Study shows removing $5 prescription co-payment generates around $18 of savings in hospital costs for every $1 lost in co-payments revenues; Labour looked at removing it in 2019/20, but did nothing
And Newsroom ran an article today about how another consequence of this loss leading no fees competition was that local communities were losing access to pharmacies as they closed down.
I’m glad it’s been looked at more holistically much like there should be universal lunches in schools. It’s usually the women of the families covering everyone’s needs, children, elderly, whilst on lower or no wages, and many men abdicate these obligations or literally fight to avoid their obligations under the PRA 1976, Child Support Act 1992 and Family Proceedings Act etc preferring their personal interests. Then offloading these support for unpaid and reproductive labour and their obligations onto women alone, children or taxpayers if they possibly can get away with it. Most do. So these types of policies will improve things for the most vulnerable, women, elderly and children as well as improving the cost of health outcomes. Until the equity issues are worked on to ensure support is arranged via Justice, IRD, Courts , legal aid these ambulance at the bottom of the cliff policies are needed to improve health and food security issues in NZ Aotearoa. Obviously doing two or more jobs is not sustainable for women.
Chemist Warehouse & Countdown must love this – as it has supported their takeover of the NZ market. I know a few local pharmacies have closed down as a result of them.
Feb 7, 2023·edited Feb 7, 2023Liked by Bernard Hickey
Yes, Chemist Warehouse and Countdown will enjoy the free plug ... but only till the Government sees reason and abolishes prescription charges.
In my suburb, Birkenhead, the Chemist Warehouse opened in the Highbury mall to the dismay of Life Pharmacy across the road. But to my surprise weeks late brave Gee Kim opened his 7Day Pharmacy just down the road, promising free prescriptions too. A sole-trader taking on the Aussie chain at their own game. May he survive!
Along with free prescriptions the Government MUST make visits to the GP free too. Free primary health care for everyone will be of immense benefit to society: it will keep people out of hospital, and in work.
Means-testing is futile: free health care needs to be for everyone, and taxes raised on the rich to pay for their own care and the care of others. Land tax anyone? (And yes, please open the column to the public.)
Obviously being private profit-driven enterprises, Chemist Warehouse and Countdown must see a net positive from their loss-leading offer. The inequality here is the access to these 'free' options. As with most of these personal cost-saving options, it's usually those with the flexibility and access who can take up these offers with the least cost. Travelling out of your way to access such a saving will likely cost you more in time / fuel etc than the potential savings which keeps it in the too hard / too costly basket.
This sort of high-level government decision making sits right up there with why we don't fund things like ambulances and dental. /sigh
Do we need to sack Treasury and start again? It feels like the NZ economy is full of penny wise, pound foolish decisions. Externalities are uncosted all over the place. Discount rates are too high in cost benefit analyses. Corporates not paying their share (like taking Covid wage subsidies and not repaying them when they made record profits). We need government to take a long view. Imagine if we embedded Te Ao Maori to the point where we considered every decision with a 500 year view. Aotearoa would be transformed. Dairy would shrink to the fraction required for our glass of milk and piece of cheese (not milk powder to coat potato chips), Tiwai point smelter would close, junk food would be heavily taxed, all homes would be warm and insulated and we wouldn't build houses on bloody flood plains, people would be invested in rather than allowing people to languish in poverty and desperation. If the Labour Party who puports to care about this stuff can't bring itself to make major changes when it has a majority in Parliament, I don't know what's going to create change. The past two terms have been a wasted opportunity because no one was thinking big. Don't scare Ford Ranger man. Forgetting that he's never going to vote for them anyway! I'd love you to open this one up, Bernard, sunlight being the best disinfectant...
Thanks Sonya, you’ve captured the wider implications of the current analysis. A valuable generalisation of the specific example from the health sector.
