Health Services Coverage Regulation: an Evaluation of Policy Options for New Zealand

Abstract

An important feature of New Zealand's 1993 health reforms was the promise to define an explicit list of 'core' services - i.e. the health services to which all New Zealanders would have access. This thesis examines public policy issues surrounding an explicit core of services, and by extension, policies which regulate health services coverage. Coverage regulation is defined as the rules about which population groups and services are covered by a health insurance plan. Part One of the thesis develops frameworks for defining and evaluating alternative models of coverage regulation. First, four key elements of coverage regulation are identified: population coverage; service coverage; whether coverage is implicit or explicitly defined; and insurability for services covered under principal health plan coverage. Second, a formal decision-making schema is developed which establishes benchmarks in the form of lower-level health policy objectives, which alternatives models of coverage regulation must meet in order to promote the higher-level policy goals of allocative efficiency, equal access for equal need, choice and expenditure control. In Part Two of the thesis, the decision-making schema is used to provide a framework for an in-depth discussion of how alternative models of coverage regulation contribute to lower-level health policy objectives and hence to higherlevel policy goals. The schema is then used to value how well alternative models of coverage regulation contribute to these objectives and goals. This involves two steps. First, it involves scoring each alternative model of coverage regulation for its contribution to policy objectives and goals, based on the discussion described above. Second, it involves weighting the different objectives and goals in order to value the contribution alternative models of coverage regulation make to each of the four policy goals individually and overall. For this thesis, it is the author's values that are used to weight the policy goals. Given the judgements required in scoring alternatives and in weighting objectives and goals, sensitivity analysis is used to explore, the impact that different scores and weights have on the overall Scores. The analysis identifies the limitations of current New Zealand arrangements for coverage regulation, and demonstrates the policy trade-offs which must be made in deciding which coverage regulation model New Zealand should adopt in the future. The current model performs only adequately in relation to each of the policy goals. A model with similar population coverage, comprehensive service coverage and an explicit, detailed service specification is shown to improve performance in relation to efficiency and equity goals albeit at a cost of limiting choice and potentially losing short-term expenditure control. In a managed competition system, the same conclusions apply. New Zealand should therefore investigate the types of, services where a more explicit and detailed service specification might be developed, in order to better support efficiency and equity goals in New Zealand health care.