Southern Cross paid out $42 million in claims for cancer treatment in the 2023 year. File photo. Photo: 123RF
The increase in the amount of chemotherapy being done by the private sector had been "exponential" in recent years, with New Zealand's largest health insurer paying tens of millions for cancer treatment every year.
New Zealanders are increasingly turning to private healthcare to provide chemotherapy due to concerns about wait times in the public system.
Medical oncologist and professor cancer medicine Professor Christopher Jackson said the growth has been "exponential".
"There has been rapid growth in chemotherapy and radiation services [in the private sector]," he said.
He said that was partly driven by the wait times in the public health system, and the availability of drugs that were not Pharmac funded.
"The gap between what's available in the New Zealand public and private sector has got bigger and many people have self-funded that.. For context, when I got back to New Zealand from working overseas, a third of the cancer drugs I trained with overseas weren't available in the public sector.
"I treat melanoma skin cancer and only one of the four most effective drugs is funded in public compared to private. The difference those drugs make can be transformative so people who need those have to go in the private sector, that's driven a lot of uptake."
Stephen Child, chief medical officer at New Zealand's largest health insurer Southern Cross, said it paid 2500 members' claims for non-Pharmac and Pharmac approved drugs and their administration in the 2023 year, worth $42 million.
Of that, $4.5m was for non-Pharmac funded drugs, about $7.5m for Pharmac-funded drugs and then $30m for the costs of infusion. In the 2024 financial year, it had paid 2044 claims for a total of $5.2m for non-Pharmac drugs.
The amount it has been paying for non-Pharmac and Pharmac drugs in recent years has increased.
"Like all private insurers we've seen a significant increase in claims over the last 12 to 18 months. In fact at one point we were paying out over $6m a day and were 18 percent up in claims volume," Child said.
About 40 percent of New Zealanders have some form of health insurance.
AIA said it paid $244.1m in cancer claims in 2023, of which $133.9m was for life claims.
Head of claims Travis Higgins said 22 percent of AIA's claims were for cancer and often included a course of chemotherapy.
He said one recent cancer claim was for a course of chemotherapy that cost more than $200,000. The drug was not available in the public sector.
"We've gone from a $90 million claims business to last year $143m. Chemotherapy is one of those increasing costs."
AIA does not have a cap on what it pays for non-Pharmac treatment as long as it is Medsafe approved.
But Southern Cross covers only the cost of infusion and $10,000 of the cost of a non-Pharmac drug, and then has its members cover the gap - although customers can choose to add modules that would bump up their cover. For a 35-year-old female non-smoker with Wellbeing One, adding Cancer Cover Plus with a limit of $100,000 per year for non-Pharmac approved chemotherapy treatment would cost $42.26 a fortnight, the insurer said.
Jackson said he had never encountered a patient who had that additional insurance.
"$10,000 doesn't go very far at all when the average cost of non-funded drugs is $10,000 a month."
Southern Cross would cover the full cost of Pharmac-funded treatments.
The government recently announced it was extending funding to more cancer drugs, but Higgins said that was unlikely to dent demand for insurance cover.
"Keytruda for example, there are over 15 types of cancer Medsafe has indicated that drug can be used for. Two under the Pharmac model and now three under the new announcement. That still leaves a delta of other types of cancers that private health insurance may pick up on."
Child said it would not change the calculation much for a Southern Cross member, either.
"Keytruda costs about $90,000 for the drug. Then it cost about $30,000 to have it infused into you for a total cost of $120,000. Prior to this government announcement for one of our members we would have paid the $30,000 for the infusion but only $10,000 towards the cost of the drug, the member would have had to pay $80,000 to access Keytruda.
"Now they're going to have the choice of going into the public system and getting that completely free or we'll pay the cost of the drug - $90,000 plus $30,000 for a total $120,000 but we have a cap of $60,000 so they'll still have to pay $60,000 out of their own pocket in the private system."
But he said for a drug that was cheaper, patients could find it was now completely free whether they went public or private if it had been added to the Pharmac register.
Jackson and Child said a "quirk" of the system was that Pharmac funding was not available for Phamac-funded drugs when they were delivered by the private sector.
"You could argue they're a New Zealander and pay tax why can't they access same medication or at least discounted rate… the other side is you could say if you go private you should have to pay for whole thing," Child said.
Jackson said there would be situations where someone's anaesthetic and antibiotics were paid for by Pharmac but their chemotherapy was not. "It means the cost of private cancer care is higher than it would be if people had access to the Pharmac-funded drugs in the private sector that they've already paid for with their taxes."
He said anything done in the private healthcare system reduced the costs for the public.
University of Otago professor Robin Gould said New Zealand had developed a two-tiered health system, where people could be treated in the private sector more quickly, and often by the same people who could not see them via the public sector.
"Those who can pay go private... it's deeply inequitable and getting worse.
"We never quite invest enough in healthcare, there's just not enough to go around."