KiwiHealth–and the future funding of healthcare

Improving health outcomes for all New Zealanders



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Kiwhealth KPMG New Zealand

New Zealand’s health system consistently ranks well against other developed countries, both in terms of population outcomes and cost per capita. The cost of providing this level of healthcare is, however, increasing and potentially unsustainable. Our population is ageing; the cost of new technology increasing; and our expectations around the care we receive keep raising.   

Due to trends like these, the cost of public healthcare is forecast to grow from 6.3% of GDP today, to 9.7% of GDP in 2060 – an increase of 53%. This raises questions around how we afford to keep our future population healthy, while also supporting other areas of government expenditure, such as education and welfare.

There is a saying “He waka eke noa: A canoe which we are all in with no exception”. At KPMG, we take this to mean that we are all in this together, and the best solutions for sustainable healthcare in New Zealand will only emerge if we work together. 

We are pleased to see that both Government and industry participants are actively looking at policy options to relieve some of the inherent pressures surrounding New Zealand’s cost of ill health. This paper explores one potential initiative, referred to as KiwiHealth. This initiative encourages both employers and employees to adopt a more proactive and preventative approach to healthcare during their working years, without relying on government subsidises.

The purpose of this discussion paper is to encourage further discussion around how public and private healthcare providers can work together to ensure effective provision of healthcare in the future. It does not present a policy option that is ready to take to market. 

Please feel free to join the discussion and exchange ideas with us.

What is KiwiHealth

Fundamentally, KiwiHealth would be an umbrella name for certain private health insurance policies from existing health insurance providers. This approach is similar to the approach adopted for KiwiSaver.

The key features of KiwiHealth are envisaged to include:

  • No Government subsidies.  While the initiative relies on the Government endorsing a mandatory employer subsidy, the fiscal impact of the scheme should be neutral to the Crown.
  • Mandated employer contributions.  A healthy workforce benefits individuals as well as employers. Indicatively, KiwiHealth has been modelled on the basis that employers offer a subsidy to their employees, of up to $500 per year, should the employee wish to participate.
  • Minimum policy coverage: major medical events. There is a promising opportunity for private healthcare to contribute to better health outcomes through easier and faster access to elective surgery. This would require all policies to cover major medical events at a minimum; including specialist appointments, advanced diagnostics and elective surgery.
  • Utilisation of the current PHI system as far as possible.  KiwiHealth is designed to utilise the private health insurance system as far as possible, including major policy types. This would avoid unnecessary administrative costs.

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