Why over 100,000 Kiwis dropped health insurance in 2025 - and what you can do about it

Health insurance in New Zealand got noticeably more expensive over the last few years, and in 2025 a lot of Kiwis reached their limit. Research from MartinJenkins shows the share of people cancelling their health cover climbed from 7% in 2022 to 9% in 2025 - which works out to well over 100,000 people dropping some or all of their protection in a single year.

If your own premium has crept up and you've wondered whether it's still worth it, you're in good company. Below we unpack what the numbers actually show, why premiums keep rising, and the options people are using to hang onto cover without the full sticker shock - including reviewing what you're paying before you make any big calls.

In This Article

• What the numbers actually show
• Why health insurance keeps getting more expensive
• Is health insurance becoming a luxury?
• What Kiwis are doing to keep some cover
• What it means for the public system
• Before you cancel: could you keep cover for less?
• Frequently asked questions
• Glossary

What the numbers actually show

The MartinJenkins research paints a clear picture of a country trimming back. Across 2025, roughly one in ten New Zealanders with health insurance cancelled their cover - up from about 7% just three years earlier.

Broken down by cover type, the year saw:

• 80,771 people cancel major medical cover
• 36,126 people cancel comprehensive cover
• 5,774 people cancel minor medical cover

For a lot of these people, the decision came down to a simple trade-off: the short-term pain of paying the premium started to outweigh the longer-term peace of mind the cover was meant to provide. And it wasn't only outright cancellations. Plenty of people who kept their policies quietly scaled them back - lifting their excess, dropping benefits, or shifting to a cheaper plan to keep something in place. If you want a sense of how the wider market is tracking, our overview of how many New Zealanders have health insurance puts these shifts in context.

Why health insurance keeps getting more expensive

Health insurance premiums have been climbing well ahead of general inflation for years now. To put some numbers on it: over the last five years, Stats NZ figures show the overall cost of living (CPI) rose about 24.9%. Health insurance premiums over the same period rose 74.4% - roughly three times faster.

And that's just the average. It doesn't account for you as an individual, which is where it can sting more. Health cover is risk-rated, meaning the price reflects your age and risk profile. As you move into an older age band, your premium can step up on top of the general increases. Factor both together and it's entirely possible to be paying more than double what you were only five years ago. Our guide to how much health insurance costs in New Zealand breaks down what actually drives the number on your invoice.

Medical inflation is doing a lot of the heavy lifting

A big driver behind all this is medical inflation - the rising cost of medical treatment itself. Over the 2021 - 2025 period, the MartinJenkins report puts cumulative health cost inflation for major providers at 61.1%.

You can see it flowing through to claims, too. The average health insurance claim paid out per member nearly doubled across that window - from $1,097 in 2021 to $1,921 in 2025. Those costs ultimately get passed on to customers through higher premiums, and with an ageing population, the trend looks set to continue. If you're curious why some treatments cost what they do, it's worth understanding how much common surgeries cost and the role of PHARMAC and non-funded medicines in the bigger picture.

Is health insurance becoming a luxury?

One of the more sobering findings in the research is how the cost squeeze is splitting the country. Around 49.1% of people living in New Zealand's most affluent neighbourhoods have health insurance. In the most deprived neighbourhoods, that figure drops to 18.1%. As premiums keep climbing, that gap is likely to widen.

There's also a quieter risk sitting in the background. Roughly 43% of insured Kiwis get their health cover through an employer-sponsored group scheme. If cost pressures keep building, some employers may trim these benefits from their packages - leaving people to decide whether they can pick up the cost independently.

Older New Zealanders tend to feel the pinch hardest. Health risks and costs rise steeply with age, so risk-rated premiums can become progressively harder to manage on a fixed income in retirement. If you're in this stage of life, our piece on health insurance for the 50-plus looks at what tends to change and what to keep an eye on.

What Kiwis are doing to keep some cover

The data shows most people aren't giving up on cover altogether - they're getting strategic about it. The biggest shift in the customer base has come from people moving to plans with lower premiums, fewer benefits, and higher excesses. That lets them keep a safety net in place while managing the cost.

A few of the common levers people pull:

• Lifting the excess. Agreeing to pay more out of pocket at claim time usually brings the premium down. Here's what a health insurance excess is and how it works.
• Trimming benefits. Dropping add-ons you're less likely to use can reduce the price - though it pays to check what you'd be giving up first. Our guide to making the most of your health insurance benefits is a good starting point.
• Switching plans or insurers. Similar cover can be priced very differently across providers, so some people find a better deal simply by comparing.

The catch is you can only cut so far before the only lever left is cancelling entirely. Medical and premium inflation have outpaced wage growth for years, and that pressure isn't easing any time soon. For more on threading this needle, we've put together some thoughts on keeping cover and managing costs in pricey times.

What it means for the public system

As more New Zealanders step away from private health cover, the pressure shifts onto the public system - at a time when it's already stretched. If you've followed the coverage of the public surgery backlog and wait times, you'll know the trend isn't slowing.

The longer-term picture is significant. The New Zealand Treasury has warned that, on current settings, health expenditure could rise from about 7.1% of GDP today to around 10% by 2065. On a per-person basis, Treasury anticipates health costs could more than double - from almost $4,000 on average now to over $8,000 by 2065.

