Medical costs and premiums rising unsustainably – what can advisers do to help their clients?

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[OPINION] 

Monday, July 6th 2026, 10:27AM

by Steve Wright

I’ve always viewed utilisation of private medical providers and medical insurance as a societal good. 

Something that relieves pressure on the Public Health system, allowing it to provide better services to those who cannot afford medical insurance.  In addition, utilisation of private medical services reduces the funding pressure on taxpayers.

I don’t believe that the Private Health system deprives the Public Health system of medical professionals.  I suspect that most in private practice are there because they don’t want to be Government employees.  Any efforts to coerce them would likely see them move to greener pastures, exacerbating the problem. 

The recent tragedy at the Waikato Hospital Emergency Department highlights the stress our Public Health system is under, as do soaring medical insurance premiums.

An apparent contributor to the rapid increase in private medical costs and medical insurance premiums, is the increased demand for private services brought about by the struggling Public Health system.

It seems to me that the Public and Private Health systems rely on each other for their success.  If one fails to deliver, they will both likely fail to deliver suitable and advanced health care.

Naturally, the Government has work to do to improve the Public Health system but to save the private health system, affordable medical insurance appears to me to be essential.

There have been calls for tax deductibility of health insurance premiums, which would reduce medical insurance costs for those working and paying tax, but calls for this have consistently been turned down and I understand the argument. 

Recently though I assisted on an insurance claim for a couple of major diagnostic tests, of which $1,008.00 was GST.   So, not only does Government fail to reward people for shifting the cost of much medical treatment off the taxpayer and onto themselves, by allowing a tax deduction of premiums, but it also penalises them by imposing a tax on them when they use private medical services. 

I ponder the wisdom of such tax policy in an environment of pressure on Public Health and rapidly rising private medical costs and insurance premiums, which are rapidly are becoming increasingly unaffordable. 

The risk that many will cancel medical insurance and flood the Public Health system appears to me to be all too real.  What will access to health care look like if that occurs and is there anything Life Insurance advisers can do now to help their clients?  With medical insurance solutions becoming less and less affordable, something else is needed. 

There appear to be opportunities for new insurance, possibly hybrid, products but I wonder if our financial planner colleagues may have some ideas too.  Perhaps self-funding over time can take care of all but catastrophic costs which could in turn be insured?  Perhaps ‘KiwiMedical’ could be implemented alongside KiwiSaver?

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: Opinion

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