Private Health Insurance in Australia – who needs it?

Disclaimer: I have just cancelled my private health insurance after almost 40 years. I will try to be unbiased as I present the facts that led to this momentous decision, but some bias is inevitable.

For Australians under 40, and international readers who know nothing about our hybrid health care system, I’ll start with a very brief overview:

The scheme [universal health care] was created in 1975 by the Whitlam Government under the brand Medibank, and was limited by the Fraser Government in 1976 to paying customers only. The Hawke Government reinstated universal health care in 1984 under the brand of Medicare. Medibank continued to exist as a government-owned private health insurance provider until it was privatised by the Abbott Government in 2014.

https://en.wikipedia.org/wiki/Medicare_(Australia)

Note: The government owned Medibank provided private health insurance in direct competition with private health insurers.

In 1999, the conservative LNP government led by John Howard brought in the Private Health Insurance Rebate Scheme. Depending on your age and income, the government will rebate 30% of the cost of your health insurance premiums. This rebate is subtracted from your health insurance premiums so you only pay for the remainder. This is the ‘carrot’ part of the equation. If you don’t take up health insurance by the time you hit the age of 30, you will pay 2% more whenever you finally do take up health insurance. This is the ‘stick’.

The purpose of the Private Health Insurance Rebate Scheme was ostensibly to relieve the pressure on public hospitals which are run by the states using funding from the Federal government.

When the rebate scheme was first introduced, premiums were relatively low and the private cover was a true ‘safety net’. In the 20 years since then, premiums have crept higher and higher while the payout for procedures and treatments has shrunk. This is true for both for-profit and not-for-profit health insurers.

As someone with a pre-existing medical condition, I’ve had basic hospital cover for almost 40 years. For most of those years, my premiums ensured that I could be treated in a private hospital by the specialist of my choice without long waiting periods or astronomical out-of-pocket expenses.

That all changed today when I finally realised that my basic hospital cover only did one thing – it allowed me to have my own specialist:

  • in a public hospital
  • in a shared ward
  • after I’d gone through the standard waiting period for public hospital treatment.

The following shows exactly what my private health insurance covers:

Apologies for the poor quality of the graphic but I wanted you to be able to see the whole thing. Every item with an ‘R’ next to it has ‘restricted’ cover only. This means that my private health insurance would only pay a miniscule amount [above and beyond what Medicare already pays]. Dialysis for chronic kidney failure, insulin pumps and weight loss surgery are not covered at all.

I don’t have kidney failure or diabetes or weight problems, but I can see at least five things I may need as I age. Sadly, with my basic private health insurance cover, I’d end up having to pay for them out of my own pocket anyway.

For me, the crunch came when I realised that I was already a [free] public hospital patient, but I was paying for the privilege.

Clearly, the hospital cover I had was next to useless, but when I looked at the levels of cover that would give me a proper safety net, I discovered that a) even some of the top plans didn’t cover me for everything and b) even if they did, I couldn’t afford them.

The sad truth is that I can barely manage to pay the $71.50 per month for the basic hospital cover I have/had. $71.50 doesn’t sound like much – it’s under $20 a week – but when you live on the age pension, $20 makes a difference. Wasting it on private health insurance that covers me for nothing is crazy.

So today I stopped being crazy and joined the ranks of Australians giving private health insurance a big miss. These Australians include young people on government support, older Australians on government support, and a growing segment of our population surviving in the GIG economy. In short, all those people who can’t afford the kind of health insurance that actually provides value for money.

So who’s left then?

I’m not sure. The table below is from the government website:

The income categories are shown across the top and indicate that under 65 years of age, all rebates cut out above $140,001 for singles and $280,001 for families. Taking bracket creep into account, that’s not a huge income by 2020 standards.

This may be my bias showing, but I am feeling rather ripped off. I’ve been a good girl and paid my premiums for years, but it seems as if the only ones benefiting from the 30% health insurance rebate are the health insurance companies themselves.

As the health insurance rebate is being paid from our taxes, I can’t help wondering whether we wouldn’t be better off if the rebate were abolished, freeing up all that money for the public health system.

