$5 prescription charge to be scrapped - Budget

“Removing the copayment charge will help reduce the demand on hospitals and other health services”

Scrapping the $5 prescription charge is the $157 million centre piece of changes to Vote Health in Budget 2023.

It also forms a key part of the Government’s pitch in helping deal with the rapidly rising cost of living in what it calls a no-frills, practical and helping-hand Budget.

“We’re helping out with health costs by making most prescriptions free,” prime minister Chris Hipkins says in a media release. “An estimated 3 million people will no longer have to worry about the cost of collecting medication.”

Vote Health is $26.51 billion in the estimates for 2023/24. It was $24.009 billion in the estimates for the current financial year, 2022/23, and has risen during the year to an “estimated actual” sum of $27.253 billion.

Other than dropping the prescription charge and last Sunday’s $30 million extreme weather response funding, Budget 2023 is light on new initiatives in health, after the announcement of two years of funding and new schemes at once last May to enable longer term planning.

The Budget 2023 investment summary document outlines how baseline funding has been reallocated in health:

• $99 million for winter 2023 initiatives

• $118 million to reduce waiting lists by freeing up inpatient hospital beds

• $20 million to improve health equity for Māori and Pasifika.

The document also reveals $10 million has been saved from the disestablishment of former DHB executive leadership positions.

It says more than $1 billion is being invested to increase health sector pay rates and boost staff numbers, and $20 million to increase COVID-19 immunisation and screening coverage for Māori and Pasifika.

The main spending planned for Vote Health in 2023/24 includes:

• $12.720 billion (48% of the vote) for Te Whatu Ora hospital and specialist services, compared with $11.707 billion in the 2022/23 estimates

• $8.158 billion (31%) for Te Whatu Ora to spend on primary, community, public and population health services, compared with $7.964 billion for Te Whatu Ora and Te Aka Whai Ora in 2022/23

• $3.071 billion (12%) for capital investment, largely for infrastructure projects and to fund the resolution of claims from historical non-compliance with the Holidays Act 2003, compared with $1.651 billion in 2022/23

• $1.339 billion (5%) for Pharmac to manage ($28 million) and purchase pharmaceuticals ($1.311 billion) – compared with $1.215 billion in 2022/23

• $616 million (2%) for Te Aka Whai Ora to deliver hauora Māori services, compared with $163 million in 2022/23

Health minister Ayesha Verrall says in a media release the $5 prescription charge can be a barrier to some people getting the medicines they need, especially now when there is pressure on household budgets.

“Free access to medicine will also relieve pressure on the health system. Removing the copayment charge will help reduce the demand on hospitals and other health services.”

The investment, which will cost the Government a net $618.6 million over four years, comes on top of her Government’s major expansion of access to medicines, with a 51 per cent increase in the medicines budget since 2017, Dr Verrall says.

The summary document says more than 135,000 adults did not collect their prescriptions because of cost in 2021/22.

The document cites University of Otago research showing that low-income households that had the prescription charge removed were less likely to be admitted to hospital and spent fewer days in hospital than similar households that faced the payment.

Finance minister Grant Robertson, when asked at a media conference if means testing was considered for the prescription charge, said, “We don’t means test health like that”, and added that means testing would be administratively costly.

The minister for Whānau Ora, Peeni Henare, announced additional funding of $168.1 million over four years for the programme.

The minister for disability issues, Priyanca Radhakrishnan, says in a media release Budget 2023 will provide $863.6 million to help ease cost pressures on Government disability support services.

Beyond health, cost-of-living measures in Budget 2023 include:

• Extending the 20 hours early childhood education subsidy to two-year-olds

• An extension and expansion of the Warmer Kiwi Homes scheme

• Making public transport free for children under 13 and permanently half-price for under-25s.

Dr Verrall, as minister of research, science and technology, says in a media release that three multi-institution research hubs will be created, one for climate change and disaster resilience, another for health and pandemic readiness, and a third for technology and innovation. All three will be based in Wellington.

She also announced a $55.2 million investment in research fellowships.

A year ago, in Budget 2022, highlights of Vote Health increases included:

• A $191 million boost over two years to the Pharmac budget

• $102 million over three years for comprehensive primary care teams

• $86 million over four years for equity adjustments to capitation

• $100 million over four years for mental health and addiction services

• $166.1 million over four years for ambulance services and $90.7 million over four years for air ambulance services.