Barry Smith (Te Rarawa, Ngati Kahu) Population Health Analyst Planning and Funding

1. Future Pressures on the Health System:Some Critical FactorsPresentation to the2012 Health and Disability Sector NGO-MoH ForumDeloitte LoungeWestpac Stadium WellingtonThursday 29th March Barry Smith (Te Rarawa, Ngati Kahu) Population Health Analyst Planning and Funding Lakes District Health Board

2. The three sides to every story: - yours - mine - and what’s really happening!

3. Four messages • Given that forewarned is forearmed we should debate these matters now – and - in a fullytransparent way • We should examine options using a ‘slow policy’ process and avoid the reactive ‘dog bite’ approach • How we deal with these (ethical) challenges will say a lot about us - our values - and the sort of society we want to live in • Community based entities may end up ‘bearing the brunt’ of stresses felt elsewhere in the health system

4. The dominant (global) narrative • “There will be increasing pressure to raise health fundinglevels - even under a philosophy of fiscal constraint” • “Increasing numbers of older people willmake spending on health difficult to control fiscally - but – especially – politically” • “Continued use of the current ways of distributing the health dollar may widen health disparities - and so addsocial costs” • “Explanations around individual health status will focus more on personal responsibility” • “ [But] the major cause of financial stress on the health system may well lie with factors other than ageing”

5. Pressure Source 1: Changing population

6. Demographic picture for New Zealand 2011-36(Source: Statistics NZ) 12% Medium Growth Projections 2011-2036 Count -----4%------ 98% 0%

7. Number in working population (15-65 yrs) for every person 65 yrs and over

8. Healthcare Cost by Age(Source: NZ Treasury, 2010)

11. Pressure Source 2: Changing technology

12. The impacts – positive and negative Positive • Supports new thinking and new knowledge • Can contribute to better health outcomes if access is only needs driven Negative • Often adopted before being ‘fully tested’ • New treatments can worsen health disparity if access is not needs based • Enthusiasm can override appropriate application • [Generally] raises costs to the health sector So - how should we balance cost against ‘progress’?

13. Pressure Source 3: Changing workforce

14. Some questions • Does use of language like “front-line services” etc. over simplify the way the health system works? • Are we making ‘savings’ just to meet rising costs in other parts of the health system? • How will regionalisation and centralisation impact communities in provincial New Zealand and just what should be regionalised? • Should control and accountability be located in the same or different places? • What should the future skill-mix in the health sector look like and will decisions be driven by equations of cost or need?

15. Pressure Source 4: Changing inequality?

16. New Zealand life expectancy at birth(Source: Statistics NZ, NZ Life Tables, 2005-2007)

17. Life Expectancy Trends: Maori and Non-Maori(Source: MSD)

18. Amenable Mortality Rates 1996-2006(Source: MoH)

19. Scatter plot of LE against HIIs, after standardisation Low average level of health High average level of health 2.5 HII Fair distribution of health Fair distribution of health 2.0 1.5 Possible goal Hutt Otago Waitemata 1.0 Nelson-Marlborough Taranaki Tairawhiti Capital and Coast Canterbury 0.5 MidCentral Southland LE Whanganui South Canterbury 0.0 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 Bay of Plenty West Coast Auckland -0.5 Hawke's Bay Waikato -1.0 Wairarapa -1.5 Counties Manukau Lakes Northland -2.0 Low average level of health High average level of health -2.5 Unfair distribution of health Unfair distribution of health Inequalities by DHB (‘Bulletin 28’)(Source: Monitoring Health Inequality Through Neighbourhood Life ExpectancyMoH Public Health Intelligence Occasional Bulletin No. 28, December 2005)

20. Age standardised death rates < 75 years (Source: OECD)

21. The ‘glass half-full’ scenario • Slower growth of the population under 65 years will provide opportunities to ‘re-invest’ elsewhere in the system • Improving morbidity rates and ‘re-configured’ models of healthcare delivery will reduce pressure on available resources • Better measures of ageing (e.g. the ‘old age dependency ratio’) will provide a more accurate picture of the social impacts of ageing • ‘Distance from death’ measures will provide a more ‘optimistic’ picture of future resource demand

22. The ‘glass half-empty’ scenario • Increasing life expectancy will generate increasing levels of disability and associated costs • Social expectations around the level of available healthcare will rise as populations age • Reconfigured models of health delivery will generate a net cost and so will not solve funding pressures • [Thus] advantages from ‘morbidity compression’ will be lost

23. The melancholic optimist “There is a crack, a crack in everything, That’s how the light gets in” (Anthem) Leonard Cohen, b. 1934

24. Thinking about solutions: Models of resource distribution

25. Some critical questions • How should we assess health need - and what definition should we use? • Should all health gains count equally - and what aboutthe ‘fair innings’ argument? • Whose costs and benefits should we value most – should we focus just on the working population? • Should we apply ‘discount rates’ to health care - andfocus on improving system responsiveness?

26. Still more questions! • Will we need a clearer definition of ‘adequate health’? • What priority should we give to the ‘worst off’? • Why don’t we just work on reducinghealth inequalities and focus less on ‘health maintenance’? • How should we balance individual rights against broader social goals?

27. So - how should we carve up the cake? Models of social distribution • Equality model – an equal portion to each • Functional model – a portion proportional to need • Reward model – a portion proportional to effort • Social value model – a portion proportional to the contributionto society • Meritocracy model – a portion proportional to merit

28. Thinking about solutions: Theconsequences of these models for the ways we spend the health dollar

29. Healthcare cost by age - current picture FUNDING LEVEL AGE

30. Healthcare cost by age – future picture FUNDING LEVEL AGE

31. Equality model - based on an equal share for all FUNDINGLEVEL The ‘needs –allocation’ gap AGE

32. Reward model - based on current ‘productive effort’ FUNDINGLEVEL AGE

33. Social values model- based on ‘contribution’ to society FUNDING LEVEL AGE

34. Meritocracy model - based on ‘social merit’ FUNDINGLEVEL AGE

35. Functional model: - based on a currentpicture of health cost by age FUNDING LEVEL AGE

36. Neo-functional model: - based on re-configured need - the ‘bathwatereffect’ FUNDING LEVEL AGE

37. ‘Right’ conditions for policy development? • Value views from outside the sector • Know more about ethics and social justice and evaluate policy directions accordingly • Havewidermore inclusivedebatesabout definitions of need • View health goalsin terms of bothcollective and individual gains • Take the issue of health inequality seriously • Apply ‘slow policy’ methods rather than the reactive fragmented approach we seem to prefer

38. The policy maker’s lament!! Steven Gene Wold, b.1941

39. And so - back to the future