General policy statement
The Affordable Healthcare Bill is an omnibus Bill that amends the Immigration Act 2009, Income Tax Act 2007, and Social Security Act 1964. It proposes to—
require Parent Category migrants to have health insurance on arrival and to maintain it in New Zealand for 10 years; and
remove fringe benefit tax (FBT) from health insurance; and
introduce the SuperGold health insurance premium rebate.
The Bill’s purpose is to encourage people to contribute to their own healthcare costs in a way that is consistent with supporting the public health system. It also makes health insurance a requirement for Parent Category visa applications.
New Zealand’s private health spending has fallen significantly below the OECD average of 28% of total health spending. At 17%, New Zealand’s private health spending compares adversely with Australia’s private healthcare spending at 32%.
This Bill proposes 3 ways to help sustain and balance New Zealand’s health system when increasing healthcare costs are overstretching public resources.
First, Parent Category migrants are to be required to have health insurance on arrival and to maintain it in New Zealand for 10 years. The health insurance must cover elective surgery. This will be noted on their National Health Index number. Eligibility for health insurance, and the premium cost, will not present problems because these immigrants have to prove good health, reach high financial thresholds, and be self-supporting for a number of years. A health insurance requirement is consistent with most other countries for retirement visas.
Second, FBT is to be removed from health insurance. The State should not be taxing health measures. FBT on health insurance sends the wrong message to employers who wish to play a responsible role in their employees’ health arrangements. Removing FBT will act as an incentive for employers to include health insurance in salary packages. The removal will align FBT treatment of health insurance with accident insurance under ACC.
Third, the SuperGold health insurance rebate on premiums will provide support for seniors who are 65 years of age and over to maintain their health insurance. The time when premiums escalate usually coincides with the time when income reduces. If it is more affordable for seniors to maintain their health insurance, they can have a greater choice of elective surgery and shorter waiting times. The 25% premium rebate is subject to a maximum of $500 per annum. The rebate is paid by the Ministry of Social Development directly to the SuperGold Card holder on application.
Boosting uptake and retention of health insurance alleviates the burden on public health by freeing up resources and reducing waiting lists. Private hospitals already act as a backstop for public hospital overflow.
Realistically, no government can fund all healthcare from tax revenue alone. The question is, what is the appropriate balance so the public share is affordable to New Zealand? If the Government does not stimulate higher voluntary levels of health cover, the consequence could be greater rationing of public healthcare and service cuts.