Do You Really Need Private Health Insurance?

Hi all,

Most people have joined Private health insurance to avoid the Medicare Levy Surcharge.
However if you are low income or you have a Medicare levy exemption, is paying $3.5K per year (for family) for Private health insurance worth it?
Or is there better alternatives?

For example, if you have an unexpected injured or become seriously ill, would you just go straight to the hospital (public) emergency?
Or if you have an planned operation, would the cost of the operation be equivalent to paying for the Private health insurance premiums for a couple of years?
Does this suggest that Private health insurance is only beneficial for those who have serious illness?

I currently have Private health insurance but question the need to have one going fourth.
Also would like to know if there are any other better alternatives available, eg. Smile dental plan.



  • +16

    I have used a self-insurance system to cover health expenses (the ones not covered by Medicare) for the past 30 years and it has working just fine for me. Every pay I put $100 in a savings account via payroll deduction. When I get a medical bill to pay, the money is available in the savings account…….
    You need to be disciplined though not to withdraw money for other purposes!!

    • Good idea.
      I assumed this has worked out well for you?
      Or would you have done something differently?

      • +11

        I would not change anything, except maybe putting $1000 upfront into the savings account to give it an starting boost.

        • Did you use a high interest online saving account?

        • @congngo: is there any such thing as a high interest online account anymore? If there is I would like to know. Even the CBA Goalsaver now gives 3.05 % which hardly covers CPI. And not a single withdrawal is allowed or your entire balance gets 0.01 % interest for the month. It's time to get out of savings (term deposits are no better) and invest elsewhere, but where I don't know, since shares are not easily liquid either.

        • @momov3:
          Shares are very liquid, but not the right solution for low risk investment. Have a look at Woolworth Corporate bonds instead.

        • @momov3:

          Hadn't actually realised it had gone down so much…huh.

          Made a nice amount this financial year from it though - around the $950-mark by the end of this FY which is nce for the mortgage!

        • Can't really be bothered with the interest. After paying tax on interest, there's not much left anyway

    • +9

      I have a better one…
      Every pay put all the money in a high interest saving account or a better investment.
      Only spend what you need. No waste or useless spending.
      That way you put away a lot more than $100. And invest it the best you can.
      Then if something happens you have your own money to fix the problem (whatever the problem is…health, accident, house break in, etc).
      Someone once said "insurance is for the poor". I think it is true to some extent. If you have your own insurance fund you do not need to pay for insurance. Especially if what you insure is a very unlikely event.
      After saying that no point paying medicare levy if your income is over the threshold and basic health insurance is cheaper.

      • +2

        yeah, I am thinking of putting the money into the Home loan offset account.

        • +1

          You have a home loan and spare money not sitting in offset! Ouch

          Not only do you have to pay tax on the savings interest earned, you're probably getting a much lower rate in savings

        • +1

          You've got your loan with a different bank or something? If not, it's outrageous they didn't automatically do that or at least suggest it!

        • @Andy-Laa: agree 100%

          I don't know of many/any banks doing this. happy to be corrected!

        • +1


          Commonwealth did for me - we have 6 accounts as a couple - my personal saver and spends, her personal saver and spends and a joint saver and spends.

          We could make one of those our offset interest which was the first thing suggested by our mortgage consultant. We obviously went with the joint saver as that's where our life savings are.

      • +5

        "insurance is for the poor"

        I don't think anyone said that because it's dumb.

        The reason you insure your health is you have a small risk of requiring very expensive medical procedures, it makes no sense at all to save $250,000 in cash for example just so that you are covered for the 1 chance in 2768 or whatever the odds may be that you require some medical procedure.

        This is the same principle as any other insurance, it allows you to be wealthier not poorer because you don't need enormous cash reserves to be safe.

        • I did read the statement by some very wealthy american entrepreneur.
          And it makes sense. If you have a few millions in the bank (or other investment) you can front any emergency if it arises without having to spend money on insuring for things that may never happen.
          On the other hand if you do not have easy access to large amounts to front such emergencies you would be better off paying smaller ongoing amounts on insurance to be safe.
          OP for example mentions he has a home loan. This means he does not have large spare cash reserves (otherwise he would not need a home loan) so it may be wiser for him to have some basic health insurance should the unexpected happen.
          It also makes sense to pay for health insurance if the government forces you to pay more than the cost of insurance in taxes if you don't have it.