This is a really important analysis - thanks! The 'prevention' portion of the public health toolkit is consistently and thoroughly under-invested in despite having a positive ROI in the long term. Underinvesting in the prevention of ill-health is a sure way to keep pressure piling into the medical treatment model (eg. hospitals). This all makes no sense especially when Treasury operates on a wellbeing framework. Long term, systems-based vision required. And the courage to act on the key drivers within the system (like this one and many other examples public health researchers regularly call for action on) in the knowledge that improved wellbeing may not show until after your re-election cycle
Well said. As someone who has direct access to the realities of people who don't pick up their scripts (specifically in diabetes care) the potential for health systems' costs to blow out is horrendous. These people are poor, they choose to pay for their kids scripts & leave theirs behind. They go without insulin, for godsakes, hoping they'll be OK. They won't. Blindness, kidney & heart failure are what they're gonna get. Where I live there is no Chemist Warehouse or Countdown Pharmacy. Yesterday I spoke to a young single mum who couldn't afford her meds, including her antidepressant, which is unfunded. So she'll go without, risking discontinuation syndrome. She is exhausted from dealing with a seriously sick child & a system that is, in her words, "a full time job to deal with." We have to do better, we have to demand change, not wait for Treasury to decide what's needed. Let's face it, Treasury staff probs don't go without food so their kids get some.
Just not acceptable in our (inequitably) rich country. Our politicians/leaders have to hear and then respond urgently to these real stories of real people, living such a tough reality within the flawed-by-design systems. Huge power imbalances. Is your local MP an option to hear this/do something?
Sadly this has fallen on deaf ears, altho there was the requisite head nodding & sad noise making... I am continuing to work on finding someone who will take action tho. I can be seriously dogged... 😉
Imago. Many thanks. Hopefully one or two of our subscribers from Treasury is reading, although to be fair this thinking is widespread through Government after 30-years of tax-cutting-led austerity thinking. Sociopathic thinking.
Feb 7, 2023·edited Feb 7, 2023Liked by Bernard Hickey
Not to mention the $20-30 most GPs charge for a "repeat script" that is required every 3 months, even for long-term medications (eg insulin). In Australia, a prescription is good for 12 months, similar to the US. To have to do this every 3 months is a huge waste of time and resources, and really does get expensive if multiple family members needs scripts, as mine does. I definitely get my family's scripts filled at Chemist Warehouse (~8 scripts total) and am happy to also pick up some shampoo and sunscreen.
My GP charges $21 and its monthly FML. I can’t get in anywhere cheaper so just have to cop it. Even worse for ADHD. If your script runs out or you’re having side effects you have to see a psychiatrist because they won’t allow GPs to give scripts for ADHD meds. So that’s $300+ for one script.
Parents should be responsible for housing, feeding and clothing their children. If they cannot then they should stop making more of them.
The state is responsible for primary and secondary schooling, and health including dental and contraception. With no school fees, GP or prescription charges or other top-ups.
In the interim there may need to be some crossover such as school lunches, or school uniforms that are an extra layer (sorry about the pun) of clothing expected of the parents.
Excellent analysis of both stripes of government’s bone headed retention of such a inequitable part charge. Why purse the dissolution of the DHB’s and leave this nonsense in place, same applies to free dental care for adults $760 million to avoid the poor pulling out their own teeth with pliers.
With friends like The Treasury providing high level policy advice, and Ministers apparently too diffident to exercise their responsibilities, who needs enemies?
Thanks Dave. Although there's a few median voters who quietly quite like the low (no) taxes and low interest rates that result. Or more importantly, the high land values they create.
Indeed. And there are also many younger voters, and I suspect very many older citizens, like myself, who absolutely see the need for a fairer tax regime. Even if that disadvantaged them financially.
The mechanism by which removing the $5 fee improved health outcomes is surely that people getting the free medicines were more likely to collect or take them. The cash benefit topped out at $100, which is pretty trivial. It's the price effect, not income effect, that matters here.
In that case, why didn't the study authors report directly on medicine use by the intervention and control group?
They had access to that data. They used it to ensure the baseline characteristics of the control and intervention groups were similar (bottom rows of Table 1 in their study).
It seems curious that they wouldn't report on the obvious intermediate outcome between policy intervention and health outcome.
Given the under-powered sample, it could be that these dramatic numbers for admissions and hospital nights are just an artefact of random chance or biases in the characteristics of control vs intervention groups.
