Jacinda Ardern's government is axing its 20 district health boards (DHBs), created in the Helen Clark era, and replacing them with two bodies: Health New Zealand and the Maori Health Authority.

Health Minister Andrew Little said the system had become too complex and fragmented, leading to different quality of care in different regions, known by Kiwis as the postcode lottery.

"It is far too complicated for a small nation," Mr Little said.

"COVID-19 has seen the system forge a spirit of collaboration, but this is seldom how we operate in normal times.

"We simply do not need 20 different sets of decision-makers ... it leads to duplication, variability and inefficiency."

Mr Little cited COVID-19 as an example of how a national health service could be effective, but the pandemic was not the driver for reform.

In 2018, Ms Ardern's government commissioned a wide-ranging review into the health and disability system, which reported back last year.

That review recommended slashing the number of DHBs by half, and doing away with election of DHB officials.

Wednesday's reforms go well beyond those recommendations, taking a step into the "transformational change" promised by Ms Ardern when she took office in 2017.

One fifth of all New Zealand government spending goes towards health, and the DHB system is heavily indebted.

Under the new plan, Health NZ will manage all health services, including hospital and specialist services, primary and community care.

The Maori Health Authority, which sits alongside Health NZ in a new organisational chart, will monitor the state of Maori health, but have its own budget to commission services directly.

"Maori still suffer on average worse health than other New Zealanders," Mr Little said.

"The Crown has obligations to Maori under the Treaty of Waitangi. Now we have an opportunity to truly live up to the vision of the treaty."

Neither Mr Little or Maori Health Minister Peeni Henare would commit to proportional funding for the Maori Health Authority.

"What I want to see first and foremost is a Maori Health Authority that has the right form, function and design," Mr Henare said.

"However, in order to turn the inequities that have faced Maori people over decades, it's going to take investment."

The changes will be phased in over three years, with the transfer of power between DHBs and new structures to begin next year.

The reforms are yet to come with public costings, but Mr Little confirmed the government would assume DHB debt.

Opposition party National attacked the changes, saying regions and communities would "lose their voice and autonomy", while the Maori Party applauded the "courageous" plan.

Australian Associated Press