Nicholas Kerr: New Zealand had no choice but to lock down

"New Zealand hospitals in crisis."

A surprising headline for many. Why are patients being treated in hospital corridors in a country that has essentially eliminated COVID-19? Unfortunately, it’s a familiar story for many Kiwis and those who have studied universal healthcare.

New Zealand has been held up as a model as to how to tackle the pandemic. We’re told that it acted decisively to bring the virus to heel. A more accurate account is that other countries implemented measures in February and early March, while the government there dithered. It wasn’t until mid-March that New Zealand imposed one of the toughest lockdowns in the world. By then, there were 102 cases, which its healthcare system was struggling to deal with.

Moreover, when these restrictions were put in place on March 14, 2020, they were to flatten the curve. Unprepared for a pandemic, the government panicked. Its initial strategy swiftly morphed to a goal of managing small peaks, and by March 23, its third approach had become one of elimination. Within this context, it’s easier to understand that despite fewer than 20 new daily COVID-19 cases (most in border facilities) and only a single death since November, the state-run hospital emergency departments are at capacity. As one doctor there noted, it’s easier to list the hospitals that don’t have a major problem than the ones that do.

These crises have played out in New Zealand for years.

Given the absence of a pricing mechanism, the government must ration care. For all surgeries the OECD tracks, the percentage of New Zealanders waiting more than three months from the time they are assessed by a specialist to when they are treated has increased dramatically since 2015. In 2018 (the most recent data available), a quarter of Kiwis needing coronary bypass surgery were waiting more than three months, up from 9%. Almost half of patients wait more than three months for a knee replacement. New Zealanders waiting for these surgeries often must bear with severe pain, loss of income, and other quality of life issues.

While America had its own struggles with COVID-19, hospital capacity wasn’t one of them. Despite the country’s relatively high number of cases per capita, the predominantly private sector health system has been resilient. Indeed, a 250-bed army hospital was deployed to Seattle in case the city’s hospitals were overwhelmed and left without seeing a single patient.

Sweden has a government funded universal healthcare system but was notable for not implementing a strict lockdown. It has experienced more cases per capita than some of its neighbors, but fewer than many major European countries that locked down. Despite its COVID-19 caseload, Sweden’s system has held up remarkably well. Even with a recent spike in cases, the country has 18% capacity remaining in its ICUs. Unlike New Zealand, Sweden funds both government and privately run hospitals following a set of reforms in the early 1990s known as the "Stockholm Model." These market reforms separated funding and healthcare delivery to address a steady decline in quality of care that resulted from the government’s near elimination of private providers in the 1970s.

The immediate result was a 20% drop in the length of its waiting lists between 1992 and 1993. As with any universal healthcare system, waiting lists persist in Sweden. However, for most procedures the country has significantly shorter wait times than New Zealand. Only 5% of Swedes wait more than three months for coronary bypass surgery.

It may seem paradoxical that Sweden has been hit hard by the pandemic and not had a major hospital crisis, yet New Zealand’s hospitals are so overwhelmed that patients are being treated in corridors. The major difference between the two healthcare systems is the substantial role the private sector plays in delivering hospital services in Sweden.

When imposing what some described as a "near-complete societal lockdown," New Zealand Prime Minister Jacinda Ardern explained that the consequences of not doing so would be that the "health system will be inundated, and tens of thousands of New Zealanders will die."

Ardern was fortunate that as a small and remote Pacific island nation, New Zealand was able to easily shut down its borders and control the pandemic. It’s not the government but the remarkable speed of the private sector's vaccine innovation that will reopen the country. Market-based solutions offer the best way to fix broken healthcare systems.

Nicholas Kerr is an adjunct scholar at the Lone Star Policy Institute. He works in marketing in the tech industry and writes a blog, the Kerrant, on policy and being a father. This article was first published HERE.