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HFA wants incentives for health insurance

The Health Funds Association wants the Government to introduce incentives for people to buy health insurance policies

Wednesday, February 28th 2001, 1:35AM

by Philip Macalister

The Health Funds Association (HFA) has started lobbying the Government to encourage it to introduce incentives for buying health insurance.

HFA chief executive Andrea Pettet says the association has had preliminary discussions with Government and it has commissioned a report on the idea from the New Zealand Institute of Economic Research.

She says the Government has responded favourably to HFA's initial approaches.

The two options being evaluated in the NZIER report are to either make premiums exempt from fringe benefit tax, thereby encouraging employers to provide health insurance as part of a remuneration package, or to provide individuals with a tax credit on their health insurance premiums.

The level of health insurance polices written in New Zealand has declined significantly in the past few years.

Pettet says in the 1990s more than 50% of the population had policies, but that number has fallen to around 34% now.

While the number is down, but not in decline, she says.

Pettet says the association is lobbying the Government on public policy grounds.

The rationale is that if a greater portion of the healthcare was paid for by insurance companies there would be a corresponding decrease in the Government's health spending.

Pettet says many other countries, including Australia, provide incentives for health insurance.

The HFA is planning to release its report in March.

The largest player in the health market is Southern Cross, which acquired number two player Aetna last year. As part of its Commerce Commission approval to buy its rival Southern Cross was supposed to sell all Aetna's existing policies.

However, it is currently trying to overturn the commission's decision in the High Court, so it can keep all the policies.

A number of players including Tower Health and Sovereign are understood to be interested in buying the Aetna policies if they come on the market.

You can read Philip's blog here: http://www.goodreturns.co.nz/blog/

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