Meeks

About acflory

I am the kind of person who always has to know why things are the way they are so my interests range from genetics and biology to politics and what makes people tick. For fun I play online mmorpgs, read, listen to a music, dance when I get the chance and landscape my rather large block. Work is writing. When a story I am working on is going well I'm on cloud nine. On bad days I go out and dig big holes... View all posts by acflory

38 responses to “Private Health Insurance in Australia – who needs it?

  • MELewis

    Wow, your post makes me realize how good we have it in France! (And we live in an area without the best medical coverage). I had no idea that ‘socialized’ medicine could have so much complexity. You need a degree to deal with all that calculating. I’m glad you figured out that the additional spend wasn’t worth it — put that extra cash into something you enjoy — and stay well!

    Like

  • daleleelife101.blog

    We haven’t had private health care for years. We pay as we go, or in the G.O. case for recent surgery go on a waitlist but still get services the same private surgeon. Living well in the first instance is a far better option than relying on the medical system to fix you, but it’s there and works fine when we need it, as most of us probably will. I truly believe governent, Big Pharma, Big Med… ‘cos private hospitals and some practitioners are just another Big Business whiteanting the public health system for their own agenda.

    Like

    • acflory

      I’m kind of shocked. I thought I’d get a lot of ‘oh, is that wise?’ comments. Instead, I’m discovering that many of my online friends had the measure of this system long before me. Kind of reassuring, actually. But why didn’t one of you tell me sooner! Kidding. I wouldn’t have believed you sooner. Really glad to hear it now though.
      Who knows. If enough of us vote with our feet, we may yet change the system for the better!

      Like

  • DawnGillDesigns

    I’m pleased to see you did a risk assessment first πŸ˜‰
    I had the insurance position explained to me by our pals in WA, back in 2002 (I think) on our second visit – they owned the local PO, and had employees as well as their own. I hadn’t realised there’d been a change in the regulations since. Good luck, I suspect you are setting some of that $saving aside, just in case πŸ˜‰

    Like

  • Widdershins

    Health insurance schemes … hah, year right, all they ‘insure’ is that the wealthy get wealthier (and healthier) and the rest of us get screwed.
    Good on you for taking back a bit of power. Treat yourself to something nice. You earned it. πŸ™‚

    Like

  • bone&silver

    That’s a big decision after 40 years, I know, & you must have felt a bit scared as well as pissed off! We are so lucky to have Medicare- I can’t imagine living in the US (or anywhere else) with no safety net… May you stay well, & enjoy that extra $70/month 😊

    Like

  • Bette A. Stevens

    Interestingly, healthcare treatment, and schemes sounds very similar to our problems here in US… We have Medicare Advantage (retirees) with few options and can’t even travel out of state without taking risks… Sounds like a global conundrum–devised for the love of money by those who already have way to much of that. Thanks for sharing, Meeks.

    Like

    • acflory

      My feelings exactly, Bette. On bad days I feel as if all of us are victims of a global scam that funnels all the wealth one way. We’re told that we are the richest countries on earth, yet our standard of living is diminishing at an alarming rate. I can well understand why populist movements have sprung up. Just wish they were heading towards greater equality instead of less.

      Like

  • robertawrites235681907

    A fascinating post, Meeks. You are fortunate that you can use public health care in Australia. The public healthcare in South Africa is so broken now that you risk dying on the ward. The doctors are good, because most of the private healthcare doctors work in the public health system pro bono because they are really good people, but the aftercare and nursing are terrible. Our private healthcare costs a fortune but we are forced to use it as the alternatives are to poor. I pay for my parents medical cover. It would amount to 50% of their pension and be unaffordable if I didn’t. Fortunately, I am a professional and earn enough to pay it for them. I also assist them with many other things in their daily life as security and other costs have become so great.

