Many Kiwis are becoming increasingly frustrated with delays in the public healthcare system, leading many to turn to private health insurance for quicker access to medical services. According to the Financial Services Council (FSC), an additional 250,000 Kiwis enrolled in health insurance last year, raising the total to around 1.45 million.
Southern Cross, the country’s leading health insurer, is responding to this surge in demand by implementing a 9% increase in premiums for 2024. This rise is largely driven by an increase in both the volume and complexity of claims, particularly for elective surgeries and urgent care.
What Is Causing the Surge in Healthcare Premiums?
The increase in premiums reflects a surge in demand for private healthcare services, with more New Zealanders turning to the private sector due to delays and constraints in the public health system. Southern Cross has experienced a sharp rise in claims, both in number and complexity.
This growing demand for private care, particularly for elective surgeries and other critical treatments, is pushing more businesses to offer private health insurance as part of their employee benefits packages.
Southern Cross, which processes 71% of health insurance claims in New Zealand, has returned 93% of its premiums to members as claims, significantly exceeding the industry average of 73%.
What Impact Do Increasing Claims Costs Have on Finances?
Southern Cross’s recent financial report revealed that while premiums have risen by 9%, claims costs have increased by 15%, leading to an $88 million deficit. The most significant areas of spending include knee replacements, colonoscopies, and hip surgeries. For instance, the cost of knee replacements alone has risen by 17.1%, reaching $70.7 million.
To manage these rising costs, the insurer has implemented cost-control measures and strengthened partnerships with healthcare providers to ensure that premium increases are kept as manageable as possible without sacrificing care quality.
For business owners, staying informed about these cost trends is essential, particularly for those offering health insurance as an employee benefit. A well-chosen insurance plan can help businesses control their own costs while ensuring that staff receive the medical support they need.
How Does Southern Cross Influence Healthcare in New Zealand?
Southern Cross remains a critical player in New Zealand’s private healthcare system, serving more than 955,000 members. For many businesses, particularly SMEs, private health insurance is an important tool to attract and retain staff, providing access to faster medical treatment than the public system can offer.
Many employers understand the value of offering comprehensive healthcare benefits to help their teams avoid lengthy waits for treatment, which can negatively affect productivity and morale.
How Will This Affect New Zealand Businesses?
While the 9% rise in premiums might strain some businesses, it also offers an opportunity for them to reassess their health insurance options and consider how best to support their employees.
As pressures mount on the public healthcare system, businesses are likely to rely more heavily on private health insurance to ensure that staff have access to timely care.
The recent scaling back of plans at Dunedin Hospital due to budget issues is one example of how public healthcare constraints continue to affect New Zealand.
Therefore businesses that offer private health insurance will be better positioned to meet their employees’ healthcare needs, particularly for procedures that may otherwise involve long waiting times in the public system.
Offering private health insurance as part of a comprehensive benefits package can make a business more attractive to potential employees while helping to maintain a healthy and productive workforce.
What Progress Is Being Made in NZ’s Healthcare System?
Despite these challenges, there have been some promising developments in the public healthcare sector. One notable example is the government’s recent launch of free access to Keytruda, a treatment for advanced cancer patients.
This health initiative ensures that life-saving treatments are available to those in need, which may help alleviate some of the strain on private healthcare providers. While private insurance remains crucial for many procedures, government measures like this demonstrate ongoing efforts to address the healthcare challenges facing New Zealand.
Nick Astwick, CEO of Southern Cross, has reaffirmed the insurer’s commitment to managing rising claims costs while ensuring financial stability. For businesses, this is a reminder that long-term planning is essential when it comes to employee health benefits.
Conclusion
While the increase in health insurance premiums presents a challenge for Kiwi businesses, it also serves as a prompt to reassess healthcare options and plan strategically.
Organisations need to evaluate the impact of these changes, especially as healthcare costs continue to rise. Providing health insurance is crucial for supporting employee well-being, particularly in a competitive job market where benefits can differentiate employers.
By carefully selecting a health insurance provider and understanding the broader trends in both public and private healthcare, businesses can ensure that they continue to support their employees effectively, maintaining a competitive edge in the process.