New Zealand's aged care system faces growing pressure as its population ages. Dr Oliver Hartwich examines why underfunding residential care may ultimately cost taxpayers more through hospital admissions, delayed treatment and shortages of rest home beds.
Opinion by Dr Oliver Hartwich | Executive Director, The New Zealand Initiative
Last week, we co-hosted a dinner with the Selwyn Foundation. Its chair, former Labour health minister David Cunliffe, led the Government's aged care advisory group and presented their report, A place to grow old.
The report describes an underfunded, fragmented system facing more than twice as many over-85s by 2047. It recommends paying providers enough to build beds, more home care, an independent pricing authority and higher contributions from people with assets.
Everyone at the table thought it common sense, and I have yet to hear any politician disagree.
But that raised the obvious question. If it is common sense now, it was common sense ten years ago, so what has stopped governments preparing for an ageing society?
Without enough rest home beds, frail old people stay with exhausted families or in hospital.
A hospital bed costs taxpayers about $1,750 a day, a rest home resident around $80. But the government sets the price of a standard rest home bed and caps what residents pay at that rate. That price has not kept up with costs, so too few get built. The report would let prices reflect costs and help those who cannot pay, rather than hold prices down for everyone.
Underpaying providers is a false economy. On the report's figures, even building enough capacity under today's rules to give more than 9,000 people a bed would cost just $190 million a year more by 2037/38 than letting the shortage grow.
The report assumes people without a bed spend a tenth of their wait in hospital and need home care and hospital trips for the rest. Each person left waiting costs $59,000 a year more than a rest home bed. By 2047/48, not building costs more than building.
Older people waiting in hospital would take up five percent of hospital capacity by 2037/38.
Politicians tolerate this because hospital costs are hidden. They turn up as emergency department queues and cancelled operations, which voters blame on Health New Zealand. Paying providers more is a visible decision. So is deciding what those with assets should pay.
Here the agreement stops. Associate Health Minister Casey Costello wants a 'really honest conversation' but would not be drawn on who counts as wealthy enough. Her party, New Zealand First, lists 'asset protection' among its priorities.
A rest home takes five years to build. The Parliament we elect on 7 November decides what we have in 2031.
If that Parliament does not choose rest homes over hospitals, the result will be longer hospital waiting lists.
Source
Author: Dr Oliver Hartwich, Executive Director, The New Zealand Initiative
Organisation: The New Zealand Initiative