Australian Health Insurance: A Big Rip-Off?

Private health care members in Australia pay around one fifth of their total health care expenditure, a new investigation by CHOICE has revealed. This is the highest contribution in the English speaking world and may be causing customers to downgrade their health insurance due to recent price hikes.

Medicine/cash image: Shutterstock

In a recent study, CHOICE looked at more than 25,000 health insurance policies including hospitals and extras across 19 health care funds. It found that on average, 19 per cent of health expenditure comes directly from the pockets of members and is not rebated by Medicare.

The investigation also discovered some 14,000 people had applied to access their superannuation savings to pay for health costs. In addition, insurers acknowledged that many of their customers were downgrading their level of cover due to recent fee increases.

According to CHOICE, the dramatic rise in health insurance premiums is compromising the health and financial security of Australia's most vulnerable citizens.

“Worryingly, since means testing was introduced for the private health insurance rebate the CHOICE investigation uncovered a trend in consumers downgrading their level of cover to accommodate increased costs,” a CHOICE spokesperson said.

“The news gets worse for consumers who prepaid before 30 June last year as they will for the first time experience the full bill shock as we head into premium renewal season.

"Also, from 1 July they’ll no longer receive the private health insurance rebate on the lifetime health cover (LHC) component of their premium.”

The state of health cover in Australia is further muddied by the questionable practices of certain health insurers.

In its 2012 annual report the Australian Competition and Consumer Commission found that the healthcare providers recognised by insurers aren’t always based solely on clinical assessments, with "commercial judgement" factoring into their assessments. This can leave consumers needlessly out-of-pocket and/or reduce the extent of their health cover.

Last month, health insurance premiums rose 5.6% on average, which is more than double what is paid in the UK. In July last year, an amendment to the Private Health Insurance Rebate excluded families earning more than $168,000 annually from receiving the full 30 per cent.


Comments

    I recently joined a new health fund called health.com.au which are pretty awesome, and their prices are extremely competitive! Worth checking out :)

      ^^^ cash for comment???

      I thoroughly endorse this product and find it good in almost every way. (this message brought to you by health.com.au)

        I uh... heartily endorse this event and or product...uh

          for the record I had a l checked out his health.com.au and it was more expensive than my current one with Bupa lol

            Hey guys, no.. no cash for comment or anything like that. Just letting you know of my own experience and thought it might help others. I'm sorry that you cannot see it that way. have a good day.

              haha its all good mate, just the way you wrote it sounded like a commercial.

    I signed up for increased dental cover a few years ago as a precaution.

    When I had to submit some costs, I found that my return was 10% so I was losing out by paying premiums.

    I also object to subsidising others for ridiculous CAM products like homeopathy and chiropractic. I should have asked my dentist to rinse out my mouth and put a homeopathy charge on my bill so I'd get another $500 back (more than my base dental return).

      You don't think chiropractic works for lower back pain?

        Depends on the chiropractor. If they are a proper clinician that assess a persons musculoskeletal system, adjusts them, and suggests exercises to correct any strength or flexibility issues, then they are good chiropractors.

        If they are the shonky operators that sign you up for a monthly payment plan allowing you as many 'adjustments' as you want, then they are thieves. These also tend to be the chiropractors that claim they can fix everything including the common cold, cancer, epilepsy, autism, ADHD, the list goes on.

        Oh and chiropractors that calle themselves "Doctor" just because they have done a pHD? Bollocks. If you want to be a doctor, then go and get a medical degree.

          yeah I agree with that, the american business model for chiropractors is all about fleecing money over long periods of time, as for all the added health benefits I don't believe in that either, all I know is if my back goes out it takes weeks to heal. If I go to a quality chiro and get one adjustment I'm right within 48 hours.

          As for suggesting exercises, a pilates class with the machines ran by a qualified physio is about as good as it gets.

            I think the chiropractic era is coming to an end, as universities close down schools due to their unscientific practices. I had a few runs with them in earlier years, and got zero-to-negative results. The conclusions from actual studies are even more negative: http://edzardernst.com/2013/06/how-chiropractors-put-patients-at-risk/

        Yeah, maybe, but a chiropracter that will claim to cure my flu, not so much.