        • +10

          medicare is my insurance. If an emergency happens, I'm happy to go public. If I need to go on a wait list, I might consider paying for private treatment. That might not be an option for some, so I guess some could say insurance is for the poor.
          I don't see how the medicare levy surcharge is a factor. For me, the surcharge is way cheaper than paying for insurance.

        • +5

          @maxi: My home loan IS my cash reserve (aka insurance). If my families health requires it, we'll sacrifice what we've paid off the house if necessary. But I suspect we'll be ahead in the long run by paying off the mortgage rather than giving money to insurance companies.

        • -2

          That leads to the stories you read in the newspaper, when people have to sell their house. Don't risk it.

        • @maxi: He could have 5 home loans and still have equity which could be called upon relatively quickly

        • +1

          Think about this from first principles of mathematics (or is it economics?) , if there's a small chance that you will need a procedure, and by definition the procedure costs 200k, and you buy insurance to cover that procedure, if you think that you are better off buying the insurance that is like saying you think the insurance system is 100% efficient. This is obviously not true because there are millions and maybe billions of dollars spent each year on marketing and advertising, paying wages of people who aren't the doctors doing the procedure etc. Unless there is some economy of scale then it's not cheaper for the insurance company than it is for you.

          On the other hand, the public system is directly linked with the economies of scale, eg. So there is a bed when you need one and nurses and doctors, we pay tax and the government sets them up for us to use them when they need them.

          The other thing to consider is that if you are unlucky you are better off than if you hadn't bought insurance, because you are the drain on the system. What this means is that others are paying for your services which means they are worse off. People don't complain about not getting sick much so they often forget about this.

        • @Jackson:
          Partially true.
          Home loan is for the house where you live, your home. And since it is not tax deductable if you have spare money that is the best place for it.
          Investment property loans is a different story. You could have lots of them and yet have lots of money.

        • @maxi: yes but by your logic (which is correct) all his spare money would be in his home loan then, so that is where everyone's spare money should be, which is why millionaires love having expensive homes, and when they hit the skids its o of the first things that gets sold (or put I'm the wife's me :)

        • @Jackson: I'm not sure, but I think the margins on most insurance products are so low that they actually only make money on the interest earned on held capital.

        • @macrocephalic: after paying wages etc.

      • -1

        I really do like your ideas, but I would still keep third party car insurance for convenience.

        I've been hit twice by uninsured drivers. Getting reimbursed by the at-fault party was like getting blood from a stone. First one never answered his phone and the second asked me repeatedly to commit insurance fraud before finally paying up.

        Another time a guy crossed a three lane highway right in front of me without looking. I bounced off him into a new car. The new car blamed me, but I was insured and it clearly wasn't my fault so after I left the scene I never heard from him again (nor paid any excess).

        • +7

          we're talking about health insurance. I insure my car coz the likelihood of needing to claim in high, and the cost is IMO a heck of a lot more reasonable than health insurance.
          I figure we have compulsory health insurance (medicare). So we all have base-line cover. Private heath insurance to me is additional cover, which I'm happy to opt out of.

    • +1

      Self insurance can often be insufficient. It is only because many people share the risk and put more money that a few can be paid when they really need it. However insurance would not work if everyone gets the full true value of what they pay because the thing they are actually paying for is uncertainty and risk.

    • Self insurance really isnt something that should be advocated.

      Medical expenses for serious illnesses can be 10's of thousands of dollars (often 100's of thousands). Unless you are putting $100 away on a daily basis, youre asking for trouble.

      • This would be true if Medicare didn't exist. Since it does, your comment is restricted to a tiny set of circumstances where the Medicare wait is longer than is convenient to you, and the cost of having insurance every year is less than the cost of the procedure.
        Seeing as you may never require such a procedure, and would then still have the money, it seems very reasonable to self insure.

  • +7

    disclaimer this advice is to be taken as seriously as any advice doled out on the internets *

    Trying to unravel your question which seems to have two parts to it?

    1) Is having private (hospital) cover worth it, if you've over the income threshold? In which case the answer is generally yes - if you shop around, basic hospital cover is around the same or less than the surcharge.

    2) If you are under the income threshold, is it then still worth having either basic hospital or hospital + extras cover? By your statement asking if "smile" dental plan is an alternative, that suggests to me you're asking about hospital & extras, rather than basic hospital cover.

    Health insurers don't really make any money out of providing basic hospital cover, because it is legislated to be community rated (pretty much a flat rate price across the board, broad acceptance and renewal rules). Compare this to car insurance which is risk rated - a young person with 4 at-fault crashes is going to be paying a lot more for insurance than a 40 year old who hasn't had a crash in 20 years.

