Public health treatment going private – good news?

Steve Wright wonders whether the government's plans to use private health care facilities to reduce elective surgery waiting lists is a good idea.

Monday, March 10th 2025, 11:00AM

by Steve Wright

The Government is reportedly considering using private health care facilities to reduce elective surgery waiting lists. This seems like a good and logical move, but are their hidden dangers?

It’s certainly good news for kiwis languishing on public health waiting lists who might get their treatment quicker. How many kiwis will benefit, depends on whether there is enough capacity in the private sector to make a significant difference.

Is it good news for the private health sector? I guess it might be good for revenue in the short term if the private sector has lots of under-utilised capacity.

Is it good news for the public health sector? I’m not sure, but whatever the capacity is in the private sector to take on public system referrals, and I have no idea what that capacity might be, one thing seems clear, additional capacity needs to be generated somewhere.

And by capacity I’m not only thinking of buildings, beds and operating theatres, I’m thinking of people too. The few specialists I know already perform some treatments in the public sector and seem worked off their feet.

If the Government is able to make a significant dent in waiting times for many procedures by utilising the private sector, will the pressure to create more capacity in the public sector disappear, at least in the short to medium term?

If it does and public capacity is not increased, the private sector too may become overwhelmed.

Is this good news for New Zealand and the taxpayer? If the private sector becomes overwhelmed, waiting times in both the public and private sectors will probably eventually equalise and lengthen again.

When that happens one of the most important reasons for ‘going private’ will disappear, along with most of the need for private health insurance. How many will continue paying premiums for health insurance that no longer facilitates treatment quicker than can be accessed in the public sector and what will that do to private healthcare viability?

Public health costs are already a very significant impost on the taxpayer. The private health sector shifts significant cost off taxpayers and on to individuals or their insurance companies. This benefit to the taxpayer could be lost with any significant reduction in demand for health insurance and private health care.

Steve Wright has qualifications in economics, law, tax, and financial planning. He has spent the last 20 years in sales, product, and professional development roles with insurers. He is now independent and helping advisers mitigate advice risk through training and advice coaching.

Tags: health insurance medical insurance Opinion Steve Wright