Health Funds Association Executive Director Andrea Pettett said: "The HFANZ supports the booking system for waiting lists and the greater transparency that it brings. However, queuing for health services inevitably means that people have to wait a long time for treatment and many will not meet the criteria for treatment. With health insurance people can access the medical care they need when they need it."

"With more than fifty-five thousand people on waiting lists for more than six months, a shortage of skilled medical staff and no prospect of improved treatment under existing funding limits — public hospitals are experiencing a time of crisis."

"We believe that many New Zealanders should be reconsidering their commitment to health insurance at a time when many DHB's have said that they will need to review the scope and number of services they can provide.

Demand for public hospital services continues to grow and the Association of Medical Specialists claims there will be no easing of waiting lists. "The Government wants no one to wait more than six months for their first specialist assessment and, if they are offered publicly funded treatment, no more than a further six months for this treatment to occur. However, it is unlikely that these guidelines will be met.

Earlier this month the Ministry of Health reported that 13,255 people were on Residual Waiting Lists (not booked & no certainty), and that the total number of people under 'active review' (where they only receive treatment if their condition deteriorates or more funding becomes available) has increased to 24,430.

"Anyone considering forgoing their health insurance and instead trying to self-insure would be taking a huge risk. While some medical care costs are quite manageable, even for people on modest incomes, most are too expensive."

Most New Zealanders would not have sufficient savings to meet the costs required for the expensive medical procedures that are covered by health insurance and, according to Ms Pettett, more New Zealanders are taking out health insurance.

"Recent data shows that the number of people with health insurance in March 1999 was around 1,310,000 compared to 1,331,000 in March 2001 — an increase of nearly 21,000 insured in a year.

"Health Insurance premiums had increased over the last decade due to an increase in the number and types of medical services funded by health insurers. It is likely that premiums will rise as the population ages, the costs of medical care rise, and the application of new and existing medical technology is extended to a wider group".

"The public health system is primarily geared to deliver acute (urgent) services, and in so doing rations access to non-urgent or elective surgery. Health insurers complement the public health system by covering the cost of many semi-acute and non-urgent but necessary procedures.

"Well in excess of 1.3 million New Zealanders now hold private Health Insurance. This represents a significant saving for the public health system and we believe it is also a strong indicator of the on-going need for private health insurance.

"We also believe that the introduction of a tax incentive on health insurance premiums, similar to that introduced by the Australian Government last year, is worthy of consideration and would help improve access to healthcare in this country."

Ms Pettett said, both the World Health Organisation and the World Bank had advocated a greater co-operation between public and private health sectors. She believes that it is time this message was taken onboard in this country.

"New Zealand needs a strong public health system, supported by a complementary private health insurance sector, if people are to get the healthcare they require, when they most need it."

FACT FILE - HEALTH INSURANCE IN NEW ZEALAND Has Health Insurance declined?
Although the percentage of New Zealanders with health insurance has declined in the last decade, recent data shows the number of people with health insurance is on the rise again. In March 1999 1,310,000 New Zealanders had health insurance, whereas in March 2000 the number had risen to over 1,331,000 - an increase of nearly 21,000 insured. This represents an increase from 34.4% in 1999 to 34.8% in 2000.

How many Health Insurers are there?
There are fourteen health insurers in the New Zealand market, which provides a considerable level of choice for the New Zealand consumer.
Mergers and acquisitions, such as the purchasing of Aetna by Southern Cross and of AXA Health by Tower Health, are part of an international trend which is seeing the globalisation of the insurance industry. It is likely that the New Zealand health insurance market will experience more acquisitions and mergers over the next period.

Do Health Insurers need a Rating?
Health insurers do not require a rating. The HFANZ has recently proposed the development of industry specific solvency and capital adequacy standards for health insurance.
These standards are likely to be more rigorous than obtaining a rating.

HEALTHCARE PROCEDURES

What does Health Insurance cover?
Many of the healthcare procedures funded by health insurers can be regarded as semi-acute such as the removal of cancers and cardiac surgery. The ability to immediately access treatment for such conditions means that people have less interruption in their employment and in their quality of life.