    However, private extras/ancillaries is an area where insurers have far more flexibility in terms of coverage, reimbursement and approval.

    TL;DR: Private extras is where big insurers make their profits. You need to look at your personal claim history to see whether you need a couple of glasses every year, a back rub and a "free" dentist check & clean, and whether your extras premium is worth it.

    • Thanks.
      What you have said makes sense. We don't use much of the "Extra" cover beside from dental.
      So we are considering just getting the basic hospital cover.
      However we are also considering doing what Shadow54 has done and just putting money aside instead of paying for the hospital cover.
      The money we put aside can just sit in our home loan offset account, further reducing the interest repayments.

    • +2

      "basic hospital cover is around the same or less than the surcharge"
      Seriously? Can you provide details? I would certainly give my money to an insurer rather than tax office if it's cheaper, but I'm yet to find cover acceptable to ATO that's anywhere near the surcharge.
      What's the cheapest health insurance that satisfies the ATO?

      • +1

        Exactly what I'd like to know too! more on this please @slknv

      • 27$ a week from gmhba for a family with three kids.

      • For example, GMHBA basic hospital extras is around $700. Don't just look at the "comparison" sites like iselect etc as they do not cover all insurers, only the insurers that feed them a trailing commission.

        • Thanks. dang. Spewing if I could have been saving money by having insurance!!???

        • Sorry, I added "extras" onto my post without thinking, it's basic hospital cover only, without extras (which IMHO are usually not worth the price paid).

          that said, basic hospital for $700 means you avoid the medicare levy surchage, as well as avoiding lifetime loading, plus you do get some benefit if you are ever unlucky enough to require hospital care.

          also look at other health insurers for their basic hospital cover, gmhba is who I use personally but there should be other at the same price point or so

      • +1

        Yes I have HBF Hospital+Extra cover which cost me $2000 a year which covers my family (me+wife+kid) and I am 32 years old. If I don't take Private health insurance then ATO will charge me around $1500 Medicare levy surcharge (MLS) and charge my wife around $2000 so total cost is $3500 for MLS. Therefore by having private health insurance I am saving $1500 and get Private health insurance as well.

        • HCF or HBF? OH well, if me and my spouse were earning that much to both be surcharged the levy,I don't think the expense of private cover would be any issue! It's a win win situation then to get private cover.

  • +7

    Yeah but what if something happens (car accident) or whatever, that requires a surgery bill of $XXX,000? Wouldn't you be glad you had private health insurance then?

    A benefit I see of private health is that you won't have to be on long waiting lists (which in itself is mentally distressing if you know something is wrong with you and have to wait months/years for your operation…)

    Not having a go at you, just something to think about..

    • It is a fair question.
      Hopefully by that time, you would have enough save in the account…

    • +24

      this is Australia. If you have a car accident you go to the emergency department of your public hospital and everything is Medicare covered.

      • +4

        "elective" surgeries that are actually debilitating (and get worse) have 2-3 year waiting lists with our brilliant Medicare covered public health system.

        • +5


          Don't think that just because you are in pain or getting long term damage that it somehow makes your surgery urgent.

          You can survive for years in absolute misery, getting by on a cocktail of drugs for many things that won't technically kill you, but will make your life feel not worth living. That will be considered a sufficient patch-up whilst you wait for your non-life threatening surgery.

    • +9

      If you have a car accident, you'll be shipped off to the nearest public hospital where you'll receive very good care through medicare. Health insurance really only becomes a hero if you need elective surgery. Having health insurance means you can jump the queue, which in my state is something over 2 years for urgent surgery, such as gall stones, heart surgery, etc. People die waiting for "elective" surgery, which really isn't elective but has been categorized as such by our government public health system.

      • +1

        So we should only join Private health insurance if the need for "elective" surgery comes up (knock on wood)?
        Normally the Health funds have a 6-12 months waiting period for elective surgery.

        • +2

          Yes, you have to wait 12 months usually for pre-existing conditions, but that is still cheaper (12 months of paying private insurance) than paying out of your own pocket for the surgery, AND it is still faster than the best elective waiting lists around the country - Tasmania for high priority surgery (think bypass surgery for hearts and the like) is 500+ days, much longer than the 12 month waiting period you have to serve to get the surgery under insurance. You must take top hospital though, because private patient in public hospital level health insurance does not push you up the list.. you have to be able to be covered for private hospital care.

