Executive Summary

Public spending on health is increasing at a high rate every year, while at the same time there has been a gradual decline in health insurance coverage (Business Desk, 2012, May 23; Ryall, 2007). The ageing of the population is set to place an added burden on the public system (Frizelle, 2005).

The government currently has minimal involvement in the activities of the private health insurance industry, with limited regulatory controls in place and no incentive schemes to encourage uptake of private health insurance (Blumberg, 2006). Given the rising public health costs, declining rates of private health insurance coverage may be of concern.

This project has employed the analytical framework of comparative institutional analysis (Mintrom, 2012) in seeking to draw lessons from the Private Health Insurance Incentives Scheme in Australia. Utilising the framework of analysis of government failure as a component of this lesson-drawing exercise, assisted in identifying possible sources of government failure that could arise from greater government involvement.

It is recommended that a 30% subsidy on private health insurance premiums should not be considered at this stage, whilst a tax penalty on high earners without private health insurance could go a long way in securing a greater level of equity.


Blumberg, L. J. (2006). The Effect of Private Health Insurance Coverage on Health Services Utilisation in New Zealand. Retrieved from http://www.fulbright.org.nz/wp-content/uploads/2011/12/axford2006_blumberg.pdf

Business Desk. (2012, May 23). NZ private health insurance uptake hits 6-yr low. The New Zealand Herald. Retrieved from http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10807807

Frizelle, F. (2005). Health expenditure and the ageing population. The New Zealand Medical Journal, 118(1208). Retrieved from http://journal.nzma.org.nz/journal/118-1208/1251/

Mintrom, M. (2012). Contemporary Policy Analysis. New York: Oxford University Press.

Ryall, T. (2007). Better, sooner, more convenient: National Party health discussion paper. Retrieved from http://www.national.org.nz