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  • rmacculloch

Has Labour Overseen NZ's biggest-ever privatization of the health system?

Here's a story to wind up ardent Labour supporters. Several years ago I wrote an article that ended up in NZ Economic Papers on health-care reform. It was written jointly with former Finance Minister Sir Roger Douglas. Part of that reform involves giving people more choice as to who is their health-care provider. In many countries with universal health-care systems (like in NZ) people can still choose their provider (unlike in NZ) so the public funding follows the consumer. By contrast, in NZ it works the opposite way: here you are told which hospital to go, so the consumer follows the funding.

Systems like ours can lead to a lack of competition and cost blowouts. Yes, ours is a truly "socialized" system. Meanwhile in Taiwan, for example, most hospitals are non-for-profit private firms - the minority are publicly owned. Folks choose the hospital that they consider best, with advice from their GP, and the government picks up the tab.

When I discussed our paper with some Labourites, the prospect of anything resembling a privatization of our health-care system threw them into a melt-down. I even had a "secret discussion" with a prominent Labour MP about it who didn't remotely want to be seen in public talking about an idea which involved private health-care provision. Public health-care provision was a sacrosanct "red-line" that could not be crossed for them.

Now think about the past two years. A cornerstone of our Covid response has been the "Managed Isolation and Quarantine" (MIQ) system. The government has stated it is a vital pillar of our health system, in terms of preventing Covid from entering the country. And who is providing those "facilities"? Private hotel chains. Many owned by profit maximizing multi-national corporations like "Accor", which owns the Pullman in Auckland. Of course these facilities could have been publicly provided on government-owned land, which may have even prevented the restricted entry due to limited rooms, but it was not. And who has been doing the vast majority of Covid tests? Private profit-maximizing medical laboratories, owned by the likes of Sonic Corporation, listed on the Australian Stock Exchange.

Radio NZ report that the MIQ facilities cost has been running at $2.4 million a day! If one adds that cost to the private lab-testing costs over the past two years, what are we up to? Two billion dollars? And these public funds have not even been paid to non-for-profits!? Yes, there's been a privatization of health on a scale and speed under this government that make the proposals in my article with Roger look rather tame. The health privatization (though the mainstream media dare not characterize in that way) and increase in inequality under Labour these past few years allow one to make an argument that this government looks way more "neo-liberal" than the Fourth Labour Government of David Lange, Richard Prebble and Roger Douglas ever was. Just shows what a tricky subject is economics.



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