        • -3

          @mrsgruffy: People die waiting for so called "elective" surgery. Unless you're actually an emergency admission and likely to die if you don't get the surgery, all surgery is considered elective. That's another thing worth doing if you are stuck and don't have insurance.. start turning up frequently at A&E and complain of terrible pain or worsening symptoms. The squeaky gate gets the most oil… be subtle, but be prepared to exaggerate your symptoms a bit. You'll spend a lot of time in the waiting room, but you will be seen, and notes will be written on your file, and it may mean you get put up the list a little bit.. but you have to be selfish about this.. you have to realise that you are pushing other worthy patients down the list. That's the quandary about this, I guess.

        • @mrsgruffy: This point is true, I was advised by hospital staff to do it and it worked. 3 months wait instead of 9.

        • +4


          Mrsgruffy, I'm afraid you're using language that politicians use and is quite misleading. It is correct that some people pass away while on the elective list for an unrelated condition, however, it is rare for a person to die BECAUSE they were on the waiting list.

          Working in the public system, I can tell you that unfortunately your suggestion of how to possibly jump ahead in the queue does not work, if anything you are contributing to resource wasting due to unnecessary ED presentations.

        • +12

          @Deridas: It certainly worked to get my son his surgery for a hydrocele as big as a softball on one of his testicles. He couldn't sit comfortably, couldn't work, couldn't even go to the movies because of the pain while sitting, but his surgery was deemed elective and he was told it would be aproximately 9 months before he would get surgery. After all, you don't die from a hydrocele, right? As a teenaged boy, this was devastating, but three trips to Canterbury Hospital A&E, we finally got someone who could see the genuine suffering and urgency of the issue, and he got his surgery 6 weeks later. I have no idea how we would have handled this distressing problem for 9 more months, since he'd already had it for a year and thought he had cancer and was too embarrassed to tell anyone. So despite what you say, having good advocacy and being prepared to be "patient" at the hospital, you can get bumped up the list. Of course, YMMV.. but that was my experience. As a small boy, he was deaf because of "glue ears" and he was put on a waiting list at 18 months for surgery for grommets. It was effecting his speech development so we took out a personal loan to pay for his surgery privately. I kept his name on the public list out of curiousity, and he was 6 when the letter came for us to attend the pre-admission clinic! Can you imagine the cost to his learning if we had waited until he was 6 to have that surgery? Waiting lists are unacceptably long all over Australia, but especially in Tasmania. A parent has to do what a parent has to do.. and that includes advocacy for their child in the public health system. We have private insurance now, but during those years, we were a family of 7 on a single income. Health insurance was out of the question, financially. These days, we can afford it, and we pay dearly for it.. over $500 per month, but I have a chronic health condition that makes it almost essential in order to get the care I need. When I first suffered my injury, neither of the two neurosurgeons in Tasmania would even see me because I didn't have private health insurance. It's a complete disgrace.

        • +1

          @mrsgruffy: "A parent has to do what a parent has to do.. and that includes advocacy for their child in the public health system"
          100% Right. Sometimes the parent has to tell the Doctor what there is to do. Doctors have a huge workload, and if parents don't insist, then they will just be pushed around.

        • +3

          @mrsgruffy: Frequent unnecessary presentations to ED with exaggerated symptoms are a waste of public health resources. Every minute spent assessing someone's pain that will be resolved by the elective surgery they are already waitlisted for, is another minute not spent assessing someone with a potentially life-threatening condition.

        • @mrsgruffy:

          mrsgruffy, it was a shame that your son had such a long wait for his procedure. The only reason he was able to be bumped was because it was pediatrics. As you mentioned there are significant psycho-social stressors associated with delays in his procedure as a teenager. I'd hate to say this, but Canterbury hospital (in Sydney) is not a pediatrics hospital. If next time this occurs should aim to present to Westmead children's or Sydney children's at Randwick. Paediatric hospitals have better finding due to donations.

      • My daughter broke her arm the other week and went to a public hospital. They gave her a back slab instead of a cast because it was a minor fracture and sent her back out after a long wait with a "she'll be right". Our doctor who I somewhat trust could only say "You went to a hospital and they sent you out with that!?!?". Everything you read says a greenstick fracture needs to be immobilized properly. We paid for a cast which came off after 3 weeks and that was long enough for the minor fracture to heal.

        I've also seen bad care from private health. Stuff anesthetic wearing off on a C-section and separately a specialist prescribing a medication despite contra-indications (seizures) then when pointed out telling the patient to discontinue use despite sudden stop being associated with very high suicide risk.

