A new report out of the Financial Services Council (FSC) shows almost 40% of New Zealand’s population now have some form of health insurance, highlighting growing strain on both public and private healthcare sectors.
The FSC’s report on healthcare which came out on Tuesday, found New Zealand is facing a significant social healthcare crisis as the country’s older population not only lives longer, but is expected to grow at an unprecedented rate.
Rob Campbell the Chancellor of AUT University and Louise Zacest the CEO of UniMed joined a FSC webinar discussing the report and broader healthcare issues in New Zealand.
FSC report lead David Bishop said the report showed health insurance has an important part to play in the health ecosystem and also highlighted the big policy issues in the health sector.
These include the increasingly aging yet less healthy population, increased costs of treatment and out of pocket expenses and the pressures on the public health system.
The count of New Zealanders with health insurance rose from 1.18 million in 2022 to 1.45 million in 2023, showing an additional quarter of a million people have turned to health insurance in the last year.
The increased popularity of health insurance means 37% of Kiwis reported having health insurance in 2023, up 5% from 32% in 2022, the report found.
Australia has a higher penetration of private health insurance than NZ does, UniMed CEO Louise Zacest said, partly because of more incentives.
In the December 2023 quarter, data from the Australian Prudential Regulation Authority indicated 54.6% of Australians have general health insurance, while 44.9% have hospital treatment cover.
“There is a real incentive in Australia, you know, so there's a carrot and stick approach. If you are over a certain income threshold and you don't have private income insurance, you pay an extra Medicare levy and if you do have health insurance you get a tax rebate,” Zacest said.
“So there are some things driving that behaviour, but we also need to come back and go, we're a country of five million people, geographically spread. Some of our centres are very small and therefore the ability to drive economies of scale impacts. And I think that impacts our health providers, which in turn, you know, means we have probably higher cost of service.”
In NZ, “surging” claims inflation was also something Zacest said she knew UniMed and other health insurers were struggling with.
People need to access their insurance more because they can't get access in ways they have previously while the cost of care has gone up substantially.
“Those together create some real challenges around long term affordability,” she said.
Zacest has a daughter at university in the US and explained the cost of her daughter’s health insurance premiums in the US were US$2,500 per year – an amount which is currently $4124.82 in NZ dollars.
“That would be five times what she would pay in New Zealand. And I think that we are not used to paying for health insurance at high levels in New Zealand,” she said.
“As we see more activity happening in the private sector, we're going to have to question some of those historical perspectives.”
Not in crisis mode yet
Zacest doesn’t think New Zealand is in a healthcare crisis – yet.
“My perspective is that I think we have a health system that is under severe pressure, but I don't actually believe we have a system that's in crisis. If we don't act soon, we could end up with a system in crisis,” she said.
Campbell was the former chair of Te Whatu Ora but was removed from the role last year by then Health Minister Ayesha Verrall due to remarks made on social media regarding the National Party's proposed alternative to the Three Waters legislation at the time.
“It has created a situation, and politicians have created a situation in which we are resource constrained. And there's also been a lack of policy understanding of where the effort ought to be put into. But things like the workforce gaps that we have, the training gaps that we have, the facilities gaps that we have, they are all things that could have been and should have been fixed by the public sector,” he said.
“It's not a matter of public sector not being able to do this. It has deliberately chosen not to do it. And naturally that gets filled by either the for profit part of the sector or by the not for profit part of the sector," Campbell said.
He said one of the mistakes made when discussing health policy in NZ was people assumed NZ had a dominant public health system, something Campbell believes is actually the opposite.
“We have a system which is largely dominated by private providers, doctors, community sector providers, everything from midwives to dentists, you name it. Very often, most often you will come in contact with a private operator. They may be funded by a government agency, but they're very often private providers. The really genuinely public part of our system ends up being a minority of what goes on. And I think that is something that we often forget,” he told the webinar.
Campbell said while the public health sector could be strengthened, there was no answer to the “various parts of the health system that are under stress or crisis” which didn’t include close integration with the private sector.
“Whether you like that or don't like it, isn't really important. If we're going to deal with the sort of issues that we're now facing, we have to involve both parts and integrate their services to meet the needs of the community,” he said.
Campbell commented later in the webinar that he would personally prefer the public [health] sector to be “much more active” and said he didn’t really accept the public sector is nearly as capacity constrained as it says it is.
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