For context, New Zealand already has a form of compulsory cover through ACC, though it's limited to personal injury. That's quite different from countries like France, Germany and the Netherlands, where close to 80% of healthcare costs are met through a mix of compulsory and voluntary health insurance. The MartinJenkins paper notes that about half of OECD economies primarily fund healthcare publicly while also using some form of compulsory insurance. None of this is simple to unpick, and it's the kind of question New Zealand will keep wrestling with as the population ages.

Before you cancel: could you keep cover for less?

If your premium has jumped and you're weighing up whether to cancel, there are a couple of things worth knowing before you do - not as advice, just as the practical realities people sometimes miss.

First, cancelling isn't always the only way to bring the cost down. Because policies and pricing differ so much between insurers, some people find they can get comparable cover at a lower price simply by comparing across the market rather than staying put. It's the same idea behind reviewing any big recurring cost - and it's a good moment to check when and why it makes sense to review your cover.

Second, there's a trade-off to understand with cancelling and re-applying later. Health cover generally works on the basis of the health you have when you take it out. If you cancel now and want to pick cover back up in a few years, any conditions you've developed in the meantime may be treated as pre-existing and excluded or loaded. That's not a reason to keep a policy you genuinely can't afford — it's just a factor plenty of people don't clock until it's too late.

If switching sounds appealing but you're not sure where to start, here's how switching or replacing your insurance works, and how our quote-compare tool lets you line policies up side by side.

Whatever you decide, the takeaway from the 2025 data is that most Kiwis are actively managing their cover rather than sleepwalking into higher costs. A quick comparison is one of the simplest ways to make sure you're not paying more than you have to for the protection you want.

Frequently asked questions

How many Kiwis cancelled health insurance in 2025?

Research from MartinJenkins shows the share of insured New Zealanders cancelling their cover rose from 7% in 2022 to 9% in 2025. In 2025 that included 80,771 people dropping major medical cover, 36,126 dropping comprehensive cover, and 5,774 dropping minor medical cover - well over 100,000 in total.

Why is health insurance getting more expensive in New Zealand?

Premiums are being pushed up mainly by rising claims volumes and medical inflation - the increasing cost of treatment itself. An ageing population and the way premiums are risk-rated by age add further upward pressure, and those costs are ultimately passed on to customers.

How much have health insurance premiums risen over the last five years?

According to Stats NZ, general living costs (CPI) rose about 24.9% over the last five years. Health insurance premiums rose 74.4% over the same period - roughly three times faster than general inflation.

What is medical inflation?

Medical inflation is the rising cost of medical treatment, procedures and care. The MartinJenkins report put cumulative health cost inflation for major providers at 61.1% across 2021 - 2025, which feeds directly into the premiums insurers charge.

What are people doing to keep their health insurance costs down?

The most common moves are lifting the excess, trimming benefits, and switching to a cheaper plan or insurer. These let people keep a level of protection in place while managing the premium, rather than cancelling altogether.

Should I cancel my health insurance if the premium is too high?

This is a personal decision that depends on your circumstances, budget and how much you value the cover. LifeDirect provides factual information and comparisons rather than advice - before deciding, many people compare their existing policy against others to check whether similar cover is available for less.

Can I get cheaper health insurance without losing my cover?

Sometimes, yes. Because insurers price similar cover very differently, comparing across the market can surface a lower premium for comparable protection. It's not guaranteed - benefits and terms vary between policies — which is why it pays to compare the details, not just the price.

Does increasing my excess lower my premium?

Usually. Agreeing to pay a larger excess (the amount you cover yourself at claim time) generally reduces your premium. The trade-off is a higher out-of-pocket cost if and when you claim.

What happens if I cancel my health insurance and need cover again later?

Health cover is generally based on your health at the time you take it out. If you cancel and re-apply years later, any conditions you've developed in the meantime may be treated as pre-existing, which can mean exclusions or higher premiums. It's a key factor to weigh up before cancelling.

Is health insurance worth it?

This is a personal question that depends on individual circumstances - your health, finances, and how you feel about wait times in the public system. LifeDirect provides factual information and comparisons to help people understand their options and decide what's right for them.

What's the difference between major medical and comprehensive cover?

Major medical cover typically focuses on significant events like surgery and hospital treatment, while comprehensive cover adds everyday extras such as GP visits, dental or optical, depending on the policy. Comprehensive plans generally cost more because they cover more.

How does people dropping health insurance affect the public system?

When more people rely solely on the public system, demand on it grows. Treasury has projected health expenditure could rise from around 7.1% of GDP now to about 10% by 2065 on current settings, with per-person costs potentially more than doubling.

Will my premiums keep rising as I get older?

Most health insurance is risk-rated, so premiums tend to rise with age as your health risk increases - on top of any general increases the insurer applies. This is a common reason people review their cover as they move through life stages.

Does health insurance through my employer count?

Yes - around 43% of insured Kiwis get their cover through an employer-sponsored group scheme. If an employer changes or removes that benefit, you may need to arrange cover independently, so it's worth knowing what you'd be replacing.

Can I compare health insurance policies online?

Yes. LifeDirect lets you compare health insurance across leading New Zealand insurers in one place, so you can line up cover and price side by side before making any changes.

Glossary

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.