        No matter what you do get involved in your own medical care, and if something doesn't sound right get a second opinion. Having private health gives you another option and can cut down waiting times if there is something seriously wrong.

        • Well she did better than me…my local public hospital missed my broken elbow on the x-ray. Sent me home, telling me it was just a 'soft-tissue' injury and would be fine in a few days - despite my repeated insistence that it was not like any of the many soft-tissue injuries I'd had in the past. My screams when the doctor tried to straighten my arm, didn't seem to clue him in either.

          Then, when the senior radiologist came in the next morning and reviewed my X-ray (it had been early evening when I'd presented, the radiologist on duty had reviewed them that night) he made the recommendation that they call me back in as he believed it could be broken. They never contacted me. Only reason I know this is because I had my GP request my notes/x-rays from the hospital when I went privately to have it treated.

        • @YTW:

          I know someone who had a dislocated shoulder remain out for over 6 months. Totally ruined her shoulder. Because it was a posterior dislocation (to the back, not to the front like Mel Gibson's in lethal weapon) and needs a different kind of x-ray to pick up (axillary view) she many times got told it was not out when there was a bone clearly sticking out the back. The standard view doesn't show it you see. Try arguing with an orthopod in a hospital. You have to be very careful not to get yourself thrown out. Mostly at public hospitals.

          4 attempts to repair the shoulder it took. I got her to a really good orthopedic surgeon. He said they were doing the wrong kind of reconstruction for the posterior dislocation injury. Knock on wood it's only been out once since that 4th surgery and that was early on during a rehab session.

        • @YTW: Oh wow, this is almost exactly what happened with my broken ankle. I ended up finding out it was broken when the GP requested emergency notes 2 weeks later. I had been trying to do weight baring physio because the hospital told me it was fine and that I needed to see a physio within 7 days. I ended up having to see a specialist privately. Not having immobilised the ankle properly and trying to weight bare (luckily I was in too much pain and gave up quickly) definitely slowed my recovery, and could have been much worse - lucky it was a stable fracture to begin with.

        • @YTW:

          Which hospital is that? You need to make a complaint, not for compensation (you won't get any), but just so the system is aware of this falling through the cracks and so policy needs to change so it doesn't happen again.

        • @Deridas: I did complain when they rang me about a month later for a survey asking about my ED experience. The woman taking the survey was shocked and made notes. Never heard anything after that. Am not surprised. That's the Qld health system for you.

        • @lisss: Erk lisss - you are lucky you didn't accidentally damage it further! At least with it being my arm I just kept it in a sling my sister made me up (she was at uni training to be a paramedic at the time, so came in handy) but it was agony sleeping without a cast, especially as we had a toddler in bed with us. My recovery was long and slow (8 wks in a cast, 5 months of physio to regain the ability to straighten my arm) but I don't think anything the hospital did or didn't do contributed to that thankfully, it was just the nature of the break.

          I went to my physio a few days later (as recommended by the ED), voiced my concerns to him and he refused to work on me until I'd had further x-rays and a second opinion. I got an appt with my GP, referral for a private orthopaedic surgeon and rang that afternoon, they fit me in the next morning. He was excellent and I will be going private immediately with him for any future orthopaedic issues.

        • @YTW:

          I would recommend making a formal complaint with a formal acknowledgement in reply, rather than just a survey. The reason for that is so the system changes. In your case, it's common for the junior doctor in ED to miss subtle Xray signs (in the elbow, it's usually the fat pad/sail sign), that's why a specialist consultant in radiology reads Xrays the second time, which was what happened. In NSW where I work, the company radiologist would report the fracture, and it has to be seen and signed by the senior ED consultant, who then calls the patient back to the ED. Somewhere along this line an error halted and caused you unnessasary morbidity. If this isn't rectified or root cause analysis made there will be another person who will get missed just like you.

        • @syousef
          The appropriate management was to place her your daughter in a backslab. If they put her in a cast, it would not allow the expected swelling to occur properly and would put your daughter at risk of losing her arm due to a phenomenon called compartment syndrome.

        • @danyboy:

          There was almost no swelling. And she was placed in a cast about 36 hours later. I'm happy to report she did not lose her arm. I understand that a backslab is sometimes the right form of treatment but not in this case. Worse the doctor did not suggest follow up for a cast - just that she use the backslab for 4 weeks.