My thought exactly. The primary author, to her credit, responded promptly and helpfully to explain why the Pharms (medicine dispensing) data was not used to assess the intermediate effect of the intervention.
In her explanation there may have been good reasons for not relying on that data - namely that pharmacists fill the prescriptions, patients might realise they're short on cash and walk away rather than paying the $5, and pharmacists won't reverse the entry into the Pharms database as they will lose their subsidy and may have to dispose of the medicines.
I do wonder how likely that story is, given that a patient presumably only discovers that the medicine costs $5 once, and is unlikely to request a script filled and then walk away without the medicine ever again. So I'm still a bit curious as to whether the Pharms data could have been used to help confirm the hypothesis that a $5 price worsens health outcomes via deferred or reduced medicine intake.
Good to have that clarification and to still be curious on that point, that's fair. I think the authors should be well-pleased that the study has generated healthy discussion! One thing I've noticed over time (and this is a generalisation) that given public health challenges are invariably complex there seems an ongoing disconnect in that the funding for research into public health challenges is typically only awarded to the more linear study design which then perpetuates the short term paradigm, due to disconnected threads (and possible inadequate solutions). The stories, qualitative data like Imago's story on this thread, add a dimension of richness and power which quantitative data alone lacks. Without including complexity we miss the interconnected costs from reduced availability to work, to attend education, to volunteer, to do unpaid care work, and the cost of chronic illness perpetuated by persistent financial stress.
"Chemist Warehouse and Countdown have done more to reduce the stress on our health system than Treasury or politicians of both parties."
Both flavours of government should have a long hard look at themselves and what they're doing.
Is any politician capable of being honest with themself.
Capitalism FTW 😇
And Newsroom ran an article today about how another consequence of this loss leading no fees competition was that local communities were losing access to pharmacies as they closed down.
I’m glad it’s been looked at more holistically much like there should be universal lunches in schools. It’s usually the women of the families covering everyone’s needs, children, elderly, whilst on lower or no wages, and many men abdicate these obligations or literally fight to avoid their obligations under the PRA 1976, Child Support Act 1992 and Family Proceedings Act etc preferring their personal interests. Then offloading these support for unpaid and reproductive labour and their obligations onto women alone, children or taxpayers if they possibly can get away with it. Most do. So these types of policies will improve things for the most vulnerable, women, elderly and children as well as improving the cost of health outcomes. Until the equity issues are worked on to ensure support is arranged via Justice, IRD, Courts , legal aid these ambulance at the bottom of the cliff policies are needed to improve health and food security issues in NZ Aotearoa. Obviously doing two or more jobs is not sustainable for women.
👏🏻👏🏻👏🏻
misandry. about half of all NZ Members of Parliament are women.
Chemist Warehouse & Countdown must love this – as it has supported their takeover of the NZ market. I know a few local pharmacies have closed down as a result of them.
Yes, Chemist Warehouse and Countdown will enjoy the free plug ... but only till the Government sees reason and abolishes prescription charges.
In my suburb, Birkenhead, the Chemist Warehouse opened in the Highbury mall to the dismay of Life Pharmacy across the road. But to my surprise weeks late brave Gee Kim opened his 7Day Pharmacy just down the road, promising free prescriptions too. A sole-trader taking on the Aussie chain at their own game. May he survive!
Along with free prescriptions the Government MUST make visits to the GP free too. Free primary health care for everyone will be of immense benefit to society: it will keep people out of hospital, and in work.
Means-testing is futile: free health care needs to be for everyone, and taxes raised on the rich to pay for their own care and the care of others. Land tax anyone? (And yes, please open the column to the public.)
Thanks John. Indeed on free visits to GPs, although we'd need a lot more GPs and practice nurses to do that.
Obviously being private profit-driven enterprises, Chemist Warehouse and Countdown must see a net positive from their loss-leading offer. The inequality here is the access to these 'free' options. As with most of these personal cost-saving options, it's usually those with the flexibility and access who can take up these offers with the least cost. Travelling out of your way to access such a saving will likely cost you more in time / fuel etc than the potential savings which keeps it in the too hard / too costly basket.
