JANUARY

The New Zealand Health Care System, 2015
Robin Gauld
University of Otago, New Zealand
What is the role of government?
Beginning with passage of the Social Security Act in 1938, a consensus has developed in New Zealand that
government has a fundamental role in providing for the population’s health care needs. At the same time,
there is continued public support for a private sector role as well. Government plays a central role in setting
the policy agenda and service requirements for the health system and in setting the annual publicly funded
health budget.
Responsibility for planning, purchasing, and providing health services and disability support for those over
age 65 lies with 20 geographically defined district health boards (DHBs), each of which comprises seven
locally elected members and up to four members appointed by the Minister of Health. These boards pursue
government objectives, targets, and service requirements while operating government-owned hospitals
and health centers, providing community services, and purchasing services from nongovernment and
private providers.
Who is covered and how is insurance financed?
Publicly financed health care: All permanent residents have access to a broad range of services, which are
largely publicly financed through general taxes. Nonresidents, such as tourists and illegal immigrants, are
charged the full cost of services by public health care providers, unless treatment is related to an accident,
in which case they are covered by a no-fault accident compensation scheme.
Total health spending was 9.5 percent of GDP in 2013 (OECD, 2015). Public spending, generated through
general taxes, accounted for 79.8 percent of total spending.
Privately financed health care: Private health insurance is offered by a variety of organizations, from nonprofits
and “Friendly Societies” to for-profit companies, and accounts for about 5 percent of total health expenditure.
It is used mostly to cover cost-sharing requirements, elective surgery in private hospitals, and private outpatient
specialist consultations; private coverage also often affords faster access to nonurgent treatment. About onethird
of the population has some form of private insurance, purchased predominantly by individuals.
What is covered?
Services: The publicly funded system covers preventive care; inpatient and outpatient hospital services; primary
care via private providers (excluding services such as optometry, adult dental services, orthodontics, and
physiotherapy); inpatient and outpatient prescription drugs included in the national formulary (see below);
mental health care; dental care for schoolchildren; long-term care; home help; hospice care; and disability
support services. Government sets an annual overall budget and benefits package, based largely on political
priorities. It also sets national requirements for publicly funded services, to be implemented by the 20 DHBs.
Rationing and prioritization are applied largely to nonurgent services, and vary by DHB.
Cost-sharing and out-of-pocket spending: Out-of-pocket payments, including both cost-sharing and other
costs paid directly by private households, accounted for approximately 12.6 percent of total health expenditures
in 2014 (OECD, 2015), with the largest portion going to outpatient services. There are no deductibles in the
public sector, although copayments are required for general practitioner (GP) services and many nursing services
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