Thursday, April 2, 2009

Reflections on Private Health Insurance

Recently we have had a number of members ask about the value of private health insurance for their particular circumstance. We are not able to provide specific advice about this but have pointed members to a range of online materials that could further inform them.

The Private Health Insurance Administration Council (PHIAC)
has produced a booked let Insure? Not Insure? that is available in html version and Pdf (455kb). This document has a useful list of questions to ask your insurer such as:
  • Will my hospital cover provide benefits for all procedures or types of treatment?
  • Which hospital treatments will not be covered by this policy?
  • Is ambulance cover included with my hospital cover?
  • Which operations are considered elective?
The website for researching private health insurance products is run by the private health insurance ombudsman's office, and consumers associated with the Consumers' Health Forum assisted that office to make the website as user friendly as possible.

The Consumers Health Forum of Australia has completed work on private health insurance with a focus on key initiatives under the private health insurance reforms. These initiatives include: informed financial consent arrangements; the consumer information website administered by the Private Health Insurance Ombudsman; the introduction of broader health cover; and the review of prostheses listing arrangements.

One of the issues affecting consumers we identified last year was ambulance cover. ACT residents do not receive free ambulance service unless they hold an ACT Pensioner Concession or Health Care card. ACT residents are however, covered for ambulance services provided within the ACT as a result of a road traffic accident – through the road rescue fee levied on vehicle registration. Medicare does not cover the cost of ambulance services. Private health insurance policies usually cover ambulance services – but we suggest you check with your health fund.

The Health Minister Roxon was very clear at the recent AHCRA summit that the Private Health Insurance rebate is here to stay but we wonder whether given the current budget issues and the renewed call for need to address middle class welfare how long the government can sustain this. We will be interested to see the federal budget.

With the private health insurance rebate it stops being only a health decision but rather becomes more of an economic one. However the financial benefits only outweigh the direct costs for those people who are medium to high income earners.

A submission to the National Health and Hospitals Reform Commission by Peter Collins, previously NSW Liberal Minister for Health, makes interesting reading:
“… An idea for making the health system work properly. Calculate what Medicare levy percentage would be required from year to year the would need to be applied to everybody’s income so as to completely cover all medical expenses that are currently covered by both the Medicare public system and the private health system and then completely remove the private health insurance system. This way all costs would be covered, everyone would be covered and everyone would pay for the system at a rate at which there income level can support.
This may seem simplified but I believe the system at present is complicated with the private health system and quite often people just can’t afford private health insurance and probably can even less afford it if they are in need of the coverage because of poor health.”

The Private Health Insurance Administration Council (PHIAC) has published the results of the annual survey of privately insured persons for hospital treatment benefits by State and Territory as at 31 December each year from 1998 to 2008. These tables provide the statistics (i.e., the numbers of people who are covered by private health insurance) but do not provide analysis.

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