Rising Health Insurance Costs Challenge New Zealand’s Elderly

The rising cost of health insurance is presenting significant challenges for elderly citizens in New Zealand. For instance, 73-year-old Sandra has seen her monthly premium increase dramatically from $522 to $715 over the past year. Living on a monthly pension of $2,153, the widowed retiree now faces the difficult choice of whether to maintain her coverage at a time when her medical needs may be growing. After three decades with the same insurer and very few claims, she expresses frustration that the current system no longer serves her well, stating, “Health insurance is now a luxury I can’t afford.” This sentiment is echoed by many across the country as health insurance premiums rise significantly above the current inflation rate of 3%.

Growing Concerns About Affordability

As health insurance costs continue to climb, households in New Zealand are increasingly questioning the sustainability of these expenses. The current inflation rate does not adequately reflect the steep rises in health insurance premiums, which have been reported to exceed general cost increases significantly. Steve Gregory, national manager of employee benefits and health at Aon New Zealand, explains that while age-related adjustments to premiums account for some increases, they are not the primary reason for the surge. The main driver is identified as medical inflation, which has jumped from 10% in 2024 to 17% in 2025. This figure is notably higher than the global average of 9.8% and the Asia-Pacific average of 11.3%.

The rising costs are attributed to multiple factors, including increased hospital charges, advancements in diagnostic technology, higher wages for healthcare professionals, and a growing demand for medical services. Even individuals like Sandra, who rarely file claims, are impacted as insurers adjust their pricing to cover the escalating costs of potential treatments.

Impacts of an Ageing Population and Public Healthcare

The challenges in the private health insurance sector are compounded by broader issues within New Zealand’s healthcare system. An ageing population is driving demand for treatments for chronic conditions such as cardiovascular disease and diabetes. Additionally, long wait times in public healthcare are pushing more patients toward private care options. Gregory notes, “In the last couple of years, we’ve seen more and more people making claims for things that would have previously been treated in the public health system.”

Advancements in medical technology have further escalated costs, as more detailed diagnostic testing becomes standard. While these innovations improve patient outcomes, they contribute to an overall increase in healthcare spending. Gregory emphasizes that any relief on private insurance premiums will depend on rebuilding confidence in the public health system. A 2024 OECD study indicated that satisfaction with New Zealand’s healthcare system has dropped to 46%, below the OECD average of 52%.

Financial advisers emphasize that health insurance should be viewed as a protective measure rather than a financial investment. For retirees like Sandra, the choice to maintain or cancel coverage often hinges on the balance between peace of mind and affordability. Chris Walsh, founder of Moneyhub, noted, “You can wait six months or six years for a hip replacement, or you can do it privately within six weeks or six days.” He advises individuals facing premium increases to carefully review their policies, consider higher deductibles, and compare offers from various providers. Tailoring insurance to cover major medical events rather than comprehensive care can also help mitigate costs.

The escalating cost of health insurance is prompting difficult discussions for many New Zealanders as they navigate their options in an increasingly strained healthcare environment. With the potential for premiums to rise further—Aon forecasts an increase to 18% in 2026—individuals must weigh their financial constraints against their health needs.