      Just looking at dental by itself, nothing else, I found it was cheaper to just save up the dental fee myself. I usually get 2 cleans per year at $250 each and I allow extra cash for maybe a filling. My teeth are in good shape so that helps.

        You can get a level of dental cover from smile.com.au which reduces your dental bill by up to 40% if you use a participating dentist.

    They ran a similar article ages ago and there was a major bung fight about the pro's and con's. My wife and I have never had private cover and in the time we've been married she's had two major surgeries. She waited approximately a month for the first and about two for the second. All we paid for was the primary specialist in both cases, which was expensive but given the many thousands we saved over the last twenty six years, we figure we are ahead many thousands of dollars. If they want us to pay for health care they need to make it worth while. I know several people who have been paying through the nose for it for years and they waited just as long if not longer for similarly services and still had to pay the difference for the private care. The whole system is a joke afic and needs to be made fairer to those who pay for it.

      But havent you also been paying the medicare surcharge as well throughout this period? I looked into it and it seemed like the govt was placing you in a position where you almost had to pay the cost of private health insurance through a medicare levy anyway?

        I looked into it and it seemed like the govt was placing you in a position where you almost had to pay the cost of private health insurance through a medicare levy anyway?Don't know how you worked that out?
        Don't we all pay the Medicare levy regardless of whether you have a Health Care Fund?
        My wife and I have saved many thousands of dollars without extra Health Care over the years. Far far more, than we paid for the extra cost a couple of times and the waiting period was negligible.

        Last edited 13/06/13 2:13 pm

          Actually there is an extra loading for people who earn a certain amount and do not have private health insurance. The Medicare Levy Surcharge is an extra 1% tax that you pay if you earn over a fixed amount and do NOT have private health insurance. See: http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00250854.htm&page=11&H11

          So if you earn $100K, you pay $1,000 extra tax if you don't have private hospital cover with an excess below $1000 or $500 (depending on family vs single cover). If you can find a health insurance for less than $1k then you are financially ahead - as well as the peace of mind of having cover for certain conditions/procedures that cost a lot in the public system.

          There's the Medicare Levy which everyone pays, and the Medicare Levy Surcharge which you pay if you don't have hospital cover and earn above a certain limit.

            @timbo2002 Drinniol
            That does makes sense, but doesn't really change the gist of my comment... :)

      I take the same view, I am not in a position at the moment where a health cost would impact me greatly, like yourself we can just wait the extra and pay what is needed. I really don't like the whole idea of private healthcare in general, from my perspective it's not possible for an insurer to be profitable WITHOUT being underhanded...

      I can understand if you were maybe on a tighter budget and even a few thousand would be a cost you simply couldn't cover, spreading it out over premiums might make sense, but in the end the gap payment is still substantial in most cases.

      As for paying for homeopathy and all that bunk, I couldn't agree more. Where is the line drawn? My therapy for my current stress disorder is a couple of schooners down the pub with the boys, should I be putting a claim in for that? The bartenders are fully qualified I'm sure.

        I figure I'm ahead, even accounting for the levy - I did the maths last year on my tax return and I saved 50% more than if I'd had paid health insurance premiums. And that's before I adjusted for co-pays with insurance from the year before. I saved major money w/o insurance.

        re: subsidising naturopathy/CAM - you're not? If you have health cover and you're paying for extras cover that includes this, than just ask not to have those extras and you'll pay less. You're not paying for others' treatment with that money.

          At the moment you (depending on your scheme) you can't pick and choose to that degree. I can't even take out cover for obstetrics as it's bundled with - along with homeopathy - with the things I do want. It's a bit like buying TV packages and trying not to get the sports channels.

        My therapy for my current stress disorder is a couple of schooners down the pub with the boys, should I be putting a claim in for that?
        Only if they water it down so there's 1 part beer in 90 billion parts water. Something tells me they'd get in trouble for doing this and, like homeopathy, it wouldn't work.

    We downgraded and moved our private health cover at the start of the year - to something that just covered the tax requirements with a bit extra for the kids. It saved us around 40% off our premiums. Even if we find ourselves having to go to hospital, in most situations we wouldn't even mention we have cover, and go in as public. It is just wasted money.

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