John Armstrong: Cuts help medicine go down

Was there political interference? Or did the high-powered taskforce charged with reviewing the public health system tailor the final version of its report in full awareness of the acute political sensitivity over the health portfolio?

Or did the group's members simply change their minds at the last minute and drop some of the more contentious things they had been planning to recommend?

The conspiracy theorists should have had a field day with last Sunday's report from the ministerial review group, established by Tony Ryall shortly after he became Minister of Health.

That is because draft copies of the report leave little doubt that something or someone persuaded the review group, which was chaired by former Treasury boss Murray Horn, to water down or remove some of its more controversial suggestions before the final version was presented to the minister.

Even in its final form, the report has a fair degree of political risk attached to it.

The review group's reform recipe would gut the Ministry of Health and set up a National Health Board which would be responsible for allocating funding of health services with the intention of improving access to services and hospital productivity.

The recommendations bear a marked resemblance to National's hugely unpopular health reforms of the early 1990s which were designed to get more efficiency into the delivery of health services by forcing hospitals to compete with one another.

However, the report's complexity and Ryall's deliberately polite, but essentially lukewarm reception to its contents has ensured it has not caused the ruckus it might have done.

Ryall said the Cabinet had yet to examine the recommendations, and he repeated his mantra that the Government would not agree to anything which increased bureaucracy or did not improve front-line services.

But Ryall's usual consummate handling of things hit a few bumps in Parliament, when he was obliged to clarify whether he had received drafts of the report.

He confirmed he had received drafts of part of the report which he tabled. He had maintained regular contact with Horn, and also had dinner with the review group on one occasion.

He denied he had issued instructions for the report's recommendations to be changed.

The denial was in response to Labour's claims of political interference which were based on different documents. They appear to have been leaked to the party and reveal what seems to be early thinking on the part of the review group.

This includes references to the need for public health wage freezes and a suggestion that hospitals be allowed to make extra money by performing surgery on foreign patients. That idea seems to have been quickly dropped - it is not a goer politically.

However, Labour instead seized on a piece of economic analysis about the aged and health care and turned it into an exaggerated claim that National intended to alter superannuation eligibility to encourage people to work longer.

Ryall scoffed at this - as well he might. There was no mention - as he noted - of any such idea in the final report.

The drafts released by Ryall are a very different story. They contain the real political dynamite.

They show the review group was seriously toying with much stronger market-based incentives to lift hospital productivity and adopting an Act-like concept under which the patient and his or her doctor choosing whether to have surgery in a private or public hospital. The taxpayer, not the institution, would pay for the operation.

This radical proposal - "one we recommend" - was a consistent feature of the drafts right up until three weeks before the final report was sent to Ryall.

Strange then that this "recommendation" did not make the final version although there is an oblique reference to it.

Had it done so, it would have re-stoked the simmering debate on whether the National Government has a privatisation agenda for the delivery of social services.

The potential backlash might have even derailed or at least forced a delay in National's timetable for shaking up a health sector which is going to have to do far more with a lot less.

In the final version of the report, the discussion on elective surgery is quarantined from the main thrust of the document and reads almost as an afterthought.

This is extremely surprising because increasing the number of such operations is a top priority if not the top priority for the Government. Indeed, Ryall was crowing in Parliament on Thursday over preliminary figures showing the number of people having elective surgery in the 2008-09 year was 130,216 - an increase of 12,266 patients.

He claimed this was a record and that the single-year increase was higher than Labour had achieved in total during the eight years that it controlled the health portfolio and doubled the health budget.

Never mind that Ministry of Health reports show that the upsurge in elective surgery was happening in the latter months of last year when Labour was still in power.

Ryall is taking a liberty in taking all the credit for the figures - but Labour flat-footedly let him get away with it.

The positive figures also gave Ryall a means of diverting attention away from the ministerial review group's report and the drafts which Labour was still scrutinising as Parliament wound up for the week on Thursday afternoon.

Why Ryall tabled the drafts the day before is perplexing. Perhaps he was doing so in the knowledge that Official Information Act-related requests for the material would force him to do so anyway and it was better to dump the whole lot now.

Intriguingly, if he had demanded the review group's report be watered down, he would have hardly released the documents which show it was watered down.

Perhaps the ministerial review group muzzled itself.

One comment attached to a draft suggests an awareness of the political niceties. A recommendation that the Minister of Health make the final decision on whether new medical procedures be eligible for public funding was knocked back for likely exposing the minister to much lobbying and putting him "in the centre of controversial issues".

And there is another factor. There is little point in being on an inquiry which beavers away for months only to come up with recommendations the minister bins.

Speaking as Acting PM, Bill English told Parliament on Tuesday he was sure Ryall had "responsibly discussed with the review group what recommendations it was making". Ryall has confirmed that.

The review group would have had a clear idea of the parameters within which it was expected to function. Ryall would not have issued instructions for recommendations to be changed. The way things work he would not have needed to.