The Government says it has no plans to offer subsidies for people with private health insurance despite pressure from a leading insurer.
Figures released by the country's largest insurer, Southern Cross Health Society, show the average annual cost of claims increased by about 10% last year.
Southern Cross Healthcare chief executive, Ian McPherson, says the non-profit organisation is paying 96 cents in claims to members for every $1 they pay in premiums.
He says health insurance is in danger of becoming unaffordable unless the Government cuts fringe benefit tax for companies offering cover to workers, and gives tax rebates for older people with private insurance.
Health Minister Tony Ryall says National dropped plans for a tax rebate for over 65s before the last election when the recession hit Government coffers.
He says the Government has increased elective operations in public hospitals, including an increase of 11% in elective surgery for people over the age of 65.
Tax breaks may not be the answer - economist
A health economist says offering tax breaks to people with private health insurance could widen the gap in health outcomes between rich and poor.
Associate Professor of Health Policy at Otago University Robin Gauld says increasing capacity in the private sector doesn't necessarily ease the burden on public hospitals.
Inequality of access could be increased, he says, by giving a tax break to one group of people who will then be able to afford services that others can't.
He says there is a political push internationally towards boosting the role of private operators, but it has to be carefully managed so it doesn't undermine healthcare for the most vulnerable.