Total Health Expenditure

Total health expenditure is forecast to rise by 2.4% in 2024-25, to $47.3 billion. This increase reflects the ongoing need for funding as equipment and services become more expensive amid a growing and ageing population, despite the change in Government. In the Wellbeing Budget speech of May 2022, New Zealand Prime Minister Jacinda Ardern announced significant investment into the nation's health system. Additional funding has been necessary to drag many District Health Boards out of budget deficits before transitioning to Health New Zealand. Overall, while funding remains strong, it remains to be seen how the new Government will apply their own health services funding with their new strategy.

Total health expenditure has escalated over the past five years. A sudden spike in funding in 2020-21 was brought about by health responses to combat the outbreak of the COVID-19 pandemic. Further, demand for health services has naturally grown over the past five years, principally due to New Zealand’s ageing population, as people over the age of 65 are more prone to chronic disease and illness. Private health insurance membership has inched upwards over the past five years, supporting total health expenditure. Private health insurance is heavily skewed towards higher income earners, with the Ministry of Health (Manatu Hauora) reporting over 60% of individuals earning over $100,000 holding private health insurance in 2015 (latest available data). Initiatives introduced by the Central Government to reduce the cost for Community Service Card Holders to visit GPs and extend free doctor visits for children up to the age of 13 in December 2018 have also continued to place additional pressure on total health funding. IBISWorld forecasts total health expenditure to grow at a compound annual rate of 8.3% over the five years through 2024-25.