Posted on Feb 07, 2011 by Sergio Ulloa
The Health Funds Association of New Zealand (HFANZ) has reported a significant decline
in the numbers of individuals covered by private health insurance within the country. Approximately 10,000 policyholders have discontinued their health insurance policies during 2010. Given a number of financial pressures resulting from changes in ACC (Accident Compensation Corporation) funding and recent economic downturn, the HFANZ were not so surprised with the reported figure.
While HFANZ reported
that there was some growth within the New Zealand private healthcare market from June 2007 - June 2010, with 12,000 additional private medical insurance policies purchased within the country, the industry may be in a catastrophe setting with more than 10,000 policyholders dropping coverage since June of last year. In the last year, the New Zealand Government restricted the medical benefits covered under the national health insurance ACC scheme and tightened the criteria for patient funding. Claims for accidents, which would have been covered under the ACC, are now being transferred to private health insurance for coverage. Changes in ACC funding
have therefore contributed to the large increase of private health insurance claims reported by the HFANZ over the last year.
, set up and funded through the Government, provides personal injury cover to all New Zealand residents and visitors from overseas. The ACC also works in replacement of a workers compensation scheme by covering occupational injury and illness.
In order to address the imbalance of health care costs and funding, the New Zealand Government reduced the coverage offered on its ACC National Health Insurance Scheme. The ACC has restricted medical entitlements
such as elective surgery and the associated costs involved. Due to these changes, private health insurance is covering such treatment, and as a result we are seeing a huge increase in private health insurance claims.
HFANZ executive director Roger Styles, said on average claims had increased by 9 percent per annum, over the last 5 years. Around 80 percent of these claims were attributed to elective surgery and associated costs. Mr. Styles further added
"Consequently, the response, seen by the industry, has been customers moving from comprehensive to elective surgical cover, and choosing more excess options enabling premium reductions. Further progress now depends largely on the policy environment, with mounting support for some form of targeted rebate to bolster coverage for those aged over 65".
As a result of the global financial crisis, healthcare systems in many countries have experienced a drop in private health insurance coverage; correlating primarily with lowered employment rates. A large number of employees in New Zealand, similar to the US and other countries worldwide, are part of group health coverage schemes partly funded by their employers. Further to this, given the rise in health insurance premiums, individuals are finding health insurance an expense they can not afford.
The New Zealand Government is experiencing increased pressures on its health care system, and like other countries across the globe, private health insurance is being encouraged. Among these pressures include an aging population and a large number of foreign patients using the public healthcare system and leaving unpaid medical bills.
Given increased healthcare expenditure associated with an aging population, the New Zealand Government would like to see this population group take out private health insurance. However, private health insurance coverage dropped significantly among the 55-69 age group. HFANZ noted this was the first drop recorded in this age group since 2003. "This age group had been growing at over 2 percent a year as the baby boomers edge closer to retirement," according to Mr. Styles
In order to retain the coverage among the elderly population, the New Zealand Government is currently in the process of considering a tax rebate on residents aged over 65 years who take out private health insurance. The HFANZ representative explained
: "the future contribution of health insurance to total health spending depends a good deal on how many people in this age group retain health cover in retirement".
Furthermore, foreign patients are putting a dent in New Zealand's health care system due to unpaid hospital bills. In 2008, almost $100,000 of debt was attributed to foreign patients
. The New Zealand health board is having to follow up unpaid hospital bills and resorting to international debt collectors for those who have already left the country.
There are growing concerns that the ACC is not protecting the health needs of its population, forcing individuals to rely more on private health insurance coverage. As a result of increasing claims, premiums are likely to increase; limiting those who are able to afford private health insurance. Incentives, such as tax rebates, are likely to be introduced in the near future to ensure access to healthcare within the country.