        • @Deridas:

          Be very careful with formal complaints. Medical staff and the medical establishment do not always behave ethically. You could find yourself blacklisted. And it is rare that medical staff will actually act against each other on a matter of negligence.

          If you don't believe me try 1984 to 2005 before being dealt with:

          Years to deal with this guy too:

          It's not just Aus:

    • An accident require surgery is an emergency. No public hospital would deny you immediate surgery if it is not classified elective. In fact, others will have to wait for the accident victim to get first priority. This happens all the time in the emergency ward. Sadly, I have a few friends receiving cancer treatment, none of them happen to have private cover, all of them are receiving first class service from their respective public hospitals without any discrimination. I do not believe waiting lists extend longer than 2 years. And if it's elective, a 2 year wait is not unreasonable.

    • +5

      Waiting lists are a joke.

      I needed an ankle reconstruction, Brostrom procedure from memory. In the end, I somehow scraped by with rehab and alot of strengthening to stablilise it, that said I was lucky and any time spent with the joint constantly coming out of place would put me at risk of arthritis apparently. It's not 100% now, but it's pretty damn good considering I didn't have to go under the knife.

      Anyway, this is a serious issue and in some cases alot worse for other people. All up, when you account for physio I would be out around 20k. I immediately went on the waiting list and proceeded to get private health insurance to wait out the 1 year pre-existing injury period. At the 9 month mark, I got an appointment to see an orthopedic surgeon through medicare. I went and saw the surgeon, they advised I would be put on the waiting list for a followup appointment after which I'd be on another waiting list for surgery. All up, just under 2 years before I received the second appointment. This for an issue that rendered me unable to walk.

      I should also note, that to be put on this list I had to pay out of pocket for an MRI and a few visits to an orthopedic surgeon, around $600 from memory.

      So yeah, I'm keeping my private health insurance so that in the event something like this happens again I can bite the bullet pay my excess and just have it done. This time it was only 20k, next time it could be much much more.

    • -1

      That what car registration/compulsory third party is for.

      • The downvote made me check.

        CTP covers everything so long as you are not at fault unless no-one is at fault. So fair enough on the downvote.

  • +2

    I never have private health insurance.waste of money.
    If you have a good family doctors.When you requires a surgery they can help you get in quicker.
    Also you need to put away some $$ for emergency .

    • I have noticed that the waiting list are usually not very transparent… plenty of room for 'special treatments' to occur.

    • 'If you have a good family doctors.When you requires a surgery they can help you get in quicker.'
      Can you tell a little more about how this works please?

      • +4

        No, because it's garbage. If you're relying on your GP to hook you up and skip the line, you're in for a nasty surprise.

        • +1

          Unfortunately I don't know of any GP that would do this for me.
          Guess it might be a different matter if your GP is a relative or something..

        • +3


          hate to break it to you, but whoever told you this is talking from their arse. My dad is my GP, guess how long I have to wait for a cardiology appointment? 2 months, nope, 4 months? nope, 6 months… I wish, 9.5 months. And this is for my heart!!!!!

          having a GP in the family doesn't get you any special favours, unless they lie for you, and risk their licence, (and trust me, no doctor who is ANY good will do that)

        • @AG_ACT: OK. Thanks for the insight.

  • +30

    I feel pretty strongly about this, that the best way to provide healthcare is a community wide shared service (medicare) funded by taxation. If it is failing because of long waiting lists or poor service, increase the funding/taxes to pay for a better system.

    The current arrangement where only the comparatively wealthy can purchase their way to improved cover is problematic on equity grounds. It is also hopelessly inefficient, as government subsidies to those wealthy (WTF? do we have that) go toward providing expensive reading glasses, gym classes and other lifestyle benefits to those richer people.

    The counter argument is if we had no private health subsidy, people would find it poor value, dump the insurance and rely more on medicare. This happened somewhat under John Howard, but nobody provided an argument to why we need to subsidise gym classes and Prada glasses as well as the things that medicare provides.

    In any case, private health care is a rort.
    Medicare covers all your hospital needs, albeit with a wait for non-critical items. But be aware that private insurance sometimes has a wait too, until you can get an appointment with the specialist or get a slot in the surgery. The number of occasions where private cover makes a difference because there is a wait is small. What is does provide is a pretty room in a hospital with an expensive surgeon and team of your choice (how do you know which surgeon to choose remains a mystery to me). You will likely be asked to pay a portion of that expense too, as most cover 80% or similar.

