Does private health insurance help or hinder New Zealand’s health system?

Recently I was asked whether private health insurance helps or hinders the public health system and my immediate reaction was “of course it helps the public system by….!”

But putting that initial gut reaction aside, I put myself into the shoes of those working in the public sector and started to question whether we do in fact encourage top surgeons to move out of the public sector. Does the presence of the private sector contribute to further inequities in health outcomes?

It is generally accepted that surgeons are paid more in the private sector than in public, and it could be argued this disparity could be discouraging surgeons from working in the public sector. However, what we are really seeing is that most surgeons working in a private setting also continue to work in the public sector. Arguably the higher pay rates they can command in the private sector subsidises their public earnings, thereby keeping world class surgeons here in this country.

Retaining quality surgeons in both the private and public sectors should be a key priority for maintaining the high standards of healthcare in this country and is a way that private health insurance can support the public health system.

Private health insurance contributes more than a billion dollars to the health sector annually and this money is often used by private sector providers to partially fund the introduction of emerging technologies such as PET scanning, robotically assisted surgeries, and development of facilities to manufacture radioactive isotopes used in diagnostic imaging across both the private and public health sectors.

New Zealand’s two tiered health system does introduce overall inequities where some people are able to afford a wider range of health services than others. However, health insurance can also help to reduce inequitable outcomes by encouraging those who can afford it, to take greater responsibility for their own health needs. By paying for around half of all elective surgical procedures in New Zealand, the private sector frees up public funding to deliver greater benefits to those who cannot afford private health insurance premiums.

Overall the public health system in New Zealand does a fantastic job but does have its limitations, particularly with regards to elective procedures. Private health insurance has a place in complementing public health services by picking up some of the slack in this elective surgery area, helping to fund innovation that benefits all New Zealanders and encourages those who can afford to look after more of their own health needs to do so.

Author: Nicola Cresswell

As Head of Health products Nicola has responsibility for the end-to-end management of Sovereign's health portfolio. Having worked in the New Zealand health insurance industry for twelve years, holding numerous communications and product roles across multiple organisations, she supports the expanding role the private health sector plays in the protecting and enhancing the health and lives of all New Zealanders. Nicola has a passion for health policy and quality healthcare provision and recently completed a Graduate Diploma of Arts (Social Policy). She is currently studying towards a Certificate in Public Health and represents Sovereign on the Health Funds Association of New Zealand board.

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