Australia boasts one of the world’s most robust public healthcare systems. Yet, as of March 2023, a whopping 55% of Australians have opted for private health insurance, a significant rise since the onset of the Covid-19 pandemic. But what drives this decision? Here’s a closer look:
Health Insurance in Australia: A Snapshot
Public Healthcare: Medicare: Covers either the full or partial costs of treatment for public patients. However, certain treatments, such as dentistry, fall outside its purview, necessitating out-of-pocket payments.
Private Health Insurance: Involves paying monthly premiums in exchange for partial or full treatment reimbursements.
The Good About Private Health Insurance
Avoiding the Queue: The recent two-year elective surgery halt due to Covid-19 has resulted in longer wait times.
Private insurance holders can:
- Receive faster treatment for non-immediate life-threatening procedures.
- Evade the current long public hospital waitlists.
Choice & Flexibility: Holders can:
- Choose their preferred hospital and specialist.
- Bypass payments for treatments not covered by Medicare.
Tax Incentives:
Medicare Levy: 2% of taxable income for most taxpayers.
Medicare Levy Surcharge: High-income earners without private insurance have to pay this, which might be costlier than private health insurance itself.
Private Health Insurance Rebate: A partial government contribution towards your insurance premiums, though it’s income-tested.
The Not-So-Good About Private Health Insurance
Understanding the Coverage: About half of the policyholders are uncertain about what their policy entails.
Claim Denials & Dissatisfaction: A study reveals that one in five policyholders had a claim denied, with overall satisfaction at just 38%.
Breaking Down the Cost
- Variables affecting the cost include: the specific fund, the policy type, the number of individuals covered, and the residing state.
- Age plays a role. A 2% lifetime health cover (LHC) loading is added to the premium for every year you’re without cover after 31.
Covered Under Private Health Insurance:
Hospital Treatments: Coverage for private patient treatment in private or public hospitals.
Choice of Specialist: Ability to choose your preferred doctor or surgeon.
Shorter Wait Times: Faster access to elective surgeries and treatments.
Private Rooms: Depending on availability, you may have access to private hospital rooms.
Extras or Ancillary Cover: Depending on the policy, this can include:
- Dental treatment
- Optometry (e.g., glasses and contact lenses)
- Physiotherapy
- Chiropractic services
- Podiatry
- Speech therapy
- Hearing aids
- Orthotics
- Occupational therapy
- Natural therapies, such as acupuncture and remedial massage (coverage varies among providers)
Rehabilitation: Services such as in-patient rehabilitation after a surgery.
Maternity Services: Coverage for pregnancy and childbirth-related services.
Medical Devices: Some policies might cover prostheses like artificial knees or hips.
Mental Health Services: Access to in-patient Brisbane counselling services for mental health.
Prescription Pharmaceuticals: Some high-cost medications not covered under the Pharmaceutical Benefits Scheme (PBS) might be covered.
Not Covered Under Private Health Insurance:
Out-of-Hospital Services: Most out-of-hospital services, which are typically covered by Medicare, like GP visits.
Cosmetic Surgery: Procedures that aren’t clinically necessary, like elective cosmetic surgeries.
Over-the-Counter Medications: Drugs that do not require a prescription.
Treatments Overseas: Medical treatments received outside Australia.
Non-Accredited Services: Treatments by providers not recognized by the insurance company.
Specific Therapies: Some alternative therapies that aren’t scientifically validated.
Gap Amount: The difference between the medical fees and what Medicare and the private health insurer pays.
Excesses and Co-Payments: Initial out-of-pocket costs as defined in the policy.
Services Outside Waiting Period: Treatments received during the policy’s waiting period.
Upgraded or New Services: Services added to a policy that haven’t been covered for the designated waiting period.
Pre-existing Conditions: Some policies may not cover treatments for conditions that existed before the policy was purchased, at least for a set waiting period. For instance, if you have a pre-existing back condition that requires regular chiropractic treatment, this may not be covered under your policy.
It’s essential to note that exact coverages and exclusions vary among providers and individual policies. Always refer to the Product Disclosure Statement (PDS) and check with your insurer about what’s covered and what’s not.
How to Make the Right Choice
Type of Policy: Policies fall into three categories:
- Extras Only: Covers treatments like dental and physiotherapy.
- Hospital Only: Helps with private patient hospital treatment costs.
- Hospital and Extra: A combination of both.
Factors to Consider:
- Level of necessary cover.
- Cost affordability.
- Excess costs for claims.
- Waiting periods for treatments.
- Additional benefits like wellbeing programs.
- Policy restrictions and exclusions.
In conclusion, while Australia’s public health care system remains top-notch, private health insurance offers more control, quicker treatments, and potential tax benefits. The decision, however, rests on individual needs, understanding of the policy, and financial capacity. So, do you need private health insurance? It’s a personal question with an answer that varies for everyone.
