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Insurance Chief Sees Cure for Health Bill

Posted on: Wednesday, 1 February 2006, 15:00 CST

By STOCK ROB

AN ENTRENCHED ideological divide has stifled common sense and pragmatism on the question of private versus state-funded healthcare, says the head of the body representing NZ health insurers.

Though some 1.3 million Kiwis pay for private health insurance, the health insurance industry is still viewed by the government as a threat and not a valuable partner, says Claire Austin, a former mental health nurse who now heads the Health Funds Association.

Among Austin's aims in her new role is fostering a more co- operative relationship which could one day mean that people buying health insurance for themselves and their families will see less of their premiums going to the taxman.

Health insurers such as Southern Cross have long maintained it is unfair to tax premiums on health insurance because those paying for their own healthcare are effectively paying taxes for state care they don't use, then paying again for private care.

They would like to see the tax removed. Southern Cross claimed in 2004 such a move would raise the numbers of Kiwis paying for their healthcare from about 33% of the population to about 37%. It said that would in turn help control the soaring state health budget - just under $9 billion and growing faster than inflation as the population ages and healthcare becomes more sophisticated and expensive.

But such discussions are doomed to fail because of the political climate of distrust, says Austin, illustrated in the briefing to incoming Health Minister Pete Hodgson. With about one-fifth of health spending coming from private sources, it claimed private firms were attracting staff away from the state-funded system, and threatened to lead to a health divide between the rich and the poor. But it was another claim Austin found truly alarming: "Increasing private demand may raise questions about the comprehensiveness and timeliness of the public system," the paper read.

In other words, Austin says, the government views private health providers as threatening to create a public relations problem by looking after people better.

"Blaming those who are performing better than you for your own underperformance isn't going to improve your responsiveness or efficiency," Austin says. "The sectors would do better to learn from each other."

Private companies have been welcomed by the government in their plans to spread retirement savings in New Zealand and to manage the superannuation fund, so why treat them with suspicion in healthcare, Austin asks?

She says there's also a good deal of housekeeping for the association to do. To show government it is a serious industry worth partnering, Austin will champion a Centre of Excellence. Its first job will be to develop solvency, capital adequacy and governance standards for health insurers, similar to standards required overseas. Expected to be in place by the end of the year, they not only help consumers make decisions between health insurers, but show politicians it is an industry committed to high standards, Austin says. State of Health Health insurers in New Zealand:

* About one in every three New Zealanders has health insurance.

* $1 in every $5 spent on health in New Zealand is paid by consumers to private companies.

* Health insurance pays for more than 70% of privately-paid-for operations.

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Source: Sunday Star - Times; Wellington, New Zealand

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