New Zealand's medical inflation, which is already among the highest in Asia-Pacific region, continues to surge and in its wake health insurance premiums too rise, at times making health insurance unaffordable.
A news report published by Goodreturns.co.nz quotes AIA New Zealand chief executive Nick Stanhope, “These increases in health insurance premiums are hurting New Zealand customers and insurers are asking the government to help find solutions.”
Mr Stanhope said the affordability pressures require fresh thinking from both insurers and policymakers. This could come in the form of smarter products, a better understanding of underlying health trends, and potentially Australian-style tax deductibility for health insurance.
He said the cost of premium increases is a concern to all of us in the insurance industry and it requires some degree of government involvement as well.
He said, “Politicians need to have the right conversations and find out why inflation in the provision of medical services is so high relative to even Australia.”
Mr Stanhope said, “AIA has also raised the issue of fringe benefit tax on group health schemes with the government. Currently employers who provide healthcare to staff face a 49% penalty on top of the premium they pay.”
Mr Stanhope has met Revenue Minister Simon Watts and Prime Minister Christopher Luxon to discuss the issue. He says it's now on their list for consideration, which it hasn’t been in the past.
The Australian model is another useful comparison. Tax deductibility there has created significant capital investment in hospitals and a stronger public-private healthcare relationship.
Insurers have taken different approaches so far. All major insurers have raised premiums. He said the biggest issue is still rising claim numbers. He noted that the last few years have been ‘terrible’ for claims all-round, particularly as the time it takes to see a specialist in the public system is increasing.