Private health cover, Australian edition
September 28, 2018 2:28 AM Subscribe
Is getting private health insurance worth it in Australia?
I've gotten to a point in life where I need to make a decision about whether I should get private health insurance. I'll be 31 next year and I also now earn enough that I need to start paying the medicare levy surcharge.
Ideologically, I really don't want to get private health insurance. My experience with the public healthcare system has been good and I believe that the government should invest more in it. I think that everyone should have access to the same healthcare, education etc. I don't want to spend my money supporting the privatisation of these things.
But if the cost of private health insurance is roughly the same as paying the surcharge, and if I get access to some additional cover that I don't have currently (like dental, physio etc) then maybe I should get the insurance. I'll probably need to get my wisdom teeth out in the next few years and I have a bunch of other minor dental concerns which crop up relatively often, so having dental cover is appealing. But I'm also thinking of trying to have a baby in the next couple of years, and I'm not sure how that works with public and private healthcare.
Please tell me everything you know about private health insurance, so that I can make an informed decision.
I've gotten to a point in life where I need to make a decision about whether I should get private health insurance. I'll be 31 next year and I also now earn enough that I need to start paying the medicare levy surcharge.
Ideologically, I really don't want to get private health insurance. My experience with the public healthcare system has been good and I believe that the government should invest more in it. I think that everyone should have access to the same healthcare, education etc. I don't want to spend my money supporting the privatisation of these things.
But if the cost of private health insurance is roughly the same as paying the surcharge, and if I get access to some additional cover that I don't have currently (like dental, physio etc) then maybe I should get the insurance. I'll probably need to get my wisdom teeth out in the next few years and I have a bunch of other minor dental concerns which crop up relatively often, so having dental cover is appealing. But I'm also thinking of trying to have a baby in the next couple of years, and I'm not sure how that works with public and private healthcare.
Please tell me everything you know about private health insurance, so that I can make an informed decision.
You only need hospital cover to not pay the surcharge. Extras cover (which is still subject to a rebate) is worth assessing against what it will cover and what you'll actually need - when I looked at the fine print, I decided dental coverage wouldn't do that much for me and so I don't do extras.
Many of the low cost policies where you would pay equivalent or less than the surcharge have basically been described as junk policies - they are not really any better than public cover. See this Choice article on Junk Health Insurance.
I recommend the ABC's interactive feature - Health Insurance, Do I need it? which will give you some considerations personalised for you.
I was ideologically uncomfortable with private insurance, but did buy it in the end (some years after turning 31), but spent a bit more to get more coverage (honestly, if I am in hospital, yes I would like a private room - while none can guarantee it, the cheaper policies don't actually cover private rooms). The ABC thing says I'd still have been better off financially without insurance - I have used it once for a minor procedure and it was good being able to have all the choices of doctor, hospital and timing. However it does not cover the costs of specialists and this can be quite costly if you want to see someone soon, rather than be in a queue.
Before I bought insurance, I asked my GP about their views. They said for the most serious issues, the public system is the best and is where you'll end up anyway. My GP said they thought it was worth it if you ended up with something where you needed rehabilitation services. Other than that, they said up to you, depends what you are comfortable with.
In my family, few of my parents generation have insurance - and now none of them can afford it with the Lifetime Health Cover loading they would have to pay. This means they have had to go on public waiting lists for things like hip/knee work or cataract surgery. It is not the end of the world, but it does cause a bit of stress for them.
posted by AnnaRat at 3:04 AM on September 28, 2018 [1 favorite]
Many of the low cost policies where you would pay equivalent or less than the surcharge have basically been described as junk policies - they are not really any better than public cover. See this Choice article on Junk Health Insurance.
I recommend the ABC's interactive feature - Health Insurance, Do I need it? which will give you some considerations personalised for you.
I was ideologically uncomfortable with private insurance, but did buy it in the end (some years after turning 31), but spent a bit more to get more coverage (honestly, if I am in hospital, yes I would like a private room - while none can guarantee it, the cheaper policies don't actually cover private rooms). The ABC thing says I'd still have been better off financially without insurance - I have used it once for a minor procedure and it was good being able to have all the choices of doctor, hospital and timing. However it does not cover the costs of specialists and this can be quite costly if you want to see someone soon, rather than be in a queue.
