New Zealanders facing extended hospital stays may be at risk of significant financial stress due to a long-standing government policy and rapidly rising healthcare costs, prompting renewed calls for systemic changes from patient advocates and industry observers.
A policy administered by the Ministry of Social Development automatically reduces income support to $56.58 per week for individuals hospitalised longer than 13 weeks.
Advocacy groups argue that this threshold leaves many unable to manage essential expenses, including rent, insurance premiums, personal items, and out-of-pocket medical costs.
The issue has received increased attention following the case of Rhiannon Purves, a Wellington resident who spent several months in hospital due to ME/CFS (myalgic encephalomyelitis/chronic fatigue syndrome).
During her stay, Purves saw her benefit reduced by over 85%, leaving her with minimal funds to cover non-hospital expenses such as supplements, personal care, and privately sourced medications.
Health advocates are now pushing for three key policy changes:
Fiona Charlton, president of Associated New Zealand Myalgic Encephalomyelitis Society (ANZMES), said the existing approach fails to consider the full spectrum of financial responsibilities faced by patients.
“This policy punishes people when they are at their most vulnerable,” she said. “We need a welfare system that protects, not penalises, those who rely on it during critical times.”
These concerns emerge alongside new data indicating a sharp rise in medical costs.
Aon plc’s 2025 Global Medical Trend Rates Report listed New Zealand’s projected medical inflation rate at 14.5%, up from 7.4% the previous year. This places the country among the highest in the Asia-Pacific region, second only to Kazakhstan’s 22%.
Aon New Zealand’s health leader, Anson Davies, cited a backlog of delayed procedures from the COVID-19 pandemic, increased claim volumes, and persistent inflation as key contributors.
“In 2024, there was a larger-than-expected rise in claimable events and procedures, which had a sizable effect on the industry. The long-awaited impact of COVID-19 was also finally felt, as many policyholders caught up on delayed healthcare from 2020 to 2023,” he said.
He added that limitations in the public health sector have also prompted more people to seek private healthcare, intensifying pressure on employer-sponsored insurance plans. In response, businesses are adjusting coverage models, reviewing plan designs, and leveraging data to contain rising costs.
These trends mirror findings from a 2024 study by the Financial Services Council of New Zealand, which found that nearly half of respondents lacked clear understanding of insurance-related financial risks. Affordability concerns also influenced decision-making around life and health cover, the report noted.
A public petition, “Fairness for the Hospitalised: Stop Benefit Cuts After 13 Weeks,” has been launched to garner support for reform. Advocates are urging both policymakers and community stakeholders to re-examine the intersection of welfare support and healthcare affordability.
