New Zealand has a legacy of dual public-private funding and provision of health care dating back to the Social Security Act of 1938 (Ashton, 2005). Whilst the present contribution of private health insurance to overall health spending is small (at 6%), the government has identified this as being a “small but important part of overall health spending” (Ryall, 2007, p. 8).

Internationally, governments have taken an active role in regulating private health insurers and incentivising the uptake of private health insurance, however the New Zealand policy approach is characterised by minimal government involvement (Blumberg, 2006). The current system has produced access issues for high-risk individuals in seeking private health insurance.

As a result of increasingly prohibitive premiums, rates of private health insurance coverage have been steadily declining, while due to the ageing of the population and rising costs in providing health care, public expenditure on health services is set to double by 2050 (Ryall, 2007).

The private health insurance industry has repeatedly called for the New Zealand government to implement incentives to increase uptake of private health insurance as has been done in Australia (Health Funds Association of New Zealand, 2011). Previous policy inquiry in this area has had a predominant focus on cost-benefit analysis, with the principle ‘benefit’ criterion being a consideration of the benefit to the public system. This project will seek to judge potential policy responses against the broader criteria of equity, efficiency and administrative simplicity.


Ashton, T. (2005). Recent developments in the funding and organisation of the New Zealand health system. Australia and New Zealand Health Policy 2005, 2(9). doi:10.1186/1743-8462-2-9

Blumberg, L. J. (2006). The Effect of Private Health Insurance Coverage on Health Services Utilisation in New Zealand. Retrieved from

Health Funds Association of New Zealand. (2011). Information paper for incoming Minister of Health. Retrieved from

Ryall, T. (2007). Better, sooner, more convenient: National Party health discussion paper. Retrieved from