This sort of high-level government decision making sits right up there with why we don't fund things like ambulances and dental. /sigh
Indeed. And many other primary care items.
Do we need to sack Treasury and start again? It feels like the NZ economy is full of penny wise, pound foolish decisions. Externalities are uncosted all over the place. Discount rates are too high in cost benefit analyses. Corporates not paying their share (like taking Covid wage subsidies and not repaying them when they made record profits). We need government to take a long view. Imagine if we embedded Te Ao Maori to the point where we considered every decision with a 500 year view. Aotearoa would be transformed. Dairy would shrink to the fraction required for our glass of milk and piece of cheese (not milk powder to coat potato chips), Tiwai point smelter would close, junk food would be heavily taxed, all homes would be warm and insulated and we wouldn't build houses on bloody flood plains, people would be invested in rather than allowing people to languish in poverty and desperation. If the Labour Party who puports to care about this stuff can't bring itself to make major changes when it has a majority in Parliament, I don't know what's going to create change. The past two terms have been a wasted opportunity because no one was thinking big. Don't scare Ford Ranger man. Forgetting that he's never going to vote for them anyway! I'd love you to open this one up, Bernard, sunlight being the best disinfectant...
Thanks Sonya, you’ve captured the wider implications of the current analysis. A valuable generalisation of the specific example from the health sector.
Thanks Sonya. Doing that shortly.
I feel like this summarises the NZ approach to everything not just prescriptions, infrastructure, mental health and climate
Exactly
Thanks Ben. Indeed.
This is a really important analysis - thanks! The 'prevention' portion of the public health toolkit is consistently and thoroughly under-invested in despite having a positive ROI in the long term. Underinvesting in the prevention of ill-health is a sure way to keep pressure piling into the medical treatment model (eg. hospitals). This all makes no sense especially when Treasury operates on a wellbeing framework. Long term, systems-based vision required. And the courage to act on the key drivers within the system (like this one and many other examples public health researchers regularly call for action on) in the knowledge that improved wellbeing may not show until after your re-election cycle
Well said. As someone who has direct access to the realities of people who don't pick up their scripts (specifically in diabetes care) the potential for health systems' costs to blow out is horrendous. These people are poor, they choose to pay for their kids scripts & leave theirs behind. They go without insulin, for godsakes, hoping they'll be OK. They won't. Blindness, kidney & heart failure are what they're gonna get. Where I live there is no Chemist Warehouse or Countdown Pharmacy. Yesterday I spoke to a young single mum who couldn't afford her meds, including her antidepressant, which is unfunded. So she'll go without, risking discontinuation syndrome. She is exhausted from dealing with a seriously sick child & a system that is, in her words, "a full time job to deal with." We have to do better, we have to demand change, not wait for Treasury to decide what's needed. Let's face it, Treasury staff probs don't go without food so their kids get some.
Just not acceptable in our (inequitably) rich country. Our politicians/leaders have to hear and then respond urgently to these real stories of real people, living such a tough reality within the flawed-by-design systems. Huge power imbalances. Is your local MP an option to hear this/do something?
Sadly this has fallen on deaf ears, altho there was the requisite head nodding & sad noise making... I am continuing to work on finding someone who will take action tho. I can be seriously dogged... 😉
Imago. Many thanks. Hopefully one or two of our subscribers from Treasury is reading, although to be fair this thinking is widespread through Government after 30-years of tax-cutting-led austerity thinking. Sociopathic thinking.
It does make me wonder how real the Wellbeing and living standards frameworks are, and how performative they are.
Yep, important question marks alright
I wonder if Ayesha Verrall has read the Otago University report. do Labour cabinet ministers read your posts?
They get them. I hope she does read it.
I will ask her mother. NZ is a small place
This is shameful.
The evils of Thatcherism reach far and long....
Add the current approach to covid: removing free GP visits and more, as Marc Daalder reports on Newsroom
https://www.newsroom.co.nz/covid-19-health-funding-quietly-halved
-Sharon
Not to mention the $20-30 most GPs charge for a "repeat script" that is required every 3 months, even for long-term medications (eg insulin). In Australia, a prescription is good for 12 months, similar to the US. To have to do this every 3 months is a huge waste of time and resources, and really does get expensive if multiple family members needs scripts, as mine does. I definitely get my family's scripts filled at Chemist Warehouse (~8 scripts total) and am happy to also pick up some shampoo and sunscreen.
