We live in a capitalist’s world. It’s where corporations, small and large, compete for everyone’s money while trying to scrimp and save by cost-cutting the services they deliver. Private health insurance companies aren’t alone in this endeavour.
At one end of the spectrum, private businesses are flogging services and products and productised services that they rarely intend to deliver on fully.
Take the fitness industry as an example. If every member came to the gym four times a week, health clubs would have waiting lines for equipment. Some already do without all their members attending. Opening clubs 24 hours a day dilutes the issue.
But our question is about health insurance, a social issue as it involves every one of us and our capacity to remain healthy, fit and without injury. So, should private health exist? What does it do that a universal health care system couldn’t do just as well?
In Australia, what’s the difference between Medicare and private health insurance?
During the late 1800s in Australia, private health insurance companies began as select member societies. They provided health insurance for a range of services to sector industries.
The private health sector grew and up until the introduction of Medicare in 1983. Over 80% of Australians had some form of private health care, but after Medicare, this fell to below 50%.
But this was not the first time that the Australian Government had introduced a universal healthcare system.
In 1975, Medibank was introduced as a government-funded private health insurer to provide all Australian’s with an equitable and efficient means of health coverage.
This decision was overturned the following year when the Fraser government imposed a levy on taxpayers who didn’t take out private health insurance. The levy continues today but at a higher rate.
The Fraser government also passed a bill allowing Medibank to compete in the private sector. In 2014, the Abbot government privatised it.
In 1983, Medicare was introduced to replace the first Medibank. Still in effect today, it uses a bulk billing system that pays for approved services at an agreed-upon rate. Some services, both public and private, can charge more, leaving a gap that is payable by the patient.
Patients accessing private services who have private health care insurance may have some of the private services covered by Medicare and Medibank. However, they may still end up paying a gap for services not claimable under either type of insurance.
So, how did Australians access health services before Medibank or Medicare?
- The public hospital system in Australian is a state-run institution. Since WWII, when the federal government took over control of taxation from the states, public hospitals have relied on funding from the federal government. Lack of adequate financing reduced the services offered.
- Before Medibank or Medicare, some hospitals, especially hospitals outside of metropolitan areas, provided general practitioner services, but there were many services not covered in a public hospital.
- Private insurers may cover some extra services, but this system was not regulated.
- Country areas also did not have many specialist medical services (EG Ear, Nose or Eye doctors). Lack of local services forced patients to travel to see specialists outside of the public system in capital cities.
- Medical debt collectors were a common sight in places like Sydney.
Now, anyone with a government Medicare card can attend a public hospital for free for services covered under Medicare. Some people without a Medicare card can also receive services for free from a public hospital.
Is it worth getting private health insurance?
Private health care does cover you for some essential medical services that Medicare doesn’t. Like dental. Without private health care, most people who do not receive government benefits must pay for dental work, including regular checkups and filings.
There is growing pressure though for basic dental work to be covered under Medicare.
If you have a pre-existing condition, your private health insurance will most likely not cover the costs associated with it.
However, to deny coverage, private health insurers are required to have the condition and treatment assessed by a professional medical practitioner. Unfortunately, some insurers are denying claims without due diligence.
Do you want to pay more out of pocket expenses with private care?
One of the problems often associated with private care is that additional services usually come with a bill that isn’t covered by the insurance.
Take choosing to have your baby in a private hospital.
In some cases, private and public hospitals share facilities so that you might be having your child in the same labour rooms as someone going public. The only differences are your choice of doctor (if they’re available), where and how you spend your stay.
While you may have elected to go private, there may be additional costs not covered under private insurance. You’ll have to pay for those out of your own pocket. And that’s one of the major complaints about private health insurance.
Meanwhile, in the public system, you’ll get the same level of medical treatment and access to specialist services like lactation advisors. And you may also get home visits from a nurse without needing to pay anymore than your Medicare levy.
Putting maternity health issues aside, the downside to public care is that some public hospitals have long waiting lists. First, you see your GP and get some tests done before they recommended you to see a specialist at the hospital.
Then, the hospital assigns you to a waiting list depending on the urgency of your condition. You might have to wait three months, six or nine months before you get your foot through the door for your first consultation.
After that, you might need to go on another waiting list to receive treatment. With private health insurance, you can usually jump the cue.
Is private health insurance necessary?
If we only had a universal health care system, then wouldn’t those who wanted better health care, ensure it was available to all?
This seems logical, but how does it get funded?
And how would people who work in the health care system benefit? Would there be caps on what you could earn or would a tiered wage system exist?
