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

How to save $$ in Victoria [Australia]

This post is for Victorians on a tight budget – i.e. people on Newstart, the Age Pension, Disability Pension or young people working in the GIG economy – and concerns energy bills such as gas and electricity.

The first, critical step to saving on your energy bills is to understand that utility companies bank on us being too busy to go out and actively look for better deals. The new initiative by the Victorian government only means that energy retailers have to inform you of their best deals. But those best deals could still be very expensive when compared to the rest of the marketplace.

To give you an example, I changed my gas supplier about a year and a half ago. At the time, my new gas supplier offered the best deal according to the Victorian government’s own comparison website:

https://compare.energy.vic.gov.au

This morning, when I did a fresh comparison, my existing gas supplier was close to the bottom of the list, and their best deal was over $400 more expensive [per year] than the new ‘best deal’. As a result, I got on the phone [contact details supplied by the government website], made sure the quote was still accurate and…signed up:

When AGL’s best is no longer the best, I’ll move my gas account again.

Gamers would recognize this as ‘churn’. The term refers to how gamers move from one ISP to another to get the best deal. I don’t ‘churn’ often, but since I became an age pensioner, I’ve learned that loyalty simply doesn’t pay. These days I ‘churn’ my gas, electricity and comms suppliers on a regular basis.

So what’s involved in comparing prices?

Once you land on the government’s comparison website, you’ll be asked a series of questions about how you use your gas [or electricity]. It pays to make your answers as accurate as possible so dig out your most recent bill and keep it handy. After you’ve completed all the relevant questions, the website will do some kind of general comparison and present you with a list of the best matches for your circumstances.

Gas pricing is a mess with about five different rates in both the ‘peak’ and ‘off peak’ categories, but don’t let it scare you. One easy thing to compare is the daily supply charge. Essentially this is the amount you pay for the privilege of having a gas connection. In other words, even if you don’t turn the gas on at all, you’ll still be charged that daily supply charge.

All retailers charge you for supply, but the amount varies. AGL’s daily supply charge is 62 cents. Another retailer I looked at [not one of the most expensive ones] was charging 83 cents. Assuming the rates don’t change for 365 days, that’s $226 vs $303 per year [or a saving of $77 per year].

When the cost of living means you have to think twice about buying that latte, a saving of $77 is nothing to be sneezed at. And when you add that small saving to the actual cost of using the energy, the savings really do add up.

So please, bookmark that government comparison website and check it out, at least once a year. Doing your homework and making a change will probably take an hour, all up, but the way I see it, I’ve just earned over $400 for that hour. Not a bad hourly rate, don’t you think?

And finally a word about keeping all your eggs in one basket. Energy retailers that supply both gas and electricity will try to convince you to move both utilities to them. Doing so may be more convenient. It may also be cheaper, sometimes. But…a cheap gas price does not automatically mean the electricity price will be the best available price as well.

Remember, the best price a retailer offers is not necessarily the best price from all retailers. Compare…and save.

cheers

Meeks