Thanks Sara. Good point on the $30 'repeat prescription' charge. Just money for jam.
My GP charges $21 and its monthly FML. I can’t get in anywhere cheaper so just have to cop it. Even worse for ADHD. If your script runs out or you’re having side effects you have to see a psychiatrist because they won’t allow GPs to give scripts for ADHD meds. So that’s $300+ for one script.
Great analysis. The charge makes no sense if look at 'whole pie'. So often only look at small slice.
The social contract needs to be re-written.
Parents should be responsible for housing, feeding and clothing their children. If they cannot then they should stop making more of them.
The state is responsible for primary and secondary schooling, and health including dental and contraception. With no school fees, GP or prescription charges or other top-ups.
In the interim there may need to be some crossover such as school lunches, or school uniforms that are an extra layer (sorry about the pun) of clothing expected of the parents.
Excellent analysis of both stripes of government’s bone headed retention of such a inequitable part charge. Why purse the dissolution of the DHB’s and leave this nonsense in place, same applies to free dental care for adults $760 million to avoid the poor pulling out their own teeth with pliers.
Great analysis. Thanks again Bernard.
With friends like The Treasury providing high level policy advice, and Ministers apparently too diffident to exercise their responsibilities, who needs enemies?
Thanks Dave. Although there's a few median voters who quietly quite like the low (no) taxes and low interest rates that result. Or more importantly, the high land values they create.
Indeed. And there are also many younger voters, and I suspect very many older citizens, like myself, who absolutely see the need for a fairer tax regime. Even if that disadvantaged them financially.
Who’s for a petition to change the Tax Regime?
The mechanism by which removing the $5 fee improved health outcomes is surely that people getting the free medicines were more likely to collect or take them. The cash benefit topped out at $100, which is pretty trivial. It's the price effect, not income effect, that matters here.
In that case, why didn't the study authors report directly on medicine use by the intervention and control group?
They had access to that data. They used it to ensure the baseline characteristics of the control and intervention groups were similar (bottom rows of Table 1 in their study).
It seems curious that they wouldn't report on the obvious intermediate outcome between policy intervention and health outcome.
Given the under-powered sample, it could be that these dramatic numbers for admissions and hospital nights are just an artefact of random chance or biases in the characteristics of control vs intervention groups.
I think your points here are valid - thanks for raising the awareness. Maybe we (you :)) could ask the authors to respond?
My thought exactly. The primary author, to her credit, responded promptly and helpfully to explain why the Pharms (medicine dispensing) data was not used to assess the intermediate effect of the intervention.
In her explanation there may have been good reasons for not relying on that data - namely that pharmacists fill the prescriptions, patients might realise they're short on cash and walk away rather than paying the $5, and pharmacists won't reverse the entry into the Pharms database as they will lose their subsidy and may have to dispose of the medicines.
I do wonder how likely that story is, given that a patient presumably only discovers that the medicine costs $5 once, and is unlikely to request a script filled and then walk away without the medicine ever again. So I'm still a bit curious as to whether the Pharms data could have been used to help confirm the hypothesis that a $5 price worsens health outcomes via deferred or reduced medicine intake.
Good to have that clarification and to still be curious on that point, that's fair. I think the authors should be well-pleased that the study has generated healthy discussion! One thing I've noticed over time (and this is a generalisation) that given public health challenges are invariably complex there seems an ongoing disconnect in that the funding for research into public health challenges is typically only awarded to the more linear study design which then perpetuates the short term paradigm, due to disconnected threads (and possible inadequate solutions). The stories, qualitative data like Imago's story on this thread, add a dimension of richness and power which quantitative data alone lacks. Without including complexity we miss the interconnected costs from reduced availability to work, to attend education, to volunteer, to do unpaid care work, and the cost of chronic illness perpetuated by persistent financial stress.