Some Private Health Insurance in Australia Is Still Better than None

For privately insured Australians, it seems that the current year is bringing along a slew of cost increases on their premiums. The most recent announcement on this topic concerns slashing the 30 per cent penalty rebate, for policymakers who first take out insurance after the age of thirty. While this measure is only bound to affect some, others are more inclusive: starting from April 2014, the private health insurance rebate cost is going to be indexed according to the lower of two factors – the consumer price index or the general increase in premium costs. Many in the health fund industry have protested this decision, arguing that the consumer price index is always going to be the lower of the two and that it does not accurately reflect inflation in terms of health care costs.

On top of all this, most privately insured Australians are bound to get an actual picture of the effects of means testing only at the beginning of this new fiscal year (2013-2014). This is because last year, they rushed to compare premium costs on singles and family health insurance and to pay for their coverage ahead of time, in order to sidestep means testing. But now, in July 2013, the rebate is going to come in and its average worth of $2,500 is bound to fall by as much as 30 per cent. To boot, private health coverage premiums have been increasing by some 5.6 per cent and will likely continue to do so, further complicating the issue of cost.

However, experts in the field explain that, at the end of the day, holding on to private health insurance instead of solely relying on Medicare is the cheaper of the two options. The representative of one insurer says that it’s far more affordable to be privately insured, even if by nothing else than a basic coverage plan, than to risk enormous out-of-pocket costs. This applies both for high-income earners, as well as for their less well-off counterparts, as the Medicare levy extra charge is activated only for singles who make more than $84,000 and households whose earnings exceed $168,000.

Another word of advice from a regulator in the field of private health insurance is to make sure you are getting proper coverage. Carole Bennett, a member of the Consumers Health Forum, says many consumers make the mistake of opting for a stripped-down health coverage plan. When the need for health care costs arises in their household, they find themselves faced with the effects of the exclusions those policies come along with. People risk not being covered for basic medical services like heart surgery, psychiatry and orthopedics – and they often only realize this once it’s far too late and they’ve started medical treatment. This, in turn, produces a double-pronged effect: it taxes the already overloaded public health care system, but it also has consumers paying through the nose for essential services.

According to the latest stats from the Private Health Insurance Administration Council, 60 per cent of the people insured in 2011 chose to take out policies with major exclusion. This number increased from 38 per cent in 2006 and remains high, even though the first quarter of 2011 saw a slight improvement. Another set of data reveals that a mere 12 per cent of patients that sign up for treatment at a public health care facility are privately insured. This taxes the public system, since such situations are covered for from the taxpayers’ money, and also often warrants less than ideal treatment and conditions for care. As such, the Government’s plea for consumers to shop around for the best plan comes with an amendment from civil society: choose a cost-efficient private health insurance plan, which doesn’t come with too many essential exclusions.

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