KEY POINTS:
Private hospitals have offered the Government a helping hand with treating the baby boom generation as it becomes the elder boom.
Old bodies cost a lot to repair - this is the inescapable logic of the private health sector's repeated bids to channel more state cash its way.
But it seems less clear that the health funding crisis will materialise.
Positioning itself to do more state-funded surgery, health insurance market leader and hospital owner Southern Cross points out the high insurance drop-out rate from age 65, leaving more people to rely on the public system. This is when age-related premiums suddenly become less affordable as many people stop work.
"Couple that with the population bulge of baby boomers turning 60, and New Zealand will face significant problems in delivering healthcare services of a standard expected by most Kiwis," said chief executive Ian McPherson.
"Don't expect the Government to take care of all your healthcare needs because we don't think we can afford to tax New Zealanders that highly."
Southern Cross reports increases in the number of patients paying for their own operations - typically surgery costing less than $5000, such as hernia repair or cataract treatment.
Already the private sector pays for more elective surgery than the state, which spends far more on acutely unwell patients.
Southern Cross funded 126,000 operations in the past financial year, compared with 105,000 elective operations in public hospitals.
The private sector has made repeated overtures to the Government, first seeking rebates on insurance premiums, followed by appeals to do more public-funded surgery and finally suggestions of joint ventures at public hospitals.
The crisis theory uses controversial claims of high public health inflation, ever-expanding health technology and an ageing population.
The health insurers' association claimed that health could be gobbling up more than half of the country's economic output (GDP) by mid-century, far ahead of the Treasury's possibly light predictions around 11 per cent. In 2002 it was 8.5 per cent, just below the developed world average.
Health Minister Pete Hodgson has dismissed the high-spending claims, but accepts the health budget will continue to increase above inflation and population growth.
While population ageing would increase health costs - more old hips needing replacement for example - he said other areas of care would become simpler or cheaper with new technologies, as had happened with angioplasty for heart treatment.
Treasury's calculations suggest that while elderly people consume much more healthcare than others, improvements in overall health could offset about a third of the extra costs from population ageing.
Mr Hodgson accepts the private sector has an important, complementary role and is happy for it to do some state-funded work - ACC buys up to 80 per cent of its elective surgery from private hospitals and the Counties Manukau health board buys around 11 per cent - but he does not want that to increase,
Price and capacity are his initial reasons, although Southern Cross boasts of an "efficient factory" at its hospitals and would expand capacity if promised an even work flow. But the heart of his objection seems rooted in Labour ideology:
"Just because the health system is predominantly public now and should stay so.
"It's our history and it's a reasonable future."
How private hospitals are paid
Southern Cross owns 10 hospitals and has joint ventures for four:
* 65 per cent of their patients are funded by private insurance.
* 20 per cent are Accident Compensation Corporation-funded.
* 10 per cent pay their own way.
* 5 per cent are funded by district health boards.
