Health Insurance Crisis Sparks Calls for Tax Relief
Health Insurance Crisis Sparks Calls for Tax Relief
Health insurance is becoming increasingly unaffordable for many New Zealanders, prompting industry leaders to advocate for tax incentives to ease the burden. A recent report from the Financial Services Council, which represents life and health insurers, reveals that one-third of individuals with health insurance have reduced or downgraded their coverage in the past year. This trend is raising concerns about the long-term sustainability of private health insurance and its role in the country’s healthcare system.
According to the data, 33% of New Zealanders have health insurance, while 27% previously had it but have since let it lapse. The rising costs of premiums are a significant factor, with some families facing steep increases as they age. For example, a 40-year-old couple with a 10-year-old child could pay around $120 every two weeks for basic coverage, while a couple aged 60 and 65 might pay over $324 for similar plans. The costs escalate further with age and the presence of pre-existing conditions.
Insurance companies, such as Southern Cross, have also reported rising claim costs, which are outpacing premium increases. This has led to calls for tax relief to make health insurance more accessible. Kirk Hope, CEO of the Financial Services Council, highlighted that most OECD countries offer incentives to encourage people to take out health insurance. In Australia, for instance, individuals who don’t have coverage by a certain age face higher taxes.
Hope argued that employer contributions to health insurance should be exempt from the fringe benefit tax (FBT) to encourage businesses, especially small and medium-sized enterprises, to include insurance as an employee benefit. He emphasized that this could improve workforce resilience, reduce pressure on the public health system, and provide financial security for families during crises.
However, not everyone agrees that tax breaks are the solution. Liz Koh, founder of Enrich Retirement, pointed out that whether health insurance is worth it depends on an individual's circumstances. She said people should consider their risk tolerance and ability to pay for medical care. While some choose to self-insure due to financial assets, others are simply unable to afford premiums and must rely on healthy lifestyles to mitigate risk.
Despite these debates, the growing affordability crisis is putting pressure on policymakers to rethink how health insurance is structured and funded in New Zealand. With the cost of private insurance continuing to rise, the call for tax relief is gaining traction as a potential solution to help more people access essential healthcare.
