Medical Costs Higher Than Inflation, As Pressure On Public System Grows

Kate
Green , Health Correspondent

People with
health insurance are using it earlier and more often, as
pressure on the public system grows and the cost of care
increases.

Figures from Insurance company AIA show
medical costs are outpacing inflation, with heart claims
facing some of the steepest increases.

Chief customer
officer Maddie Sherlock said New Zealanders relied on
insurance more than ever – AIA paid $177 million in total
medical claims in 2025, an increase of $10m on
2024.

“We are seeing more people seek private
diagnosis and treatment earlier, because of public wait
times, and that people are really looking for certainty and
fast access to care,” she said.

One of the biggest
drivers for claims was heart disease.

Heart claims
made up $93.5 million of AIA’s total payout of $790m to more
than 789,000 New Zealanders last year.

Claims data
showed scans, procedures and hospital stays were notably
more expensive for heart-related conditions.

Heart
attacks made up the biggest proportion of heart-related
claims at 31 percent, followed by heart disease at 24
percent, diagnostics at six percent, valve-related diseases
at five percent and cardiac arrhythmias at three
percent.

According to the Heart Foundation, heart
disease caused a death every 90 minutes, making it one of
the five major non-communicable diseases that made up 90
percent of deaths, along with cancer, diabetes, respiratory
disease and mental health.

The group most at risk of
heart disease were men aged 40-69.

AIA data showed
high-value medical claims, including chemotherapy and
complex spinal procedures, were also on the rise, thanks to
improvements in diagnostic capability and treatment options,
but also due to pressure on the public
system.

Financial Services Council chief executive
Kirk Hope said their data also showed people were claiming
more often and claims were becoming more expensive, because
treatment costs had increased significantly since the Covid
era.

According to Aon’s 2025 Global Medical Trend
Rates Report, medical inflation jumped from 7.4 percent in
2024 to 14.5 percent in 2025.

“One of the steepest
rises recorded in the Asia-Pacific region and it clearly far
exceeds general inflation, which is at about 3.1,” Hope
said.

Elective surgery inflation was between 10-100
percent, he said.

The primary drivers were the rising
costs of technology, facilities and staff – with the latter
potentially caused by shortages.

New Zealanders
remained under-insured compared to OECD comparator
countries, remaining inaccessible for many, Hope
said.

“Health insurers have struggled to break
even.”

Most health insurers were making a loss on
health insurance.

“Health insurers paid out more than
$2.4 billion in claims in the last year and that’s against
$2.5 billion in premiums – but some of that in the life
insurance space as
well.”

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