Before I bought insurance, I asked my GP about their views. They said for the most serious issues, the public system is the best and is where you'll end up anyway. My GP said they thought it was worth it if you ended up with something where you needed rehabilitation services. Other than that, they said up to you, depends what you are comfortable with.
In my family, few of my parents generation have insurance - and now none of them can afford it with the Lifetime Health Cover loading they would have to pay. This means they have had to go on public waiting lists for things like hip/knee work or cataract surgery. It is not the end of the world, but it does cause a bit of stress for them.
posted by AnnaRat at 3:04 AM on September 28, 2018 [1 favorite]
But if the cost of private health insurance is roughly the same as paying the surcharge
Only the shittiest private health products are functionally equivalent in cost terms to the surcharge. They are "junk" policies that don't cover anything unless like you're in very serious medical situation - in which case the public system would totally cover you.
You really need to pay a little more to get dental etc.
Do note, if you don't have private health insurance:
1) it will only get more expensive for you to take it out as you age, and you don't want to be on public waiting lists for "non essential" things like cataract, dental surgery etc. This means you consider insurance, or you pay out of pocket.
2) If you have to take an ambulance, for any reason at all, you will be issued a bill for several thousand dollars, and unless you have a healthcare card (low income) you will be expected to pay it, in full. Ambulance cover can be purchased separately should you wish to avoid private health insurance.
posted by smoke at 3:08 AM on September 28, 2018
Only the shittiest private health products are functionally equivalent in cost terms to the surcharge. They are "junk" policies that don't cover anything unless like you're in very serious medical situation - in which case the public system would totally cover you.
You really need to pay a little more to get dental etc.
Do note, if you don't have private health insurance:
1) it will only get more expensive for you to take it out as you age, and you don't want to be on public waiting lists for "non essential" things like cataract, dental surgery etc. This means you consider insurance, or you pay out of pocket.
2) If you have to take an ambulance, for any reason at all, you will be issued a bill for several thousand dollars, and unless you have a healthcare card (low income) you will be expected to pay it, in full. Ambulance cover can be purchased separately should you wish to avoid private health insurance.
posted by smoke at 3:08 AM on September 28, 2018
Response by poster: If you have to take an ambulance, for any reason at all, you will be issued a bill for several thousand dollars, and unless you have a healthcare card (low income) you will be expected to pay it, in full. Ambulance cover can be purchased separately should you wish to avoid private health insurance.
I already have ambulance cover through Ambulance Victoria, so that's not a worry.
posted by kinddieserzeit at 3:15 AM on September 28, 2018
I already have ambulance cover through Ambulance Victoria, so that's not a worry.
posted by kinddieserzeit at 3:15 AM on September 28, 2018
When I was your age I had the same struggle. Ten years on I'm glad I have it - I've had elective surgery twice in the private system - plus endoscopies which cost me nothing beyond the excess because the insurance provider partners with docs for some screening procedures (this may depend on which company).
I also was ideologically opposed but I figured the government already got a lot of tax from me, this is a little bit extra that a company is using a different way. They seem to be doing well enough since the staff I've dealt with have always been great.
Also, the public system gets money from your insurer when you go into a public hospital. I went to my local A&E once and they explained it, I was hazy but she said it was a really good thing for the local hospital and didn't cost me a cent.
Plus now I've been totally spoilt by having my own room. I got the top hospital cover (thank you younger me!) but pretty basic extras - dental, physio and optical - and those are generous enough to make it worthwhile. It's worth seeing how much you get back as some cover heaps of things but you barely get any rebate.
posted by kitten magic at 3:31 AM on September 28, 2018
I also was ideologically opposed but I figured the government already got a lot of tax from me, this is a little bit extra that a company is using a different way. They seem to be doing well enough since the staff I've dealt with have always been great.
Also, the public system gets money from your insurer when you go into a public hospital. I went to my local A&E once and they explained it, I was hazy but she said it was a really good thing for the local hospital and didn't cost me a cent.
