The amount paid out in health insurance has doubled over the past decade, reaching $1 billion in claims last year.
New statistics from the Health Funds Association for the year ending in March show paid claims have increased almost 4 percent since last year, despite the number of people with health insurance falling slightly.
Twenty nine percent of New Zealanders have health insurance, most of them are covered by elective surgical and specialist policies.
Health Funds Association chief executive Roger Styles said the public purse could only afford so much, so having a significant amount financed by insurance helped the public sector.
He said 80 percent of the costs were for elective surgeries and specialist costs that could be met more quickly through the private sector.
Mr Styles said the amount paid out would only increase because of the advent of new technology, treatments and medicines.
He said that combined with an aging population meant the trend of increasing health costs was set to continue.
Mr Styles said insurance claims were a sizeable and growing contribution to health spending.