Insurers feel health tax not so beneficial

Health insurers are worried at the prospect of public health spending being "quarantined" with a dedicated tax.

The Government has set up a group of health and financial experts to advise it on possible changes to how it finances health and disability services.

It has asked them to consider what is the best financing method and to look at a dedicated health tax, general tax, social insurance, other taxes such as the tobacco excise, and private contributions such as user charges and private insurance.

Health Minister Annette King has indicated that she favours the idea of ringfencing a health tax as a way of dealing with the rising demand for health spending.

Tower Health and Life chief executive Jim Minto said yesterday he did not support the idea of a dedicated health tax because he feared it could be used to create falsely high expectations about what the public health system could deliver.

That could lead to some with insurance letting their policies lapse, he said. Once they realised the public system was not going to deliver on expectations, they might find they had developed health conditions that insurers would no longer cover.

Health Funds Association executive director Andrea Pettett said her group was concerned about the implications of a dedicated health tax and that the Government had not sought public input.

A spokesman for Mrs King said no decisions would be made on funding methods before the next election.