ACT leader David Seymour calls for ‘health savings accounts’ for all

Wednesday, 10 September 2025

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ACT leader David Seymour has proposed a “major” overhaul of how the country funds healthcare.

Speaking at the Financial Services Council conference in Auckland on Wednesday, Seymour called for New Zealand to emulate Singapore with compulsory “Health Savings Accounts” (HSA) for everyone.

The model requires people to save into health savings accounts to fund their healthcare, with the money coming from tax cuts.

The Government would effectively act as an insurer of last resort on the accounts for instances in which people need treatment that costs more than they have saved.

The idea, which is not Government policy but an ACT policy suggestion, is not a new one. In a paper earlier this year, Former ACT leader Sir Roger Douglas published a paper with Professor Robert MacCulloch, of the University of Auckland Waipapa Taumata Rau, called, how to change the welfare state from a taxation to a savings-based model.

They suggested a radical overhaul of the tax system, proposing making the first $60,000 of income tax free.

That would mean a $10,000 tax cut for everyone with income of at least $60,000. The money would be directed into a compulsory savings accounts for health and pensions, with investment returns and compound interest growing the savings to pay for future care.

Douglas and MacCulloch argued dramatic reform was needed for the country to afford rising pension and health costs as the population ages.

Seymour continued that theme in his speech to insurers and KiwiSaver managers at the FSC conference, saying there was an iceberg ahead, and if New Zealand wanted to avoid running into it, it had to ask how other countries paid for health.

“There has to be change,” he said.

The current health funding system was set up in an era of larger families, and a younger population, and in the current era of an ageing population “we suddenly find that the numbers don’t stack up”.

A time-pressed Seymour did not have time to deliver the speech he had written and instead introduced the reform proposal in extemporised comments.

In the prepared speech, he had said Singapore allocated nearly half the share of GDP New Zealand did to pay for health and the country got better outcomes.

In it, he claimed the model would drive personal responsibility and reduce waste.

“The demand for ‘free’ healthcare is infinite. That’s why accident and emergency departments are clogged with people who could be better treated elsewhere, easing emergency departments,” the undelievered speech said.

It said the Ministry of Health itself admitted the biggest improvement in our health would come from prevention: diet, exercise, lifestyle.

The philosophy was that “when people control their own accounts, they are more likely to look after themselves”.

Singapore showed what was possible, Seymour said.

In that model every working citizen contributed to a Medisave account. The Government then topped up the accounts of the poor and chronically ill, and catastrophic costs were covered by insurance.

Singapore enjoyed one of the best healthcare systems in the world, and yet in 2021 it spent just 5.6 % of GDP on health. New Zealand spent 10.1%.

After Douglas and MacColluch published their paper, tax expert Terry Baucher said: “All up Sir Roger and Professor MacCulloch suggest these could save over $12 billion annually.”

However, he said: “This is quite a radical proposal which would be quite a shock to the system.”

The model would appear to require a big scaling up of private healthcare.

Singaporean insurance broker Pacific Prime said Singapore’s healthcare system was a mix of public-private services overseen by the Ministry of Health. It combined the government-subsidized public healthcare with a strong private sector presence, and the choice between the two often depends on individual needs and budget.

Seymour said the health funding model would be phased in gradually.

It had some similarities to KiwiSaver, he claimed, and would create a vibrant market for health products.

Employers could contribute to HSAs as part of remuneration packages.

However, Seymour said the Singapore model was not the only model that could work for New Zealand.

“We could instead copy the German or Dutch models of social insurance which utilise payroll contributions or Government subsidies,” he said.

He told the conference: “We are one of the few countries in the world where that whole system from physical infrastructure, to operations, to commissioning, to funding, are all almost entirely done by state.”

“It’s becoming increasingly clear that major reform is what’s needed.”