Hi Jay, I don't believe this is true and the case officer has thing mixed up. Your partner is not applying for a NZ visa, she is applying for an Aus visa as a British resident. She continues to be a British resident and a temporary resident of Australia so a renewal of medicare card should not be a problem. When you say no longer eligible for medicare and also not for reciprocal health care - this is the same thing, she should never have had a full medicare card but rather a visitors card for the initial period of 5 years. A new visitors card can be applied for again when you get the new visa.
You post is a bit confusing, can you please clarify based on what I have written above.
Thanks