Prescription charges editorials

May 16th, 2012 at 3:00 pm by David Farrar

Two editorials on the increase from $3 to $5. First the Dom Post:

With the Government promising a “zero budget”  next week the choice for him was simple: ask people to  pay slightly more for prescription medicines or tell patients needing cancer treatment and elective surgery to wait longer. He has chosen to ask families to pay up to $40 more a year for medicine. Few, apart from those who like to pretend the Government has a limitless supply of money, will disagree with that choice.

The increase, which takes effect next January, will push the price of a single item up from $3 to $5. For a family the maximum payable in a single year will increase from $60 to $100.

That is 11c a day per family maximum.

Prescriptions for children under the age of six will remain  free and families that cannot afford to pay the increase will be able to obtain assistance from Work and Income NZ and primary health organisations.

The reality is this is a very minor changes, that reduces the drugs bill to the taxpayer by just 4%.

In Australia the average fee is A$35.40 (NZ$45), although  those on low incomes pay a lesser fee. In England the average charge is NZ$16 and in Finland, Labour’s utopia,  Mr Ryall says individuals have to fork out  $1107 each before the cost of prescription medicines is limited to about NZ$2.50.

So we have a cap 10% that of Finland.

The NZ Herald:

Much angst has greeted the Government’s announcement that prescription charges are to increase from $3 to $5 next year to fund reinvestment in the health sector. Opposition parties have warned that lower-income groups, the elderly and the chronically ill will be hit hard. The Mana Party leader, Hone Harawira, has gone so far as to claim it “will lead to children dying”. Such concern is vastly overstated. This is, after all, the first increase in prescription costs in 20 years, and could be justified merely on the basis of inflation.

Vastly overstated? More like insanely hysterical. And the charge was originally $15, reduced to $3 in 2004, so at $5 is still just one third what it once was.

For many people, the rise in cost will be easily manageable. They need prescriptions relatively rarely, and their families’ requirements will get nowhere near the 20 items of medicine a year, after which prescriptions for the rest of that year are free. Such people would not have been unduly perturbed if the increase had been more than $2. Indeed, it would have made more sense for the Government to charge a larger sum for each prescription but to lower the trigger point for free prescriptions.

Not a bad idea.

At its worst, the increased prescription charge will cost a family an extra $40 a year. That sum hardly tallies with the dire consequences predicted by some Opposition politicians. Even so, the move is predicated on the universality that so marred the previous Government’s early childhood and welfare payments. A more astute targeted approach would have served those with substantial medication requirements better and left little room for criticism. Unfortunately, the Government has missed that opportunity.

Subsidies should generally be targeted at those in need, not made universal as this is economically inefficient.

Prescription Charges

May 15th, 2012 at 11:00 am by David Farrar

Tracy Watkins at Stuff reports:

Prescription charges will increase from $3 an item to $5 an item in next week’s Budget, as the Government moves to offset the cost of extra health spending in the “zero Budget”.

The new charge will cover up to a maximum of 20 items from January 1 next year, raising $20m in the first year and $40m after that.

Health Minister Tony Ryall and Prime Minister John Key said the money raised would be  reinvested in the health sector.

“Despite tight financial times and what will be a zero Budget on May 24, health will receive a big funding boost, which will come from savings within health and across the Government’s accounts,” Ryall said.

It was the first time the prescription charge has been increased in 20 years. There will continue to be no charge for under-sixes.

Despite this Hone Harawira is claiming children will die because of this.  Anything for a cheap headline.

The fee used to be $15, and Labour in 2004 reduced it to $3. This increase is a maximum $40 per year per person, so I don’t think will be a huge impact for most. The Government noted:

New Zealand continues to have low prescription charges compared to almost every other developed country.

In Australia, for example, the standard prescription charge is up to NZ$45 and in England it’s around NZ$16. In Australia people on low incomes pay around NZ$7.45 per item. In Finland, there is an annual limit of around NZ$1,107 per patient, after which there is a flat fee of around NZ$2.50 per medicine item.

I think Australia has the right idea. It is hugely economically inefficient to provide subsidies to wealthy people who don’t need them. We spend just over $1 billion a year on subsidized medicines.

What Id like to see happen is that low income people with a community services card get their medicine highly subsidized (pay only $3 to $5), while others pay somewhere between most and all of the cost themselves.

The real challenge for this Government is to reduce the huge amount of middle class welfare we have.  We can support those less well off better, if we are not subsidizing medicines for millionaires.

UPDATE: The maximum possible extra cost per person family works out at 11c a day. This puts into context the hysterical claims by Harawira which the media are giving such prominence to.

So this week we have the offer of free voluntary contraception to beneficiaries being compared to Nazi war crimes by Josef Mengele, and a maximum 11c a day rise in the cost of prescriptions to killing children. Some on the left are getting rather demented.