Government incentives are required for elderly people to maintain their own health insurance.

CEO of Accuro Health Insurance, Bruce Morrison, says too many elderly people are cancelling their policies because they can't afford them just when it's important they should determine their own future health needs.

He says these people end up in the public health system and their ongoing requirement for shoulder, knee and heart surgery takes a significant share of the health budget.

Bruce Morrison acknowledges many older people can't afford private health care but others would be able to contribute to ongoing health insurance if the government offered an incentive.

He says this is essential because of the ageing demographic. In addition older people should be able to enjoy their lifestyle without spending their superannuation on new hips and open heart surgery.

"Between 2004 and 2010 the government's health spend increased from $7.6 billion to $12.7 billion, an increase of 41 percent. The government will face an inability to fund the public system within 20 years," he predicts.

He strongly recommends Minister of Health, Tony Ryall, should study the Australian model which provides an incentive for everyone on private health insurance.

"Their government has an effective public/private model and, as a result, nearly half of Australians have health insurance, up from 30 percent in 1999. In comparison less than a third of New Zealanders have health insurance, down from 48 percent in 1990.

"If health insurance remained at the same level 20 years ago there'd be a public health saving of $300-400 million."

Bruce Morrison argues that a subsidy such as a tax rebate to retain health insurance for the over 65s is far more valuable than a range of Gold Card concessions for bus travel and cheap cinema tickets.

Fringe Benefit Tax should also be scrapped on business health insurance. Many employers would love to provide health insurance for their staff but it's "too hard and too expensive."

Accuro provide a very competitive product and specialises in group schemes but, despite its benefits, the government still makes it hard for the employer.

"I would encourage Tony Ryall to consider the benefits of incentivising the right behavior and encourage people to look after their own health choices."

Accuro is inviting the Minister to its Wellington headquarters to discuss the issues of retaining older people in the private system, explain what it's learned over 40 years as a health provider and explore ways in which Accuro can work with the government to strengthen the relationship between public and private providers.

"We believe we can do that because we're a not-for-profit organisation that focuses on benefiting its members. We're not intending to be self-serving but we have solutions to an issue that will otherwise see the government facing unsustainable costs," Bruce says.

"The public purse can't continue to look after elective surgery. Private health must take a bigger role and we want to work with the Minister to achieve that end."