s what gives me a sense of unease, in that I know that if I had a problem, I probably am going to have to pay to see a private specialist if I want to get timely treatment of that problem.

SHANOOR SEERVAI: That’s it for today’s episode of The Dose, with Robin Gauld, a health policy expert in New Zealand.