    Like

  • anne54

    We ditched our health cover a few years ago, so I understand how ripped off you feel. I was keeping mine for the extras, but decided I would be just as well off paying for my glasses and dental ~ and of course I was never given a full refund for these.
    Terry is now on the Aged Care Pension, and ALL the medical intervention of the last six months has been covered for him. This has ranged from surgery, specialist appointments, scans to allied health services like podiatry and occupational therapists. Oh, and four ambulance rides. He was first admitted through various emergency departments, so I guess that bypassed any wait-times he would have had if it had been elective surgery. I joke that he is single-handedly bankrupting the health system, but I have very high praise for all the intervention, care and extra support we have been given.

    Liked by 1 person

    • acflory

      lol – I wish i’d written this post a couple of years ago then. Might have got to this point a lot sooner. I guess old habits and old fears are hard to shake. That said, I’ve always known that in an emergency a big teaching hospital – public hospital – is the best place to go.

      Like

      • anne54

        Having an emergency in a big teaching hospital is something else that is not available to lots of people….another example of the unintended divides in the health system.

        Like

        • acflory

          Very true. I think there is a place for private hospitals and private health insurance, but I believe it should be a ‘nice to have’ rather than a necessity. Ditto public schools and the education system.
          Corporations are not the life blood of our country. It’s people.

          Like

  • davidprosser

    If the DNC screw Bernie over for his Billionaire opponent you should vote him in over there and he’ll give you a National Health Service and ensure only those that want private health care have to pay for it.
    Hugs

    Like

  • jilldennison

    ‘Tis the same here … the only ones benefiting are the insurance companies. Sigh. I guess we have to just make sure we don’t need the services of a specialist, or a hospital, eh? Maybe if enough people wise up and do what you did, the insurance companies will all go broke and the government will have no choice but to step up to the plate. Yeah, I know … dream on.

    Liked by 1 person

    • acflory

      I think private health insurance is having problems here because we’re a pretty small market and people are leaving. I fear it would take a very big shock for the insurance companies to change their ways in the US. They have you over a barrel. 😦

      Liked by 1 person

      • jilldennison

        Yeah, the insurance companies, as well as doctors groups, labs, and most notably Big Pharma! If I didn’t order my meds from Canada, I would have been dead long ago.

        Like

        • acflory

          I have to tell you, I was truly shocked when I learned that basic, life sustaining medications were priced out of the reach of ordinary people. So wrong. 😦

          Liked by 1 person

          • jilldennison

            It is wrong, and what’s even worse with my insulin is that the man who discovered insulin did not patent it, for he felt it would be wrong to profit from something that could save so many lives. So, here we are 100 years later, and if I bought my insulin in the U.S., it would cost me over $1,300 per month, or about 87% of my entire monthly income. Sigh. Yes, it is wrong.

            Like

          • acflory

            I…did not know that. So how did Big Pharma get its grubby mitts on the patent [and $$]?

            Like

          • jilldennison

            Good question, to which I don’t really know the answer. Big Pharma owns some of our members of Congress, obviously. But there’s more than that, and I’m not sure what. But, considering that I order my insulin from Canada for 1/3 to 1/2 the price I would pay for it here … exact same thing, exact same brand … there’s something fishy here. We are told that if Big Pharma is forced to lower their prices, they won’t be able to afford to develop new drugs to combat other diseases, to which I say B.S.!

            Like

          • acflory

            Yes, the pricing is /very/ fishy. I have an awful feeling that Big Pharma charges what it knows it can get away with. . ./in the US/.

            As for R&D, yes a lot of time and effort does go into R&D, but many of the biggest breakthroughs happen in universities. The university then tries to capitalise on the breakthrough, forms a company, applies for a patent, and then gets bought out by Big Pharma. Instant breakthrough and patent. All they then have to do is commercialise it.

            Here in Australia, the government subsidises all/most life saving medications via the PBS – Pharmaceutical Benefits Scheme. That means that patients can access those drugs at a fraction of their ‘true’ cost.

            Actually, I think what happens is that our govt says – give us a discount or you won’t be able to sell in Australia. Kind of like buying in bulk. Knowing private patients would never be able to afford their inflated prices forces Big Pharma to give the discount.

            I suspect something similar must happen in Canada.

            The big question, however, is why the same thing doesn’t happen in the US?

            Like

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