New Zealand's primary health care sector has undergone fundamental changes under the Primary Heal... more New Zealand's primary health care sector has undergone fundamental changes under the Primary Health Care Strategy announced in 2001 and implemented from 2002. The strategy replaces historic fee-for-service general practitioner subsidies with population-based capitation subsidies, and restructures the key contracting relationships within the sector. Primary Health Organisations take on the responsibilities for contracting with services providers to deliver services, and for contracting with District Health Boards in order to secure funding and ascertain service type and quality requirements for the services delivered to patients. This paper uses the framework of economic contracts to analyse the effects of the changes brought about by the changes to primary health care arrangements in New Zealand. The paper finds that the change in arrangements is likely to lead to higher costs of financial risk and reduction in the level of competition between providers of health care services. When combined with the governance arrangements specified in the strategy, these effects are likely to result in reductions in efficiency in the primary health care sector relative to the arrangements prevailing prior to the change, and are unlikely to lead to the levels of innovation in service delivery anticipated by the strategy. These findings draw into question the extent of value for money that will be delivered from the substantial increases in government funding applied to the new strategy.
Agenda: a journal of policy analysis and reform, Apr 1, 2008
Using analysis of the management of 'random' and 'controllable' risk in capitation contracts, thi... more Using analysis of the management of 'random' and 'controllable' risk in capitation contracts, this paper critiques the arrangements in the New Zealand Primary Health Care Strategy (NZPHCS) introduced in 2002. Total system costs have undoubtedly risen under the mixed capitation model adopted, relative to fee-for-service. By requiring only those treated to pay all costs not factored into the government's prospective capitation payments, the burden of unanticipated risk-management costs falls disproportionately on the sickest patients. Rather than resources being allocated on the basis of health need, the sickest individuals bear a disproportionate share of the cost of random demand shocks.
Bundling of broadband access with other services has been a defining characteristic of internet a... more Bundling of broadband access with other services has been a defining characteristic of internet access markets for as long as broadband technologies have been available. Initially, cable television competitors entered telecommunications markets by bundling first voice telephony and subsequently (broadband) internet access with their television products. The fear that bundling broadband access with live sport content could distort competition in broadband markets by first facilitating the assumption of a dominant position in broadband markets and then the squeezing-out of small rivals with low levels of investment but higher costs led to the New Zealand Commerce Commission recently declining to grant clearance for a merger between the dominant pay television provider and the number two (by market share) fixed line broadband provider also the number one mobile operator (Commission 2017; B. E. Howell and Potgieter 2017a; B. E. Howell and Potgieter 2017b). We investigate the situation where a basic content package, a premium content package and broadband are offered by a firm and analyse the firm's price-setting behaviour when customers react to a given set of prices by maximising their individual consumer surplus. Numerical simulations with random customer valuations is used to illustrate the multiplicity of outcomes that can be expected from a regulatory intervention. We discuss issues arising from this analysis that should be pertinent to decisions in similar cases.
Bronwyn Howell looks at the origins of yet another inquiry into the operations of New Zealand’s t... more Bronwyn Howell looks at the origins of yet another inquiry into the operations of New Zealand’s telecommunications regulatory regime.
How can the same industry in two very similar countries adopt the same technology at the same tim... more How can the same industry in two very similar countries adopt the same technology at the same time and nurture the development of two completely different sets of institutional and regulatory arrangements? Bronwyn Howell takes a trip through the telecommunications histories of Finland and New Zealand. She finds that initial investment conditions have a long-lasting impact on market evolution and participant interactions.
Collecting GST from Internet Service Providers (ISPs) will be increasingly expensive, complex and... more Collecting GST from Internet Service Providers (ISPs) will be increasingly expensive, complex and distortionary in a global market. Much larger national economic gains are available by exempting them, in line with the treatment of financial services, according to a new paper by ISCR's Bronwyn Howell.
