HFANZ: Health costs need attention, too

Government moves to raise the pension age should also consider the cost of healthcare for an ageing population, the Health Funds Association’s chief executive says.

Tuesday, March 21st 2017, 6:00AM

by Susan Edmunds

Prime Minister Bill English this month revealed plans to increase the age of eligibility for NZ Super to 67 by 2040.

HFANZ chief executive Roger Styles said it was time to consider health costs at the same time.

“Thanks to an ageing population, healthcare inflation, and the rise of new and costly treatments, New Zealand’s health spending has one of the fastest rates of increase in the OECD. Treasury has repeatedly advised that this unsustainable growth presents a bigger fiscal problem for the Government than the soaring cost of NZ Super.”

He said, while superannuation costs were tipped to get to 7.9% of GDP by 2060, healthcare costs would jump to 9.7% over the same time.

“This represents a 56% jump on 2015 funding and about $8 billion in today’s terms, an amount governments will have difficulty coming up with by simply making efficiencies in our public hospitals,” he said.

“Other policy options such as increased user charges and greater rationing and waiting lists are all likely to be needed in the coming years, although these still are unlikely to match the shortfall.”

He said 20% of New Zealand’s healthcare was privately funded, or about $4 billion a year.

“Health insurance could be playing a bigger role in meeting future healthcare costs and thereby relieving the pressure on government budgets and the public health system. Private health insurance is ideally placed to be able to routinely fund high-cost treatments, which user charges cannot. We just need to address some of the disincentives currently in place so that more people can take out cover.”

Altering fringe benefit tax rules to remove an impediment for employers taking on workplace health insurance schemes was one thing that could help, he said.

“The Government needs to face up to the unsustainability of future health spending and develop a collaborative strategy to reduce dependency on public financing and move closer to the OECD average for public/private health spending shares. It won’t be able to raise the age of eligibility for surgery, and it will have to act before 2040."

Tags: health insurance