Health insurance shortfall a bigger issue than retirement savings

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New Zealanders' failure to take up health insurance will create bigger problems than any retirement savings shortfall, according to Accuro chief executive Bruce Morrison.

Friday, May 11th 2012, 10:21AM 3 Comments

by Benn Bathgate

Health Funds Association (HFANZ) figures show that in the year to March the number of people with health insurance fell 2% to 1.35 million, and for Morrison this represents a more significant problem than any retirement savings shortfall.

"We think this is going to become a bigger issue - in fact already is a bigger issue - than superannuation and KiwiSaver," he said.

Morrison said that while Accuro has been growing its membership quarter-on-quarter for the past few years, he remained concerned at the overall trend for falling numbers of people with cover.

He also criticised the Government for failing to create a balance between public and private healthcare, saying the focus on reducing waiting lists is actually detrimental in the long term.

"In fact it's more dangerous because as the population ages and believes that the public purse will cover it [it creates] less and less interest in making private provision either through insurance or their own savings," he said.

"The strain on the public purse in the future is going to be enormous."

Morrison backed calls from HFANZ chief executive Roger Styles for rebates for people over 65 and the removal of Fringe Benefit Tax, but said the insurance industry could take measures itself.

"The more each insurer tries to outdo each other with benefits, and we push the price beyond the reach of most people, we're not doing anyone any favours."

Southern Cross Health chief executive Peter Tynan also believes the wider issue of health insurance needs to be linked to retirement savings - especially given the higher rate of medical inflation.

"It's a sub-set of the savings debate because it's a percentage of those savings that's going to be spent on health," he said.

Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz

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