New Zealand's primary health care sector has undergone fundamental changes under the Primary Heal... more New Zealand's primary health care sector has undergone fundamental changes under the Primary Health Care Strategy announced in 2001 and implemented from 2002. The strategy replaces historic fee-for-service general practitioner subsidies with population-based capitation subsidies, and restructures the key contracting relationships within the sector. Primary Health Organisations take on the responsibilities for contracting with services providers to deliver services, and for contracting with District Health Boards in order to secure funding and ascertain service type and quality requirements for the services delivered to patients. This paper uses the framework of economic contracts to analyse the effects of the changes brought about by the changes to primary health care arrangements in New Zealand. The paper finds that the change in arrangements is likely to lead to higher costs of financial risk and reduction in the level of competition between providers of health care services. When combined with the governance arrangements specified in the strategy, these effects are likely to result in reductions in efficiency in the primary health care sector relative to the arrangements prevailing prior to the change, and are unlikely to lead to the levels of innovation in service delivery anticipated by the strategy. These findings draw into question the extent of value for money that will be delivered from the substantial increases in government funding applied to the new strategy.
Agenda: a journal of policy analysis and reform, Apr 1, 2008
Using analysis of the management of 'random' and 'controllable' risk in capitation contracts, thi... more Using analysis of the management of 'random' and 'controllable' risk in capitation contracts, this paper critiques the arrangements in the New Zealand Primary Health Care Strategy (NZPHCS) introduced in 2002. Total system costs have undoubtedly risen under the mixed capitation model adopted, relative to fee-for-service. By requiring only those treated to pay all costs not factored into the government's prospective capitation payments, the burden of unanticipated risk-management costs falls disproportionately on the sickest patients. Rather than resources being allocated on the basis of health need, the sickest individuals bear a disproportionate share of the cost of random demand shocks.
Bundling of broadband access with other services has been a defining characteristic of internet a... more Bundling of broadband access with other services has been a defining characteristic of internet access markets for as long as broadband technologies have been available. Initially, cable television competitors entered telecommunications markets by bundling first voice telephony and subsequently (broadband) internet access with their television products. The fear that bundling broadband access with live sport content could distort competition in broadband markets by first facilitating the assumption of a dominant position in broadband markets and then the squeezing-out of small rivals with low levels of investment but higher costs led to the New Zealand Commerce Commission recently declining to grant clearance for a merger between the dominant pay television provider and the number two (by market share) fixed line broadband provider also the number one mobile operator (Commission 2017; B. E. Howell and Potgieter 2017a; B. E. Howell and Potgieter 2017b). We investigate the situation where a basic content package, a premium content package and broadband are offered by a firm and analyse the firm's price-setting behaviour when customers react to a given set of prices by maximising their individual consumer surplus. Numerical simulations with random customer valuations is used to illustrate the multiplicity of outcomes that can be expected from a regulatory intervention. We discuss issues arising from this analysis that should be pertinent to decisions in similar cases.
Bronwyn Howell looks at the origins of yet another inquiry into the operations of New Zealand’s t... more Bronwyn Howell looks at the origins of yet another inquiry into the operations of New Zealand’s telecommunications regulatory regime.
How can the same industry in two very similar countries adopt the same technology at the same tim... more How can the same industry in two very similar countries adopt the same technology at the same time and nurture the development of two completely different sets of institutional and regulatory arrangements? Bronwyn Howell takes a trip through the telecommunications histories of Finland and New Zealand. She finds that initial investment conditions have a long-lasting impact on market evolution and participant interactions.
Collecting GST from Internet Service Providers (ISPs) will be increasingly expensive, complex and... more Collecting GST from Internet Service Providers (ISPs) will be increasingly expensive, complex and distortionary in a global market. Much larger national economic gains are available by exempting them, in line with the treatment of financial services, according to a new paper by ISCR's Bronwyn Howell.
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Papers by Bronwyn Howell