The Government's health reforms will only save 0.2 per cent of GDP by 2034. Photo / Supplied
The Government's health reforms will only save 0.2 per cent of GDP by 2034. Photo / Supplied
The Government's huge shake-up of the health system is only expected to deliver savings to the cost of running the health system by the end of the decade.
Government modelling suggests that the health reforms will only begin to have an effect on the growing cost of healthcare in 2026/27and by 2033/34, the reforms will save the Government 0.2 per cent of GDP a year - about $1.4 billion.
National's Health spokesman Dr Shane Reti said the savings appeared too small, considering they came at the cost of the "massive upheaval from the biggest merger of public sector entities ever in New Zealand".
He said the savings were a good thing but "not enough" considering the disruption.
The modelling comes from a Treasury paper, which was released to the Herald under the Official Information Act.
The paper said that improving the "fiscal management" of health expenditure would be "fundamental to delivering on the Government's fiscal strategy over the medium-term".
Modelling suggests health savings will be minor. Source / Health Transition Unit
This means that reining in increasing costs of healthcare in some capacity is essential to the Government being able to manage its expenses in the future. Treasury's most recent statement on the long-term fiscal position - published last week - said that the Government's fiscals were sustainable in the near term, its debt pile would grow to unsustainable levels over the long term.
Modelling included in the paper released to the Herald, shows that Government spending on Health was 6.6 per cent of GDP prior to the pandemic and will rise to 7.9 per cent of GDP without reforms to the health system.
By these numbers, the Government would be spending $44b on health in 2034, up from $18.6b in 2019, prior to a Covid-induced spending bump.
Overall, Treasury is supportive of Health reforms, saying that "whilst the health and disability system performs well in many international comparators, it has continued to struggle to deliver equitable health outcomes, does not meet the Crown's obligations to Māori, and the system remains unnecessary complex and fragmented".
Reti said the savings seemed remarkably small, considering $486 million had been set aside in the most recent budget to pay for the cost of health and disability system reform.
