Media releases 2013

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Southern Cross welcomes proposed healthcare bill

Thursday, 28 February 2013 by Aimee Bourke

Southern Cross says the Affordable Healthcare Bill proposed today would result in:
  • improved business productivity
  • increased accessibility to timely healthcare for employees
  • a valuable safety net for the nation’s most vulnerable
  • freeing up public health system dollars and resources.

The Member’s Bill calls for the removal of fringe benefit tax (FBT) on employer-paid health insurance premiums and a 25 per cent health insurance rebate for people aged 65 and over.            

Southern Cross Health Society Chief Executive Peter Tynan says, “Growing demands on the public health system and the spiralling costs to finance those demands is beginning to outpace the government’s ability to fund it – so it’s right to encourage New Zealanders to contribute more towards their elective (non-urgent) healthcare costs.

“One way or another healthcare must be paid for, whether through insurance, taxes, subsidies or directly out-of-pocket. The alternative is reducing or rationing services, so any initiative that makes healthcare more affordable and attainable is positive

Tynan believes the proposed removal of FBT on employer-paid health insurance in particular would have the biggest impact for the country.

“Employers are stuck between a rock and a hard place; coming under increased pressure to contribute to a healthier workforce while being penalised for doing so with FBT - something not applied to the compulsory insurance levies currently paid to ACC.”

Today, employers provide health insurance for 640,000 working New Zealanders.

“They do this because there are clear, documented benefits in having a workforce with fast access to healthcare. Simply put, those with health insurance get back to work faster and this results in increased productivity, says Tynan.”

Twenty five years ago the proportion of employees with subsidised insurance was significantly more.However, the introduction of FBT saw insured employees dramatically reduce by more than half a million. These were tax-paying New Zealanders who fell back on the public system.

Removing FBT on health insurance will:

  • encourage more employers to again provide this as a benefit to their employees
  • reduce strain on the public health sector
  • align tax treatment of health insurance premiums with the tax treatment of ACC levies.
  • Tynan is also pleased to see the needs of New Zealanders aged 65 and over as a focus, as this group has a high need for health services.

Those aged over 65 account for 14 per cent of the population, yet around a third of all healthcare spending. By 2036, Statistics New Zealand estimates around 23 per cent of New Zealand's population will be aged over 65 – requiring an even bigger slice of the healthcare pie.

“Making health insurance more affordable for the over 65 year old age group has the potential to:
  • result in a significant improvement in overall health and quality of life for many aged 65 years and over
  • decrease the pressure on the public health system of delivering elective surgery targets
  • free up resources for other patients to be seen more quickly in the public system.