What are the trends in Health Insurance?
HFANZ data shows that more people are purchasing or switching to major medical type policies, with higher level surgical cover from comprehensive-type policies that also cover visits to the family GP.
This is seeing more Health Insurance claims resulting from surgical procedures.

Health insurers met a substantial proportion of the healthcare costs for adults (15-64 years) in 1999 as shown in the following table.

Disease Category % of Combined Public Health and Health Insurance Expenditure for Adults in 1999
Public Health Health Insurers
Dental 36% 64%
Cancer 44% 56%
Sensory Organ 63% 37%
Cardiovascular 73% 27%
Musculoskeletal 77% 27%
Genito-urinary 74% 26%
Digestive 77% 23%
Skin Disease 83% 17%

What is the relationship between the public health sector and the private system?
In New Zealand the public and private systems are complementary. The public health system is the key provider of high level acute care. Health insurers do not wish to compete with the public system who are well-equipped to provide acute services.
The private sector and health insurance can best contribute by providing access to semi-acute and non-urgent but necessary assessment and treatment, lessening the pressure on the public system.

PRICING AND CONTRIBUTION TO HEALTH

Health Insurance is playing an increasingly valuable role in funding healthcare for New Zealanders.
Over the last ten years, public health expenditure has increased 76% in real terms and yet there is no respite in demand for services (MoH Health Expenditure Trends 1980-1999). In the last ten years Vote Health has reduced its overall contribution to total health expenditure from 72.7% in 1989-90 to 68% in 1998-99. During this period out of pocket health expenditure increased marginally from 14.5% to 15.9% and expenditure covered by health insurance rose from 2.8% to 6.2%.

In the year 1999, Health Insurers contributed around $554 million towards the healthcare costs of New Zealanders, representing over 9% of the combined New Zealand public health and Heath Insurance expenditure.

Why are premiums increasing? Health insurance premiums have increased over the last decade due to an increase in the number and type of medical services funded by health insurers. It is likely that premiums will rise as the population ages, the costs of medical care rise, and the application of new and existing medical technology is extended to a wider group.

New Zealanders, in line with international trends, expect more and more medical interventions in keeping with the advent and application of new technology. Health insurers are finding that some of their customers are now having second heart bypasses and hip revisions, which are costly procedures.

New Zealanders expect the best in medical care and technology, and we have no reason to believe that this trend will reverse. This will result in increasing pressure on both the public and private health systems.

What insurance will I need as I get older? Insurances should be viewed collectively as a package. For example, when you are younger, you are likely to be charged higher premiums for car insurance and household insurance, but lower premiums for life and health insurance. Conversely, as you get older, the reverse applies. Your need for certain sorts of insurance changes as you get older, for example you may no longer need life insurance but your need for health insurance may increase. So, while it is true that your health insurance premium is likely to increase as you get older, this needs to be balanced against the savings you may make with other types of insurance.

There is a wide variety of health insurance plans available. Many pay the full cost of surgery up to a maximum of $60,000-$80,000. The wide variety of plans offers New Zealanders considerable choice and they should carefully consider which type of policy best meets their needs. Insurers will often exclude pre-existing conditions out of fairness to other policyholders. For this reason the HFANZ encourages people to get Health Insurance early and maintain their policy from a young age.

Insurance is based on risk assessment with premiums reflecting the risk. Older people on average claim more and consequently pay higher premiums. The Human Rights Act 1993 specifically permits insurers to charge people of different ages different premiums based on supporting data.

For nearly a decade many health insurers have offered five yearly age banded premiums, which means that premiums more accurately reflect the claims costs of the age of the insured.

WAITING LISTS

Whilst HFANZ supports the waiting times criteria and the greater transparency it brings to access to elective surgery, we are concerned that the current funding paradigm may never be met.

Recent statistics released show that waiting lists are growing despite the much-publicised key priority to reduce waiting times for elective surgery. Many people do not qualify for surgery under the new criteria. These people have a medical need, but do not meet the minimum threshold set for access to elective surgery in the public health system.

Many people have to wait over a year to get a specialist assessment and for a similar period or longer to get surgery.

HFANZ and many medical professionals do not believe that current waiting periods are acceptable. The recent increase in the number of New Zealanders with Health Insurance is a natural consequence of waiting periods in the public system.