Plus now I've been totally spoilt by having my own room. I got the top hospital cover (thank you younger me!) but pretty basic extras - dental, physio and optical - and those are generous enough to make it worthwhile. It's worth seeing how much you get back as some cover heaps of things but you barely get any rebate.
posted by kitten magic at 3:31 AM on September 28, 2018
Totally agree with AnnaRat that I'd be going public for serious stuff. You're in a serious accident, all the trauma docs are in the public system anyway, most private hospitals don't have A&E. But there comes a time as you start to fall apart when it's nice to know your surgeon in advance and to be able to plan elective surgery on your own timeline (and by picking the private hospital you increase your chances of getting a private room - they list how many of each type so you can check the odds).
posted by kitten magic at 3:35 AM on September 28, 2018 [1 favorite]
posted by kitten magic at 3:35 AM on September 28, 2018 [1 favorite]
I'm in my early thirties and am grateful to have my private insurance and it's worth it to me. It has saved me thousands and thousands of dollars in hospital and specialists costs.
My health condition is not uncommon for any (female) person but has required 2 x day surgeries of which all I paid was a $400 excess per surgery (total bill per visit was ~$4/5k) + whatever specialists appointment costs I had to pay out of pocket.
It's given me peace of mind knowing I don't need to have an additional $4/5K saved up for health 'just in case' and can make decisions to actively treat my condition rather than putting it off. I haven't tried public for this so can't comment on how quickly I would be able to access care.
In addition, things like visits to the podiatrist are less financially stressful, more than 2/3 of each appointment cost is covered by my insurer and things like custom orthotics I only need to pay 1/3 of the cost.
posted by latch24 at 4:03 AM on September 28, 2018
My health condition is not uncommon for any (female) person but has required 2 x day surgeries of which all I paid was a $400 excess per surgery (total bill per visit was ~$4/5k) + whatever specialists appointment costs I had to pay out of pocket.
It's given me peace of mind knowing I don't need to have an additional $4/5K saved up for health 'just in case' and can make decisions to actively treat my condition rather than putting it off. I haven't tried public for this so can't comment on how quickly I would be able to access care.
In addition, things like visits to the podiatrist are less financially stressful, more than 2/3 of each appointment cost is covered by my insurer and things like custom orthotics I only need to pay 1/3 of the cost.
posted by latch24 at 4:03 AM on September 28, 2018
I have it and I know it's probably unnecessary, but my husband had two medical issues in the past few years that really fucked with his quality of life and yet had public wait lists of nearly a year (1. a hernia, 2. a torn meniscus requiring knee surgery. He's not yet 50 and couldn't exercise - could barely walk - until they were sorted.)
Once we got private cover there was still a long waiting period for pre existing conditions. So we decided to take it out so that next time this sort of thing happens, we don't have to wait. If we couldn't easily afford it, we'd just take a gamble that we'll stay relatively healthy or only have problems that are urgent enough the wait lists are short. And we'd probably be fine.
posted by lollusc at 5:43 AM on September 28, 2018
Once we got private cover there was still a long waiting period for pre existing conditions. So we decided to take it out so that next time this sort of thing happens, we don't have to wait. If we couldn't easily afford it, we'd just take a gamble that we'll stay relatively healthy or only have problems that are urgent enough the wait lists are short. And we'd probably be fine.
posted by lollusc at 5:43 AM on September 28, 2018
I've had some experience in how the system works (took PMI, had surgery, have friends who work in the system). TLDR I think taking the minimum cover makes sense.
For having a baby, first you would check what catchment area you fall under which would determine which public hospital you get treated in. Some public hospitals have a great reputation (eg Royal Women's in Melbourne) and you would much rather they treat you than some private hospital. Private birth cover last I saw you needed to pay it a year in advance and it cost well over twice as much as regular cover that excludes births.
Ideologically, the government wants richer people to help pay for their own healthcare privately to ease the burden on the public system. You will notice that when you check in to some public hospitals they will ask if you have private health insurance and if you want to be treated as a private patient - this means the insurance company pays your costs, not the taxpayer. No consequence to you either way.
