Annual health insurance claim pay-outs have reached $1 billion for the first time.

Pay-outs for hip replacements, colonoscopies and other health care amounted to $1 billion for the 12 months that ended in March, according to the Health Funds Association, representing health insurers.

This was $38 million more than in the preceding year, and $450 million (82 per cent) more than in the 2006 financial year, when pay-outs were $550 million.

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The Government is tracking to spend $15.2 billion on Vote Health in the 12 months to June 30.

According to the latest analysis from the Ministry of Health, which is for 2010, government agencies, mainly the ministry but also including ACC, provided 82 per cent of the funding for total New Zealand health spending; the private sector, including health insurance and people paying their own way, accounted for 17 per cent. Of total health spending, health insurance comprised 5 per cent - down from 6 per cent in 2000 - and "private household" spending was 10.5 per cent.

The proportion of private health spending has grown over time. In 1980, the public/private split was about 88 per cent/12 per cent.

Southern Cross, New Zealand's largest health insurer, has said that in the last calendar year it paid out 2.3 million claims totalling $803.4 million.

Seven percent of the claims were for elective surgery, yet they accounted for 73 per cent of the costs.

Claims to Southern Cross for imaging and tests cost $70.6 million, skin procedures $41.7 million, total knee replacements $40.6 million, total hip replacements $38.2 million and colonoscopies $30.6 million.

Health Funds Association chief executive Roger Styles, who was unavailable for comment, said in an association newsletter that despite just 29 per cent of New Zealanders having health insurance, the $1 billion in claims pay-outs was a sizable and growing contribution to total health spending.

"Health insurance really deserves more credit for its contribution to overall health funding in New Zealand. There are limits to what can be afforded by the public purse, and having a significant chunk of health care financed via insurance helps the public sector to focus its resources to best effect."

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"With a constant stream of complaints about the lack of public funding, there are now a billion reasons for having a closer look at how health insurance can help with funding," said Mr Styles, whose association has in the past lobbied governments, without success, for tax breaks to encourage greater uptake of health insurance.