The announcement was part of the $12.1 billion package in the Government's first phase of its attempt to ease the economic fallout of the coronavirus outbreak.
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The goal of the package is to keep job losses to a minimum and keep the health sector from being overwhelmed as the number of positive cases - currently at eight - rises.
"We will be investing in more health staff, more virus testing, more medicines, face masks, extra intensive care capacity and equipment at hospitals, and more money for GPs," Prime Minister Jacinda Ardern said.
"If we can manage the virus, we can mitigate the damage to the economy."
The Government is also putting $126.5m to the Ministry of Social Development to pay up to 108,000 self-isolating or sick workers - or people who are caring for others with Covid-19 - for two-week periods over the next two months.
The payments will be $585.80 a week for full-time workers, or $350 for part-time workers.
It will not be available to those who can work from home, nor to people leaving New Zealand who need to self-isolate for 14 days when they return.
Payments will be backdated to March 17.
The first phase of the $500m boost to health services includes funding for:
• $40m for Public Health Units, including contact tracing
• $5m for more testing capacity
• $32m for freeing up ICU capacity and equipment at hospitals
• $50m in support for GPs and Covid-19 health centres
• $20m for Healthline capacity
• $20m for a GP telehealth service
• $10m for a public health campaign
• $15m for mitigating the immediate and long-term psychosocial impact of Covid-19
The health sector was expected to come under enough strain for the Government to already be reaching out to retired health professionals to see if they could help, Health Minister David Clark said.
DHBs were also looking to set up specific Covid-19 health centres, though Clark said where they were and how many there would be would depend on each region's needs.
Most of the $40m boost to Public Health Units would be for contact tracing, he said.
There would be more cases of Covid-19 in New Zealand and Clark said that hospitals needed to be ready with more ICU capacity and primary care.
"A further $20m will be invested in improving the capacity of general practice and community health providers to use technology such as video conferencing and telehealth to conduct consultation."
He said Healthline, which is taking more than 5000 calls a day, also needed more funding so that doctors and nurses can provide clinical advice over the phone.
A further $205m would go towards the second phase of the health response to ensure there were sufficient medicines, flu vaccines and face masks, while $50m would go towards boosting pharmacy and ambulance support, Aged Residential Care hospital beds, and supporting people staying at home.
