Imagine the difficulty of trying to save for something that you don’t know the price of.
A recent survey of 2000 New Zealanders by Southern Cross found that the majority are wandering in the dark when it comes to the cost of common elective surgeries. Only third believed they had any idea – and of that third, the majority vastly underestimated the cost.
Fifty-one percent believed the cost of knee replacement in private practice to be under $5000, when the actual cost for the majority of procedures is upwards of $19,000 (including prosthesis). Fifty-eight percent believed the cost of hip replacement was less than $10,000 – when the real cost is upwards of $18,250 (including prosthesis).
It seems many New Zealanders are completely unaware that they might need to save at all. Twenty-one percent of those surveyed believed the Government will cover all of their healthcare costs in retirement.
This lack of knowledge is big concern. The reality is that, sometime in the not-too-distant future, the majority of responsibility for funding elective surgery will likely shift from the Government to you and I.
Public funds are facing increasing pressure from several fronts – growing burden of lifestyle-related disease, an aging population with higher health needs, and correspondingly lower ratio of working age to retired people. If these trends continue, demand is likely to outstrip the Government’s ability to fund elective healthcare to the current level.
Elective healthcare is non-urgent healthcare you can reasonably be expected to wait for. But non-urgent doesn’t mean you don’t need it.
If they are not required immediately, procedures considered ‘elective’ can include hip, knee and shoulder replacements, cardiac procedures, cataract, varicose vein and gynaecological surgery.
Going without treatment can have huge impact on our ability to work and our quality of life. And that means big impact for New Zealand employers.
Currently New Zealanders do have the option of publicly funded elective surgery. However, to be placed on the wait list, you must meet your District Health Board’s priority threshold. Those who don’t meet the threshold are sent back to their GP or placed on “active review”.
Private care is readily accessed. But without health insurance, the price of number of common elective surgeries is beyond the reach of the average New Zealander. cardiac bypass operation starts from around $38,000, while endometriosis surgery starts at around $6000.
Just like retirement savings, New Zealanders need to be educated, encouraged and incentivised to save for the cost of their elective healthcare, whether it is through insurance premiums or other savings mechanisms. We also need to ensure the cost of healthcare represents the best possible value for New Zealanders. The cost of many procedures has risen substantially in recent years.
To give just one example, the average cost of knee replacement surgery rose 19 percent between 2007 and 2012.
To moderate cost inflation long-term, and its impact on health insurance premiums, Southern Cross Health Society has placed an increasing focus on contracting with healthcare providers through its Affiliated Provider programme. Affiliated Providers are surgeons, specialists and facilities that carry out certain procedures and healthcare services for Southern Cross members at agreed prices.
Though we are the first private health insurer in New Zealand to implement these types of agreements, contracting is used by many large insurers in the UK and Australia, as well as by the ACC.
As New Zealand not-for-profit insurer, Southern Cross’ motivation is simply to get the best possible value for our 820,000 members (half of whom have insurance through employer schemes) – not to make profits for shareholders or overseas owners. The one thing New Zealanders certainly can’t afford is to have their healthcare used as conduit for unreasonable or offshore profits. M
Peter Tynan is chief executive of Southern Cross Health Society.
