Prime Minister Christopher Luxon has a unique opportunity next week during his trip to India to learn from a country that has successfully implemented tax-deductible health insurance premiums. If New Zealand adopts a similar approach, we can significantly reduce the burden on our overstrained public health system.
New Zealand’s public health system is under immense pressure, with elective surgery backlogs leaving thousands of Kiwis in pain and uncertainty. Last week’s announcement by Health Minister Simeon Brown, outlining a partnership with the private sector to clear this backlog, is a welcome step.
However, this is merely a short-term fix. If we truly want to reduce the burden on our strained public health system, we must adopt a more sustainable, long-term solution—one that incentivizes private health insurance through tax-free rebates.
Currently, many New Zealanders would love to secure private health insurance but refrain due to cost concerns. By making health insurance premiums tax-deductible, we provide a powerful incentive for Kiwis to take responsibility for their own healthcare.
This shift would lead to fewer people relying solely on the public health system, reducing wait times for non-elective surgeries and freeing up critical resources for those who need them most.
Many countries have already recognized the benefits of such an approach. In Australia and India, for example, premiums paid toward private health insurance are tax-deductible. This policy encourages more individuals to take up private health coverage, easing the strain on public hospitals, improving health outcomes, and allowing governments to allocate resources more effectively.
By following suit, New Zealand stands to gain significantly. A greater number of insured individuals means reduced pressure on public hospitals, leading to better service for those who rely on the public system.
Moreover, as more people access private healthcare, public funding can be better utilized to enhance overall healthcare infrastructure, improve frontline services, and ensure timely treatments for those who need urgent care.
The financial case for this change is also compelling. Instead of shouldering the full burden of an overextended public health system, the government could share the load with the private sector.
With tax rebates offsetting part of the cost, more New Zealanders would be able to afford private insurance, leading to overall cost savings in the long run. Fewer hospital admissions and shorter wait times would translate to reduced government spending on healthcare—a win-win situation for both taxpayers and the system as a whole.
The government needs to act swiftly. With an aging population and increasing healthcare demands, our public health system is at risk of becoming unsustainable.
Offering tax-deductible health insurance premiums is a practical, proven, and financially responsible step toward safeguarding our nation’s healthcare future.
It is time for Prime Minister Christopher Luxon and Health Minister Simeon Brown to seriously consider this policy. The health and well-being of New Zealanders must come first, and providing incentives for private health insurance is a crucial part of the solution.
We urge the government to take decisive action now—before the strain on our public health system reaches a breaking point.
Firozi Mistry, an Insurance Adviser at Mazda Financial Services Ltd, has 22 years of experience in the banking industry across India and New Zealand. She has worked with reputed institutions such as Canara Bank and Westpac Bank and has been actively involved in the financial sector, including banking and private lending.
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