Medical costs higher than inflation, as pressure on public system grows

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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