Going private - are you getting what you pay for?
According to the Consumers Health Forum, “the persistently negative revelations about the rising costs and uncertainty plaguing health insurance have culminated recently in the first decline in the membership rate for years”.
And this is despite the plethora of regulations, tax incentives and $6 billion rebate that the government hoped would encourage people into health cover. When Liz Cole had to be rushed to hospital in the early hours of the morning and the paramedics asked for her preferred destination, she chose the nearest private hospital. “It was brand new and stylish with immediate attention from medical staff, good nurse-to-patient ratio and a pleasant room with state-of-the-art technology. But from my window I had a view of the reputedly very good and quite new public hospital and all I could think was: “If I’d gone in there it would cost me nothing!”
Liz and her husband pay about $4500 a year for private health cover that includes top hospital benefits.
By contrast, retired businessman Terry Langdon pays nothing. He has never had private insurance because, he says, he can’t see the value in it.
He and his wife Sheryl have nothing but praise for the two public hospitals in their area and although agreeing that the waiting list can be long for certain elective procedures, they say they’ve never had to wait for more urgent treatment. When Sheryl was taken to hospital with pneumonia she was admitted and treated without delay.
Asked what he would do if he needed major elective surgery, such as a hip replacement, Terry said he would first check the waiting list at the public hospital and, if too long, would consider having it done in a private hospital at his own cost – using the money he’d saved over the years by not having private insurance.
“Things have changed since I was young,” says retiree Rob Plum who has spent many weeks in private hospitals during the past five years and always seeks “no gap” surgeons who operate for the scheduled fee.
“Today the public hospitals seem to be more caring whereas the private hospitals want their money up front and are always shoving complicated forms in front of you, whether you are fit to sign them or not,” he says.
Jeweller Alastair Bax agrees and says that in both of the large, well-known Brisbane private hospitals in which he and his wife spent time recently, there was a conspicuous lack of nursing attention and the mostly pre-packaged food was “dreadful”. Despite this, Alastair pays for top private hospital cover, with a $500 a year excess, because: “I like to choose my own doctor and I don’t want to wait for an operation.” However, he doesn’t pay for “extras” such as dental and optometry.
“It’s cheaper if you keep your money in the bank and pay up when necessary,” he says.
Many are critical of private hospitals and it appears that the long-held community perception that private hospital care is superior to public, no longer holds as true as it once did. Many private hospitals that were once run by churches now have to walk a fine line keeping the shareholders happy as well as the patients.
Common criticisms include general maladministration, petty cost-cutting (one patient says he was told to wash his own bandages!), poor nurse-to-patient ratio (with contract nurses unfamiliar with ward procedures and sometimes working double shifts), poor food and a “profits before patients” attitude.
“Despite criticisms, statistics show that most Queenslanders of retirement age and older still favour having private health cover”
Rob Plum says of his recent stint in a new private hospital operated by a major healthcare provider: “Medical care was as good as you’d expect for the price but the administration was chaotic and uncoordinated. The left hand doesn’t know what the right hand is doing and the patients suffer for it.
“When my wife rang up to enquire how I was they told her I’d been discharged. Actually I was still in the operating theatre.”
Despite such criticisms, statistics show that most Queenslanders of retirement age and older still favour having private health cover for both hospitalisation and designated “extras” such as dental care. Some even recommend using the public system for emergencies and major conditions such as heart trouble and cancer, while “going private” for elective surgery.
And only the rich can afford such surgery without insurance. The annual high claims survey conducted by peak industry body Private Health Care Australia shows that the number of claims topping $10,000 is increasing, with many exceeding $50,000 and the highest in the past year reaching a whopping $446,803 for treatment of an aortic aneurism. A hip operation usually costs at least $22,000 without private cover, otherwise it’s about $4000 in out-of-pocket expenses.
CEO Dr Rachel David, in quoting these figures, says: “It’s easy to understand why health cover provides peace of mind for more than 13 million Australians.” These treatments are of course available free at a public hospital but with Queensland still not quite meeting the Australian Medical Association’s target for minimal waiting times (though doing better than most other states) you will have to join the queue for all except the most urgent surgery/treatments.
That’s up to 90 days for semi-urgent cases and 365 days if non-urgent, for example for some joint replacements and cataract surgery. For those older citizens who prefer not to wait, finding the best deal in hospital cover, and ancillary health care such as dental and optometry, is very important.
Fortunately, with more than 30 health fund providers from which to choose, competition among them is fierce.
However, selecting from the almost 120 separate policies on offer is a challenge.
It may help to consult one of the comparison specialists but bear in mind that these companies usually earn a commission if you change provider.
This vast range of health funds and policies is one of the aspects of private health cover that most concerns consumers – and the Federal Government that is clearly determined to coerce us all into private medical insurance.
The difficulty of finding the right policy has become a major focus for several consumer associations including the Australian Competition and Consumer Commission which is pushing for greater transparency in, and regulation of, the health insurance industry. Specifically, there needs to be clarity about the standardisation of terminology such as “no gap” and “known gap” and the need to review requirements for minimum policy coverage given the growth of restrictions and inclusions.
Health Minister Sussan Ley admits that while private health insurance is a fundamental part of our national health system, a survey conducted last year showed that the majority of the 40,000 consumers who responded believed the current system was frustrating and didn’t offer good value for money.
So the Federal Government has done what governments love to do and formed a committee, to oversee reforms in the private health sector.
The committee will represent consumers, medical associations, health professionals, profit and not-for-profit private health care providers, private insurance experts, private hospitals and a couple of peak industry bodies.
It will be charged with:
- Advising on the implementation of the Turnbull Government’s reforms to private health insurance, including the development of easy-to-understand categories of health insurance, so that consumers understand what their policies will and will not cover
- Addressing regulatory issues that are adding to the cost of premiums and discouraging innovation
- Developing a private health insurance product designed specifically for Australians living in rural and remote areas
Another consumer body, The Consumers Health Forum, has enthusiastically endorsed this move, arguing that medical rebates could be better targeted in the interests of taxpayers and consumers, and also that policies not meeting its criteria for reasonable cover, simplicity and comparability should not be eligible for the government rebate.
In the meantime, those battling to meet the cost of private medical insurance still have to try and get the most bang for their buck and it may help to consult one of the comparison specialists – while bearing in mind that these companies do earn commissions if you change your provider.
A retired couple with full hospital and extra benefits cover can expect to pay $320-$380 a month.
Health insurance specialist Alex Scoffell of comparethemarket.com.au recommends not being guided by price alone, but also by quality of customer service and whether you prefer your provider to be a not-for-profit mutual fund or a for-profit public company.
Scoffell says you may get the best deal by insuring with two different funds, one for hospital cover and one for the extras that may include everything from dental care to acupuncture. It is important to examine exactly what each is offering in any given package so you pay only for what you need, particularly noting factors such as benefit limits, hospital admission excess and just what services such as some radiology and pathology, are covered by your insurer.
During the past year, some hospital patients have had nasty surprises when they found themselves paying for services which were no longer covered by either Medicare of their insurer.
Those interested in changing or comparing their health insurance policy should visit privatehealth.gov.au and check the rating of your local hospitals at MyHospitals.gov.au although the information is limited. It does not, for example, explain the real issue here – that the high cost of medical technologies available in our hospitals today is posing a considerable challenge to state and federal governments, private hospital operators, private health insurers and, ultimately, patients.
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