It should be no surprise that surgeons earn the top salaries in the medical profession. A doctor with steady hands who slices open a patient is in high demand. The average taxable income for an Australian surgeon is $398,866. Some make much more.
Many doctors work in both the private and public systems. Some as consultants and some as visiting physicians. Those with private practices also pay for other staff, expenses and leave from their earnings.
And let’s not forget just how much education and training you need to become a doctor. Medical practitioners go through a lot to get the top of their profession. So, don’t they deserve to earn a high income?
But doctors’ salaries aren’t the problem within the private health care system. When compared with executive salary packages their compensation is but a drop in the bucket.
Rising insurance premiums signed off by the Government raise revenue to pay for advertising, vetting of claims, shareholders and the well oiled executive branch. Net profit in the private health sector remains in the billions and CEO’s take-home millions every year.
As well, the private health care system places an unnecessary burden on the public system. With fees already at a premium, patients with private health insurance still use the public system. They can’t afford to pay the additional excess that the patient encounters.
Then there are cases where the private system refuses to take a privately insured patient. Or the patient themselves just prefer the public system even though they pay for private insurance
Meanwhile, the private system has empty beds, and there are not enough beds to go around in public hospitals.
How much does private health insurance cost?
The cost of private health insurance depends on what you want to be covered and how much excess you are willing to pay. Just like home and contents insurance, when something goes wrong, you may be required to pay an excess amount like $500.
Basic cover for a family can start from about $30 a month. This might cover basic dental like a clean and a filling, as well as therapies like a remedial massage. On the other end of the scale, if you’re seeking top hospital cover plus extras, packages begin at about $250 a month.
Even the more expensive cover still comes with an excess of between $250 to $750.
One of the issues with selecting private health insurance in Australia is that the different options are confusing. As of this financial year, insurers have introduced a new tier system hoping to make things less complicated.
When selecting your private health care cover in Australia you have to consider other aspects:
- If you’re over 31 and not had insurance cover before you’ll pay a penalty for every year since.
- You may have a waiting period of 6-12 months after you take it out, especially if you have pre-existing conditions (but you can still access the public system for those).
- Most services only pay for a portion of the service, not the whole amount.
- The number of times you want to access a health service may be limited each year.
Is a universal health care system a human right?
Do we all have the right to health care that keeps us alive and in good health?
A United Nations treaty in 1966 declared the right to health and Australia signed on in 1976. Australia governments are to provide “the right of everyone to the enjoyment of the highest attainable standard of physical and mental health. “
We’ve signed on to numerous other international treaties that uphold the right to health. But no laws in Australia have been passed declaring health, physical or mental as a personal right regardless of economic status or income.
So, Australia is meant to follow a rights-based approach to health without discrimination, but does our current system go far enough?
Can we do better?
Australia’s current health care system isn’t fair
While it goes further than other countries like the USA, Australia’s system for healthcare discriminates against those without private health care. As well, even those who pay for private health insurance are discriminated against when it comes to paying an additional excess for treatment.
Australia’s private health care system:
- Is too expensive for many individuals and families.
- Has constrained conditions like paying an excess.
- Places those who pay for it before others. It creates an economic tier of health care which discriminates against those in lower financial circumstances.
- Is given preference for resources, like beds and doctors over the public system.
- Puts executives and shareholders before patients.
The public system:
- Restricts care to basic services with excessive waiting lists.
- Doesn’t include dental, a contributor to chronic disease. (Although, some free dental is available for children if a family receives certain payments from the Australian Government.)
- Places ridiculous expectations on limited resources shared by both public and private sector patients.
Our public health care system is constrained
It doesn’t go far enough to give everyone “the enjoyment of the highest attainable standard of physical and mental health.” It’s not a universal system.
Our government gives preferential treatment to a private health care system which discriminates in their delivery of health care and the delivery of health as a human right. It favours the rich and perpetuates a class system in Australia.
Australian’s – people in general – deserve a fair health system. One that cares about a person’s health over privatisation, profits and economic status. Sure, our system provides some level of care to all, but it doesn’t give a quality service to all.
The quality of Australia’s health care system depends on how much you can afford to pay for private health care.
Instead, we should be providing the same level of care to all regardless of age, race, the current level of health, religion, location or economic circumstance.
Rather than funnelling all that money into the private sphere, how about channelling it into a universal health system?
Do away with the marketing teams, overheads and organisational structures that create red tape and expensive premiums with an unaffordable excess to churn a profit for executives and shareholders.
A real universal health care system is idealistic, for sure, but it’s not unobtainable.