ISSUES WITH BALLS
ASHLEY BALLS HIGHLIGHTS THE DIFFERENCES IN HEALTH PROVISION AND HEALTH INSURANCE PREMIUMS BETWEEN SPAIN AND NEW ZEALAND.
discussion with a colleague in Auckland revealed we had both had the same surgical procedure paid for by insurance. I received full reimbursement as I paid a higher premium; my colleague has a policy providing 90 percent reimbursement. The total cost of the procedure was $10,550.10 for my colleague – mine was less as it took place four years earlier.
Nothing unusual here – both procedures went as planned and we are both pleased with the outcome.
However, and quite by chance, our local newspaper La Gaceta had an article on the private hospital being contracted by the local NHS to carry out a number of routine surgical procedures to cut the waiting list. Among them were 20 of the same procedures we have both received in Auckland. The similarity ended there as the cost was €960 each, or roughly NZ$1,600 at current exchange rates.
This massive disparity, which cannot be explained away by differences in the cost of living or wages/salaries, set me thinking and asking why the difference and is anyone getting shafted?
Firstly, let me explain that here in Spain, like New Zealand, there is a National Health Service (NHS) – which is entirely free at the point of delivery. There are no mechanisms for charging for GP visits, NHS consultants, scans/x- rays, laboratory tests or in-patient care. There is a thriving private sector paid for mostly by insurance companies with numerous, mostly international providers, including some familiar names such as BUPA.
However, on inquiry premiums are equally different. My Auckland colleague, a middle-aged family man pays $315 a month for himself and his wife. I am older and was paying $600+ a month until 2015 when we left the country. I had 100 percent cover, whereas my colleague receives 90 percent of any successful claim. Local, Spanish, insurance rates for a middle-aged couple are in the region of €50 a month or around NZ$1000 per annum.
How can the differences in costs be explained? Approximately 20 percent can be explained away by cost of living comparison. Salaries, while difficult to get statistical accuracy on, suggest a much greater disparity. However, doctors and surgeons here in the private sector are well remunerated.
I live opposite a building in the centre of the city which houses a number of private specialists and the cars they drive include hybrid Porsches and the usual range of top model German brands. They live in the smart suburb by the golf course along the river bank or in the expensive apartment blocks here in the city centre. Many, to my personal knowledge, have holiday homes too, just like their New Zealand counterparts.
The major difference is that here in Spain you either work in private or public health, not both, and transfer from one to the other is unusual. The public sector personnel are all civil servants and paid scale salaries and pensions. The private sector charge ‘market rates’ for their services and are predominantly remunerated by the insurance companies – just like New Zealand. However, the difference is the Spanish market rates are much lower here and devices (hip joints, etc.) are significantly cheaper. This is in part due to economies of scale (bulk purchasing) but also different intermediary structures. In New Zealand it is not unusual to find that a medical specialist owns a company that has exclusive import rights from a foreign manufacturer for a range of related devices. This would not be permitted here for reasons of conflict of interest. The Spanish market is large and single desk purchasers (NHS) are price makers not price takers.
Another difference occurs in what private specialists are paid. Like all professions everywhere those at the top are well paid but the top echelon here don’t receive 40-60 times the average wage. By way of example, the President of Spain receives €78,185 a year (NZ$132,000) against $471,000 for the New Zealand PM. There is income inequality in Spain and it is getting worse, but the differentials are smaller. The notion that a chief executive of a state-owned corporation could be paid $1 million would be met with incredulity here, as would council CFOs and departmental heads receiving $200,000 to $400,000 plus.
Returning to health – can prices in New Zealand be lowered? Can private health insurance premiums go down instead of up? The answer is yes but it would take a revolutionary change and for the insurers to only provide 100 percent reimbursement cover – to set prices for procedures, to promote single purchaser desks for prosthetics, drugs and surgical consumables and importantly inform health professionals that their prices are going to remain at the present level for the next five to 10 years. All this has to be done in such a way as to avoid conflict with New Zealand antitrust legislation which is supposed to prevent monopolistic situations arising.
If SME owners, and I was one, want to buy health insurance for themselves and their staff these issues are important. As an employer who had 68 full-time staff, all of whom received full health insurance which covered spouses and children at no cost to the employee, it was a huge benefit for all of us and the premiums worth every penny.