I took the cheapest bare minimum policy available, it was only 2/3rd what the Medicare surcharge would have been so I took it purely to save money. The minimum cover levels are dictated by the government, anything above that is determined by each company. In my thinking this means I know the lowest level cover the government mandates for all PMIs but anything above that requires a serious amount of reading fine print. So the lowest level was say 800 per year, I know what I'm getting because it's mandated by government, higher cover is say 1200, but the content of that extra 400 is not regulated and I don't have the expertise to know if it's a good deal or not.
All the Australian doctors and allied health workers I know say that you will get better care and safety in the public system. The only reason to use the private system is if you are looking to avoid lengthy wait list for elective surgery. Elective means stuff that won't kill you immediately but could still impact your quality of life, pain, mobility, etc - the public system has to prioritize what their surgical teams work on and there are some surgeries you could have to wait over a year for. With private you could get it done immediately. Because private hospitals are profit focused they run on a bare minimum of patient safety (financially not viable to be prepared for low probability events) so the smart ones manage to set up next to a major public hospital so if anything goes wrong they can hand over the critically ill patient to the better equipped public system next door.
I needed some surgery that had over a year's wait in public and so I did it private. The minimum government mandated level of insurance I had covered about 70 percent of the surgeon, anaesthetist and hospital stay, but did not cover the theatre fees, so I think I ended up with something like half the 2500 cost covered in total.
I'm a big believer in self insurance. Insurance is basically the probability x cost plus a profit margin and admin fee and CEO salaries. If you can absorb that cost yourself why not cut out the middlemen? The main reason for insurance is if the cost would ruin you. So for example, I can't shrug off the cost of say, a fire destroying my house (300k for a rebuild say) so I need insurance for that. But I can absorb the cost of my phone dying (400 for replacement) so no I don't want your extended insurance. For healthcare, most elective surgeries are easily absorbable (a few thousand, compared to a 100k annual income for those needing to pay the levy) so it makes sense to me to take the minimum cover only. More catastrophic health issues will be handled by the public system. I'm... not sure if there's some kind of hugely expensive elective surgery (50k or more) that can't be done easily through the public system that I would feel I really must have (cosmetics / professional sports medicine stuff come to mind) but barring that I'm sticking with my bare minimum private insurance cover.
posted by xdvesper at 7:42 AM on September 28, 2018 [2 favorites]
For having a baby, first you would check what catchment area you fall under which would determine which public hospital you get treated in. Some public hospitals have a great reputation (eg Royal Women's in Melbourne) and you would much rather they treat you than some private hospital. Private birth cover last I saw you needed to pay it a year in advance and it cost well over twice as much as regular cover that excludes births.
Ideologically, the government wants richer people to help pay for their own healthcare privately to ease the burden on the public system. You will notice that when you check in to some public hospitals they will ask if you have private health insurance and if you want to be treated as a private patient - this means the insurance company pays your costs, not the taxpayer. No consequence to you either way.
I took the cheapest bare minimum policy available, it was only 2/3rd what the Medicare surcharge would have been so I took it purely to save money. The minimum cover levels are dictated by the government, anything above that is determined by each company. In my thinking this means I know the lowest level cover the government mandates for all PMIs but anything above that requires a serious amount of reading fine print. So the lowest level was say 800 per year, I know what I'm getting because it's mandated by government, higher cover is say 1200, but the content of that extra 400 is not regulated and I don't have the expertise to know if it's a good deal or not.
All the Australian doctors and allied health workers I know say that you will get better care and safety in the public system. The only reason to use the private system is if you are looking to avoid lengthy wait list for elective surgery. Elective means stuff that won't kill you immediately but could still impact your quality of life, pain, mobility, etc - the public system has to prioritize what their surgical teams work on and there are some surgeries you could have to wait over a year for. With private you could get it done immediately. Because private hospitals are profit focused they run on a bare minimum of patient safety (financially not viable to be prepared for low probability events) so the smart ones manage to set up next to a major public hospital so if anything goes wrong they can hand over the critically ill patient to the better equipped public system next door.
I needed some surgery that had over a year's wait in public and so I did it private. The minimum government mandated level of insurance I had covered about 70 percent of the surgeon, anaesthetist and hospital stay, but did not cover the theatre fees, so I think I ended up with something like half the 2500 cost covered in total.
