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.
34 Comments
ACC and the insured population are the main reasons our health service hasn't imploded in on itself already. While the government is balancing the deficit it inherited with future spending priorities a smart move would be to make health insurance a tax deductible item.
The more people that can be offloaded from needing elective surgery in the public system, the better off we all will be as those who cannot access private health will face shorter waiting lists in public. This is cheaper than outsourcing public work to the private sector indirectly which is what currently occurs.
It is disgraceful that 37% of New Zealand's population now have health insurance cover. They have health insurance because they know that they cannot expect to get free and timely treatment from New Zealand's state health service. And why? Because New Zealanders selfishly are unwilling to pay the taxes necessary for a state health service for everyone that is free, timely, comprehensive and efficacious. Such a health service would render private insurance unnecessary except for pets and overseas travel.
There is no reason, other than selfishness, why New Zealand could not be as nktokyo describes the Japan health system below: 'In Japan health insurance is a small form of tax. You pay inline with your income. It's compulsory. When I needed an operation the waiting list was 3 weeks. In NZ I've waited 3 years. There is a lot of waste with the Japan system, but dental is included. It costs $25 to get your teeth cleaned and $50 for a filling.'
Correct. After the stop in elective surgeries in the initial lockdown, he public sector started farming out to private hospitals which took capacity from otherwise required surgeries. Surgeons then have to spread their time and you can be sure that they will favour the private clients over all else despite taking clients form ACC, public also as a secondary priority as they are guaranteed income, albeit at lower profit. We have an ageing population, and the demand for things like joint replacements (knee, shoulder, hip commonly) will be rising year on year currently alongside the additional demand on ACC from aging people having injuries more often as well. All of this culminates in demand increases without the capacity to manage unless forecasted, triaged and prioritised well.
ACC is definitely part of the problem. When you go to a physio these days, the "ACC surcharge" will often be higher than the amount paid by ACC for your treatment.
ACC1523 Specified treatment providers costs
Why? Because ACC has not increased what it pays health providers over the years.
I watched this play out in Australia. If your income was over a certain amount you were penalised with a higher medicare levy. The justification was that it would remove the burden from the public system. This was over 20 years ago now. A similar justification was given for encouraging people into the private school system.
The reality is that in both health and education a certain critical mass is necessary to keep the system functioning well. With regard to schools, there is also a cultural aspect. Having students from higher income households abandoning public schools doesn't help the public system - it does the opposite.
With health, it's also not so straightforward. From a political perspective you want the most influential (read wealthy) in society to be invested in the public system. In practice you also find that the exact same resources are used for public and private patients in many cases (e.g. private paying for beds in a public hospital, staff moving between, etc).
Pushing as many people into private systems is not the easy win it is sold as. As ever, the only thing you can be assured of is that on average, people will pay more for the service.
In Japan health insurance is a small form of tax. You pay inline with your income. It's compulsory. When I needed an operation the waiting list was 3 weeks. In NZ I've waited 3 years.
There is a lot of waste with the Japan system, but dental is included. It costs $25 to get your teeth cleaned and $50 for a filling.
These include the increasingly aging yet less healthy population
The crux of the issue right here - particularly the "less healthy" part. We have the right to eat junk, drink toxic fluids, smoke poison, and spend all day on our phone... and no one can take these rights away.
But no moral hazard here, we are entitled to free healthcare.
100% in agreement. Ideally, things we ingest that have solid evidence showing causation of health burdens should be taxed accordingly to fund the health provision it necessitates. We did it with cigarettes. User pays. Vapes, Alcohol, high sugar drinks / foods are obvious groups that are up for discussion. They do not need to be taxed to oblivion but they need to wash their face in terms of cost through health services. People should be able to have a "treat" and have a choice but not at other peoples expense.
Taxing sugar will not hide the fact that a full cover public health system is simply not viable. There are far too many other factors (Genetic, Environmental, Diet, accident, exercise, age, etc...) that can go wrong in a human body or mind.
It is clear that most people (Even with full knowledge of the issues) simply don't, won't, or can't change themselves.
We need to have a discussion on what/who should/should not be covered publicly.
A breathalyser in ED, whereby if you are over the limit and you either stump up the cash or don't get seen would be one brutal but effective triage method.
I wonder how many of these people are covered by company policies. Most of my working life medical insurance came as part of the package.
If you are born in a western country with good nutrition and a reasonable medical system and don't have any family history of disease then I wonder if its worth the cost.
If its an emergency then you end up in the public sector and if its and accident then we have ACC.
I am one of the statistics here. Almost 79 and having enjoyed really good health throughout life until my sudden and unexpected cancer diagnosis some 2 and 1/2 years ago, I have just had a radical nephrectomy in a private hospital. This only became possible because the (unfunded and expensive) drugs I have been on, have been highly successful.
The total cost including 8 nights stay will be little short of $50,000, almost entirely met by my health cover. If it proves as successful as hoped, my life expectancy will be extended, thus making it more likely that I will be involved with the health service in one form or another in future.
I think our health service is already at crisis point and worsening. It now takes some 2 weeks for a GP appointment and having had to go to A&E a couple of nights ago, we ended up there for almost 12 hours. When we were dealt with, the service was excellent-calm and highly professional-but so clearly under immense pressure. In the private hospital, again the medical care was top-notch, but almost every one of the nurses was from overseas.
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