New Zealand First MP Barbara Stewart's bill was drawn from the ballot this month.
It also proposes a 25% health insurance rebate for people aged over 65 and the removal of fringe benefit tax from health insurance to incentivise employers to include it in salary packages.
The bill already has the support of the Health Funds Association.
nib chief executive Rob Hennin referred to data released under the Official Information Act, which showed that since 2007 ineligible patients from overseas have cost the New Zealand health system $200 million.
He said that was putting district health boards under more funding pressure.
"New Zealand should be following the lead of countries like Australia, the United States, Canada and South Africa, which have mandated that visting non-residents take out health insurance cover," Hennin said.
He said the NZ First bill was a sensible step to address this issue.
But he said the bill's inclusion of the move to abolition FBT on employer health contributions would likely allow the Government to use its financial veto on the grounds it would have more than a minor impact on its fiscal position.
"That is why it is important that this bill proceed to a select committee for consideration, so that the elements of the bill on which all parties can agree can be retained," Hennin said.
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