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.
If you're feeling the pinch, CHOICE recommends a series of steps you can take to try and keep your health insurance costs down, including:
- Review your extras cover
- Take a look at your Hospital Cover and ask yourself why you have it. Is it for tax or health?
- Check for a discount for paying annually or direct debit
- Visit privatehealth.gov.au
You can also check to see whether you qualify to join a restricted membership fund and shop around for a new health care provider (just make sure there's no overlap with the old cover or you could be billed twice before the old one gets cancelled).
Have you downgraded your health insurance to keep costs the same? Let us know what you think about your current insurance in the comments section below.
See also: Ask LH: Do I Need Full Hospital Cover? | How To Identify Bad Apple Doctors | ACCC Puts Private Health Insurance Under Microscope | One Day, You're Going To Die. Here's How To Prepare For It...