Labour Party leader Chris Hipkins announced today that a future Labour government would reinstate free prescriptions from July 1, 2027. The policy aims to reverse the $5 co-payment reintroduced by the National-led coalition in 2024. According to Labour, the universal scheme is designed to remove financial barriers that prevent patients from accessing necessary medication.
Why the policy is proposed
Labour argues that prescription costs deter patients from seeking treatment, which leads to more serious health outcomes. According to a Medical Journal study cited by the party, individuals unable to afford their prescriptions are 35% more likely to require hospitalization. Chris Hipkins stated that the policy, which would cost an estimated $74.5 million annually, is intended to prevent medical conditions from escalating. Labour’s health spokesperson Ayesha Verrall and finance spokesperson Barbara Edmonds support the plan, which would cover all funded medicines dispensed in community pharmacies. Under the current National-led system, prescriptions remain free only for those under 14, over 65, and Community Services Card holders.
Financial implications and debate
The proposal would be funded by a capital gains tax on profits from the sale of commercial or residential property, excluding the family home. This funding mechanism has drawn criticism from the National Party. Nicola Willis, National’s finance spokesperson, recently released a costings document alleging an $18.2 billion gap between Labour’s spending plans and its projected revenue from the capital gains tax. While that document identified the reversal of prescription charges as a factor in “widening the gap,” it did not assign a specific cost to the prescription policy itself. Barbara Edmonds has dismissed the National Party’s analysis as “desperate,” suggesting the government should focus on its own financial records.
What happens next
The implementation of this policy depends on the outcome of the November election. If Labour secures power, the party intends to roll out the scheme by mid-2027. Voters may see further debate regarding the feasibility of the capital gains tax as a funding source, as the two major parties continue to contest the accuracy of their respective financial projections. Meanwhile, patients ineligible for current exemptions will continue to pay the $5 co-payment until at least the first three-month collection period, while those using non-approved prescribers could still face fees of up to $15.