    People make the argument like 'what if you are in a car accident?' but this ignores almost all private hospitals have no emergency department for that type of injury - you will be going to the medicare covered free hospital anyway.

    If you have chronic poor health, private insurance might be a great deal. For everyone else it is a costly layer of bureaucracy that impedes price competition. There is a reason the cheapest glasses at OPSM are $99 and the cheapest at Zenni optical are $12.

    This year, my family of 6 has had full private cover. It has cost $2400. We have made claims of $2100 because we timed some costly dental and orthodontic work on one of the kids to maximise this. So even though my premium is the same as a family of 3, and we have spent a lot on extras, plus had the normal dental, physio and other little bills, we haven't made our money back. Note we pay a lifetime levy of 6% as we have been in and out of coverage.
    This shouldn't come as a surprise, if we did make a profit the insurers would be swiftly out of business. The main benefit we have had is the cover is available should we have needed it. With a couple of us playing contact sport, it is nice to know there is some coverage, that we could expect speedy care with minimal inconvenience so we could potentially minimise time off work or similar. Nice to have, but not required for effective medical care.. That said, I will drop it again once the braces come off and we no longer have that predictable expense.

    I suppose there are some sick people out there for whom it makes financial sense. And if you must have a private obstetrician when you are pregnant rather than the public system, it possibly provides not quite appalling value. But in nearly all cases it covers 'wants' not needs, and it costs a lot to do so.

    • Well said mskeggs.
      I have been having the same 'feelings' towards private insurance but wasn't sure if it was just me or if I was doing something wrong.
      I think the government needs a solid review of Private health insurance policies and how to improve it by focusing less on 'wants' (as you say) and more on needs (eg. lower excess, free ambulance).

    • Ummmm….. So so called 'wealthy' pay top tax rate, Medicare levy, Medicare levy surcharge, budget repair levy and probably more that I don't even know.. They don't get any premium rebate unlike I do being medium income earner… I don't pay more than 20% of my income unlike so called wealthy…
      But still we should all be bashing people doing heavy lifting..

      • +1

        Huh? Private health rebates are available to all but the top couple of percent, and that change is only relatively recent.
        I'll bash away at 'heavy lifting', er…heavy typing, pen pushing? high income earners as long as they are disproportionately benefitting from super tax concessions, lurks like trusts, concessional CGT and other distortions of our tax and welfare system that allow the wealthy to gain benefits not realistically available to the poorer people.
        We have a progressive tax system because we have agreed as a society that those who accrue substantial financial advantages should contribute at a higher rate as they accrue more.
        The wealthy can choose private insurance or to pay out of pocket for healthcare, as is their privilege as a rich person. I damn well will do what I can to ensure the poorer people have a decent health system too. I would suggest the rich don't need your protection as a middle income earner, they have done exorbitantly well on their own. There are many, many less fortunate that could benefit from your concern, however.

        • -6

          Yes we as a society have also agreed to keep whinging…. So whinge away…

        • +4

          It's the classic story. 3 guys go to a pub. One of them earns more than the other 2 combined, so they all agree it's only reasonable for him to buy the drinks. Then the pub drops the price of beer and the poorer ones complain because only their wealthy friend is benefiting. Obviously the solution in this instance is to charge the wealthier friend a tax that will fund a cash payout for the other two to keep this equitable.

        • +3

          Except in this case the subsidy welfare for private health disproportionately benefits those on higher incomes.
          To use your strange analogy, its like 3 guys going into a pub and the publican offering all of them free tap beer, but they have to get in a queue, but he has another special of 30% off and immediate service if they buy the fancy drinks only the rich guy can afford.
          And using some money they collected from all 3 earlier to offer the 30% discount.

          My question is why we would want to offer to pay 30% of the rich guys bill when he can obviously afford to pay it himself, and he is already eligible for the same free beer everyone else is getting.

        • @mskeggs: The answer lies in another question: Who gets most of the portion from the 30% money? The rich customers do not get the benefit of the money directly (if at all) as they still have to pay the rest 70% plus the GAP gasp that can be of significant amount in case they want to jump the queue and paid for the beer. My logics say most of the money goes to the insurance executives and medical specialists..

        • @leiiv:
          I don't disagree. It is a terrible policy all the way down! It makes the insurers less competitive and efficient and costs everybody.

        • @mskeggs: I disagree that lower income earners are supporting higher income earners via the rebate.

          I do however agree that the policy has major flaws. The intent was to push those who can afford it out of the public system and into the private system, freeing up capacity for those who could not afford private insurance. In reality the private system is run for profit and therefore happily cherry picks high profit treatments while pushing the remainder back into the public system.

