NZ’s healthcare system is under pressure as demand for care continues to rise faster than the system’s ability to supply it. In this episode, we’re joined by Nick Astwick, CEO of Southern Cross Health Society, to unpack why access, ageing, chronic illness, and the way care is delivered are placing sustained strain on the system.
Demand is overwhelming supply
A central challenge facing New Zealand’s healthcare system is that demand is increasingly overwhelming supply. As the population ages and people live longer, more New Zealanders are engaging with the health system, often for longer periods and with more complex needs.
Healthcare remains largely a human-to-human service. Unlike other industries that can scale through technology and automation, healthcare relies on trained professionals delivering care directly to patients. As demand rises, the system cannot expand capacity at the same pace, creating pressure points across nursing, specialist care, and elective services.
While access is becoming more difficult, the quality of care once patients enter the system remains high. The challenge is not the capability of clinicians, but the system’s ability to meet growing demand with a largely fixed supply.
Access, cost, and the public–private balance
Access to healthcare is increasingly defining how pressure shows up across the system. Public healthcare operates within a fixed budget and must ration care, which often results in waitlists when demand exceeds available resources. While emergency and chronic care are well managed, elective procedures can face significant delays.
Private healthcare plays a complementary role by providing faster access to elective surgery, imaging, and cancer care. However, rising demand has also driven increased use of services, which in turn contributes to rising insurance premiums.
Nick Astwick explains that rising health insurance premiums are largely being driven by people using more healthcare services overall, rather than sharp increases in the cost of individual procedures.
Globally, these pressures are not unique to New Zealand. Health systems in the UK and elsewhere face similar challenges, reinforcing that this is a structural issue rather than a local failure. Systems that perform best tend to be those where public and private healthcare work together, each focusing on what they do best.
FBT and the role of employers in healthcare access
Employer-provided health insurance plays a meaningful role in how New Zealanders access private healthcare, but fringe benefit tax (FBT) remains a barrier. While many businesses want to invest in the health and wellbeing of their employees, FBT can discourage employers from offering health cover due to the additional tax cost.
A significant proportion of health insurance memberships are supported by employers. Businesses are increasingly recognising that faster access to healthcare helps employees return to work sooner, reducing time away and improving productivity.
There have been ongoing conversations between industry groups, government, and tax authorities about whether current FBT settings create unnecessary disincentives. While no policy changes are confirmed, there is growing recognition that employer-funded health insurance can help reduce pressure on the public health system by shifting some demand into private care.
Prevention, healthspan, and the future of care
A key theme raised by Nick Astwick is that New Zealand’s healthcare system is still largely designed to process sickness, rather than prevent it. While the average New Zealander lives to around 82, the average healthspan – the years lived in good health – is closer to 70, meaning many people spend their later years managing illness and engaging heavily with the healthcare system.
Nick explains that at Southern Cross Health Society, the focus is increasingly on maximising quality of life, not just funding treatment once people become unwell. Fast access to care is critical, as early intervention can stop small issues becoming major ones, but so too is how people look after their health over decades, particularly their metabolic health.
Looking ahead, Nick outlines that the future of healthcare will require new models of care, better use of technology, and a shift towards funding outcomes rather than simply paying for procedures. For Southern Cross, that means evolving beyond speed and access alone, and working towards a system that helps extend the number of years people can live well, while easing long-term pressure on both private and public healthcare systems.
Key takeaways
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Demand for healthcare is growing faster than the system can supply
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Ageing, chronic illness, and longer lifespans are increasing pressure
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Healthcare is difficult to scale due to its human-to-human nature
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Public healthcare must ration care within fixed funding
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Private healthcare provides faster access but faces rising demand
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Insurance premium increases are largely driven by higher service use
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Employer-funded health cover plays a growing role, but FBT can be a barrier
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Prevention and better health management can reduce long-term strain
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A sustainable future relies on public and private systems working together
Next steps:
Lighthouse Insurance helps clients structure their insurance properly so healthcare decisions don’t turn into financial shocks.
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Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
