Sick New Zealanders will face a bigger bill for prescriptions, but the money will help fund better access to elective surgery and cancer services.
Health Minister Tony Ryall and Prime Minister John Key on Wednesday announced an extra $101 million for some hospital services over the next four years.
Mr Key says the increase will be funded from savings and revenue initiatives from across government departments, but will not reveal further details until the May 24 budget.
Part of the funding will come from a hike in prescription fees from $3 to $5 for the first 20 prescriptions per person or family a year, after which prescriptions will continue to be free.
The government says no person or family will pay more than an extra $40 per year.
Mr Ryall rejected criticism that it was effectively a cut to frontline health services.
"We've put $180m extra into medicines over the last three budgets and the money that's going to be raised from this increase in prescription charges will be going into support more frontline services," he told media.
Mr Key says he does not believe it will deter people from picking up prescriptions, and it is a positive trade-off for "the vast bulk" of New Zealanders.
"We could have chosen to leave prescription charges at $3 and had less money to spend on health, or said to New Zealanders `look, we think you paying a small increase more will give you much better peace of mind when it comes to cancer treatment, elective surgery and those other important issues'."The savings from the prescription changes will amount to $20m in the first year and $40m in subsequent years.
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