          The issue is not 'the rich getting richer' but the poor policy that results in people signing up for private health insurance and then using the public system anyway.

        • @ProggerPete:
          Agreed. The policy has been costly, diverting funding from public health care to insurance products that do little to relive the burden.
          Considering the gov contributed around $1000 to the insurance my family bought this year, we would have been better off if that was spent on public health.

      • +4

        AJ80, not bashing the wealthy.
        I am sure most/some of the wealthy are where they are today because they have worked hard, pay their share in taxes and have given back to the community in some ways.

        I think that there should be a line drawn between the wealthy and the super rich. The economic royalist.
        The 1% that has 99% of the world's total wealth. The 1% that have more money than what they know what to do with it.
        But this is a different discussion.

        The discussion here is about Private Health Insurance, it seems a little broken.
        For low income earners who do not pay the MLS, there doesn't seem to be enough incentives to have Private Health Insurance.

        Please correct me if I am wrong.

    • Can you share the name of the insurer? I would be interested to look into a health insurer which charges $2400 for a family of 6. I would have thought more in the mid $3K range. There comes a time when inevitably I will have to go back on to private hospital cover, much as I hate the idea.

      • +1

        I am with Frank Health, a brand of GMHBA a mutual fund based in Geelong. Most funds offer polices for families that cost the same regardless of how many kids are covered.

        • Have not heard of Frank Health, just the big ones, BUPA, Medibank, HFC.
          Pity there isn't a good comparison website, as there is for Internet plans, Car insurance etc.

        • +5

          iSelect and ComparetheMarket do a comparison, but as they get kick backs I don't trust them. I also don't believe they are thorough enough. For example, I knew I had big dental and orthodontic bills coming, and different funds offer wildly different levels of rebate and annual and lifetime rebates. The automatic compariosns figure none of this in, but the difference between best and worst is easily $1000 per annum in my case.
          The government lists every health fund here:

          Some aren't open to the public. I made a spreadsheet comparing every public one on the list with the expected timing of rebates for my kids, taking into account annual and lifetime limits, plus regular expenses like annual dental check up. None of them made me a profit, and the best of them would end up costing me several thousand more than I got back over 5 years (obviously not counting any unforeseeable medical events).
          Ironically, the insurer I went with was not particularly highly ranked. The reason I chose them was they ran a special that waived all waiting periods, which in my case made about $1000 in rebates become available.

        • @congngo:

          KFC is not a health fund ;-)

        • +1

          @syousef: Quite the opposite. KFC is a health care killer :)

        • @congngo:

          This will give you a starting point for comparisons. They don't limit their lists to only the funds that give them kickbacks like the other ones do (iSelect etc).

    • +5

      Agreed, it is an absolute rort and a rort people are more or less forced into by the tax system supporting it. As a business, if the cost of your products and/or services is being funded partly by the governmnent, what is that likely to do to your pricing? You want to make as much profit as possible for your shareholders and therefore will charge the highest amount you think people are willing to pay for your services. If this is partly funded by the government, this is a free kick and you can still charge as much as you or the market think people are willing to pay on top of that. The health funds are absolutely raking it in.

      If all the resources and funds that are being ploughed into private health insurers was redirected to the public system, I imagine it would be a lot better and perhaps there would be no need for private insurers. The irony is that people will scream blue murder if any attempt is made to make them pay more via Medicare to improve the public system, a system that benefits all. However, being blindly led into overpriced, poor value health funds because of a supposed tax benefit, which is lost because funds charge higher premiums than they would if the benefit did not exist, is fine. Go figure.

      • Totally agreed.
        PHI should be for the minority and the exceptions.

        I believe that all citizens deserve the right for free health care, in Australia that is Medicare.
        Hence the majority of the funding should go to Medicare and PHI should only play a small role in our health care system.

    • "This year, my family of 6 has had full private cover. It has cost $2400. We have made claims of $2100 because we timed some costly dental and orthodontic work on one of the kids to maximise this."

      And you complain? This means you had insurance for $300. What about tax rebate. Did you get back anything from the 2400$ ?

      • +1

        Yes, we had insurance for $300, because we claimed a orthodontic bill in June, one mid year, and will have a third in July, So I should amend to say $2100 in claims over 13 months. But this coming year will have $1500 less in claims, making it a poorer option.
        If I could have hospital cover for $300 every year I would class it as pretty good value. But that isn't the case.