Understanding universal health care, Part 5: Cost-Sharing for Patients in New Zealand

Economic evidence suggests that requiring patients to share the cost of treatment can help reduce the use of outpatient medical care without resulting in adverse consequences, assuming appropriate protections are in place for vulnerable populations. Despite this, Canada remains among a small minority (six of 28) of universal health-care countries that do not use any of these tools.

This series of blog posts document how eight high-performing universal health-care countries employ cost-sharing mechanisms such as deductibles, co-insurance and co-payments, while also protecting those who could potentially be overburdened by them. The previous posts outlined the Australian, Belgian, French and Dutch health-care systems; this entry will focus on cost-sharing arrangements in New Zealand.

New Zealand’s universal health-care system delivers care through public and private hospitals and mostly self-employed primary care providers. The public system is primarily funded through taxation at the national level, with a smaller portion (~10 per cent) being funded through the Accident Compensation Corporation (ACC), New Zealand’s universal national no-fault accident insurance program. About one-third of New Zealanders also benefit from insurance coverage via parallel private (for-profit and non-profit) organizations, which cover the cost of a range of services including elective care in private hospitals, gaps in public reimbursement, outpatient consultations, faster access to non-urgent care, and upgraded amenities (such as private rooms).

Under the public plan, emergency care, inpatient and outpatient care at public hospitals, specialist care (in the public system), maternity services and dental care for children under the age of 18 are not subject to cost-sharing. However, cost-sharing requirements are, generally, expected when patients access general practitioners and nurses working in primary care settings. For care provided in private hospitals, patients are subject to direct charges unless they purchase private insurance.

General practices in New Zealand receive public funding via a capitation system (i.e. per patient), adjusted for age and health status. However, they set their own fees (per visit) within a range agreed upon with the district health boards (which, as of July 2022, no longer exist) and primary care organizations. Physicians who set their own fees are thus able to determine the level of co-payment they expect from patients per encounter (which in 2020 ranged from NZD$15 to NZD$50 or C$13 to C$43). Co-payments are relatively lower for those who enroll with a specific practice, which then receives additional government funding. Patients may also see a specialist privately (outside the public hospital system) but will be subject to the full cost of a consultation unless they have private insurance.

Prescription drugs, which are covered under the public system, are also subject to small co-payments of NZD$5 (or C$4.30 in 2020) per prescription. Co-payments are also expected for devices such as crutches and other aids.

To protect vulnerable patients, a variety of safety nets target both practices and patients. Practice targeting safety nets, such as the Very Low Cost Access Program, subsidize the cost of treating high-needs populations in exchange for lower co-payments. Patient targeting safety nets, which are designed to support lower-income and high needs populations, include the Community Services Card, the High Use Health Card, Care Plus, and Pharmaceutical subsidies cards—each of which have their own benefits and qualifying criteria.

The New Zealand system exempts children < 14 years of age from cost-sharing while offering reduced co-payments to those over the age of 65 and those living in low-income areas. When it comes to medical aids, children under 16 are exempt from any cost as are those who’ve been injured and assessed by a limb clinic, and those who require them for vocational training. The ACC will also cover the cost of aids that result from an accidental injury.

This fifth contribution to our ongoing series has provided a basic outline of the health-care system in New Zealand and the ways cost-sharing and protection measures for vulnerable populations are used. The next blog in our series will focus on the system in Norway, what cost-sharing expectations exist for patients, and the protections in place to protect vulnerable populations.