Addressing Unmet Need for Health Care in New Zealand Using the Population-Based Funding Formula

Abstract

New Zealand’s Ministry of Health utilises a population-based funding formula (PBFF) to allocate funds to regional health authorities, known as District Health Boards (DHBs). This formula endeavours to fairly allocate funds across regions and populations. For the past decade, a top-slice of funding for ‘unmet need’ was added to the base PBFF, expanding its budget and mission. This top-slice was inaugurated with an aim of reducing health disparities across DHBs, and addressing differences in health status or health need which might otherwise be reproduced by simple capitation. This thesis examines the inter-related concepts of health equity and unmet need, against a backdrop of the political and technical considerations necessary to derive health funding formulae. This thesis then attempts to place New Zealand’s health funding scheme in general, and the unmet need top-slice in specific, in context with comparable health funding schemes utilised by other Organisation for Economic Co-operation and Development (OECD) member states. Empirical measures of self-reported unmet need, inequities in need-standardised utilisation of health services, and comparisons between self-reported need-standardised utilisation inequity and hospital-reported utilisation data, were undertaken to elucidate links between the unmet need top-slice and health inequities. Finally, three different budgeting measures were utilised to estimate the funding quantum necessary to meet self-reported unmet need. Some inequities in health status are observable in New Zealand, and these inequities persist across contact type, time period, and data source. This research suggests additional risk adjusters which could be used to more efficiently allocate and target funding to address unmet need. Alternate quanta for the unmet need funding top-slice are suggested. Adjustments to the New Zealand Health Survey to better serve as a measure for auditing the efficacy of the unmet need top-slice are outlined. Finally, policy suggestions and areas for further research are proposed.