I'm a big believer in self insurance. Insurance is basically the probability x cost plus a profit margin and admin fee and CEO salaries. If you can absorb that cost yourself why not cut out the middlemen? The main reason for insurance is if the cost would ruin you. So for example, I can't shrug off the cost of say, a fire destroying my house (300k for a rebuild say) so I need insurance for that. But I can absorb the cost of my phone dying (400 for replacement) so no I don't want your extended insurance. For healthcare, most elective surgeries are easily absorbable (a few thousand, compared to a 100k annual income for those needing to pay the levy) so it makes sense to me to take the minimum cover only. More catastrophic health issues will be handled by the public system. I'm... not sure if there's some kind of hugely expensive elective surgery (50k or more) that can't be done easily through the public system that I would feel I really must have (cosmetics / professional sports medicine stuff come to mind) but barring that I'm sticking with my bare minimum private insurance cover.
posted by xdvesper at 7:42 AM on September 28, 2018 [2 favorites]
I'm a 56 year old Australian who has never seen any value in private medical insurance. I have seen friends, family and acquaintances deal with a range of serious health conditions both with and without private insurance, and near as I can tell, the ones with private insurance got care that was no better and also needed to deal with niggling, irritating, nitpicky paperwork during and afterwards.
Medicare is an outstanding bureaucracy from a client-facing point of view, certainly much better to deal with than any private insurer I've ever encountered.
If I were 31 again and seriously looking at private health insurance, 56-year-old me would be advising me just to work out what the policies I was interested in would actually cover, and then just paying the same amounts as the premiums for those policies into one of my own savings accounts. 25 years of that covers a hell of a lot of nice-to-haves.
posted by flabdablet at 8:13 AM on September 28, 2018
Medicare is an outstanding bureaucracy from a client-facing point of view, certainly much better to deal with than any private insurer I've ever encountered.
If I were 31 again and seriously looking at private health insurance, 56-year-old me would be advising me just to work out what the policies I was interested in would actually cover, and then just paying the same amounts as the premiums for those policies into one of my own savings accounts. 25 years of that covers a hell of a lot of nice-to-haves.
posted by flabdablet at 8:13 AM on September 28, 2018
Ideologically, the government wants richer people to help pay for their own healthcare privately to ease the burden on the public system.
Note that this is the ideology only of the right wing of Australian politics.
The left wing, being the actually economically literate wing as opposed to the "common sense" the-whole-nation-is-a-household-or-maybe-it's-a-business-la-la-la-I-can't-hear-you wing, understands perfectly well that the most economically efficient way to achieve this payment split, and the way that would actually cost the rich less if fully implemented, would be just to fund the public system to a point of universal total adequacy via progressive income taxes.
posted by flabdablet at 8:23 AM on September 28, 2018 [5 favorites]
Note that this is the ideology only of the right wing of Australian politics.
The left wing, being the actually economically literate wing as opposed to the "common sense" the-whole-nation-is-a-household-or-maybe-it's-a-business-la-la-la-I-can't-hear-you wing, understands perfectly well that the most economically efficient way to achieve this payment split, and the way that would actually cost the rich less if fully implemented, would be just to fund the public system to a point of universal total adequacy via progressive income taxes.
posted by flabdablet at 8:23 AM on September 28, 2018 [5 favorites]
From my perspective, I would rather pay the surcharge to the government where they might do something useful with it, then the insurance company.
posted by daffodil at 1:45 PM on September 28, 2018 [1 favorite]
posted by daffodil at 1:45 PM on September 28, 2018 [1 favorite]
Private health cover is invaluable if you have mental health issues. The public system is horrifically inadequate.
posted by daybeforetheday at 3:34 AM on October 5, 2018
posted by daybeforetheday at 3:34 AM on October 5, 2018
This thread is closed to new comments.
I considered getting private for maternity cover and didn't because in that particular area so much is unscheduled they couldn't guarantee anything. A private room - if there's one available. Your OB - if yours is available. Etc. I had a great experience public at RPH in Sydney. YMMV at a private hospital (?).
I pay out of pocket for extras and for a private GP. It would be nice to have that covered, but it doesn't make sense for us to spring for private yet.
posted by jrobin276 at 2:45 AM on September 28, 2018