Membership numbers fell 0.7 per cent but Peter Tynan - chief executive of Southern Cross Health Society - still referred in his operational report to more than 800,000 members.
Industry figures show around 1.2 million New Zealanders have private medical insurance.
Tynan said the society's affiliated provider programme and cost containment meant progress was being made on the strategy to reduce medical inflation pressure.
"Agreed pricing for procedures between Southern Cross and affiliated providers is helping minimise inflation of medical costs. The flow-on effect of this is to keep premium rises down," Tynan said.
In other industries, advances in technology usually cut costs but in healthcare, advances drove up costs.
Ian McPherson, chief executive of Southern Cross Medical Care Society, raised concerns about the country's public health system which he said was under "enormous" financial pressure due to fewer taxpayers to fill the public purse, the rising incidence of chronic conditions and higher demand for new services and treatment options.
"A strong Southern Cross is important for New Zealand," he said.
McPherson had grim words about the sector.
"We are cognisant that healthcare costs are a massive problem on the horizon and individual New Zealanders having to save or spend more money on their own healthcare won't be a vote winner," he said, referring to Southern Cross' engagement with Treasury, the Productivity Commission and politicians.
Premium costs and cover for people over 65 was a major issue, but their premium increases were in line with their higher average claims costs.
"In March, the Affordable Healthcare Bill was tabled. The bill calls for the removal of fringe benefit tax on employer-paid health insurance premiums and a 25 per cent health insurance rebate for people aged 65 and over," McPherson said.
Employers subsidised health insurance for 640,000 working New Zealanders, he said, citing Southern Cross' backing for removal of the tax.
