HomeHealthHealth InsuranceWhich hospital procedures have the highest out-of-pocket expenses?

Which hospital procedures have the highest out-of-pocket expenses?

Out-of-pocket medical expenses have jumped dramatically, according to data released by the Australian Prudential Regulation Authority (APRA). The authority released its latest Quarterly private health insurance statistics report last week. 

APRA’s report revealed that average out-of-pocket payment for hospital episodes in the December quarter was $410.67. This was an increase of 10.2 per cent compared to the same quarter the previous year. The increase over the December quarter was 2.6 per cent.

The gap for medical services varied across specialty groups, with the biggest being for plastic/reconstructive services, averaging $727.39.

Broken down by age group, the APRA report shows a significant increase in hospital benefits paid by private health insurers from age 50. The amount rises with increasing age, peaking in the 75 to 79-year-old age group. 

Out-of-pocket medical expenses – how do they vary?

The release of APRA’s latest quarterly report was timely for me, coming last Wednesday. On that day I encountered a friend recovering from a knee replacement and had coffee with another friend who’d just had cataract surgery. The next day my neighbour headed into hospital for a gastroscopy.

My first consideration was, of course, their wellbeing, but later wondering what costs were involved gave me pause for thought. All three had private insurance, but to what level would their insurance cover these procedures?

While private insurance will cover part of the expense of hospital procedures, it will rarely cover the full gap. That gap in expenses must be paid by the patient. These are usually described as out-of-pocket expenses, but are also known as ‘patient payment’, ‘gap payment’ or simply a ‘cost’.

The surgery undergone by the three friends I came across last Wednesday represented some of the more common hospital procedures.

Joint costs for joints

Looking at knee replacements, non-hospital fees come in at an average total of $4800. These will include specialist fees, assistant surgeon fees, and anaesthetist fees. On average Medicare will cover $1900 of this cost, with private insurers tipping in $1800. Patients typically paid a difference of $680.

This does not include hospital fees, which incorporate accommodation, theatre, and medical devices. For knee replacements, those fees average about $18,000 but are generally covered mostly, if not in full, by insurers.

Not all those who had private health cover had out-of-pocket expenses. APRA figures showed that 32 per cent of insured patients incurred no associated cost.

Hip replacement fees follow a similar course, with out-of-pocket expenses averaging $690.

Interestingly, there is a significant difference in expenses between a hip arthroscopy and a knee arthroscopy. An arthroscopy involves a thin tube with a camera being inserted in the joint to enable treatment or diagnosis. For knees, the arthroscopy out-of-pocket average is $400, but for hips it is $1500.

Not just joints

Thinking back to my neighbour’s gastroscopy, the APRA figures show this procedure will set back the average privately insured patient by $140, while out-of-pocket expenses for a colonoscopy average $150.

Across the full spectrum of hospital procedures, average out-of-pocket costs vary greatly. Some examples include:

  • Breast reconstruction $730-$960
  • Coronary artery bypass graft $470
  • Pacemaker $50
  • Hysterectomy $500
  • Varicose veins $300

Have you had a recent hospital procedure? How much of the cost was met by your insurer? Let us know via the comments section below.

Also read: Health insurers accused of overcharging for top-level hospital cover

Health disclaimer: This article contains general information about health issues and is not advice. For health advice, consult your medical practitioner.

Andrew Gigacz
Andrew Gigaczhttps://www.patreon.com/AndrewGigacz
Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.


  1. By far the most expensive procedure for me now would be for the dystonic tremor (inherited) in my dominant hand. This involves the scarring of the thalmus by guided ultrasound to prevent “messages” from going through to my hand, & it costs $35,000 with no rebate! Oh, & then there was my first total knee replacement, done in a private hospital, which cost over $3,000 over & above the Medicare rebate! Top surgeon? Yes! Great success? NO! I had to have it redone `12 months later, as it was very unstable, this time by an excellent reconstructive surgeon who only charged the Medicare rebate, as did his anesthetist! No out-of-pocket for me that time, thank goodness!

  2. If a person pays top cover, there should be no gap to pay. when I was younger we paid the fund for “intermediate cover” and if there was a hospital stay, in a public ward, the fund actually refunded the difference in cash. It is similar to pet insurance where the advertising spiel offers cover for 805 of the cost. Why can’t there be cover for 100% of cost.

    • Had that done about 12 months ago at Ashford Private Hospital in Adelaide. That was around $4,000 out of pocket. I am on Silver, not gold with Medibank, so that may have had something to do with it.

  3. The cost for a hospital procedure has gone through the roof, we need to ask why. I have had my cataracts done in the past 18 months, I was going to get them done in the public hospital, ( I can no longer afford top cover ) I was told there was a minimum wait time of 13 months. I didn’t realise at the time that my surgeon was the person informing the urgency to the public hospital, I was at the stage were I didn’t feel safe driving, maybe my surgeon didn’t think a person in their mid 70s should be driving, strangely he was able to get me into a private hospital straight away, the operation cost me $6000 out of pocket, Medicare actually pay for the lenses, my total stay in hospital for both eyes was 4 hours, not bad $1500 per hour. My wife now needs an operation on her hand, again the hand surgeon has put a wait time of 12 months in the public hospital system, this is not the hospital putting the wait time, it’s the doctor, he has indicated that it could be done private, there seems to be an agenda for some doctors to deter people from the public hospital in favour of a much more financially beneficial visit to private. My wife is 78 and in quite a lot of pain, so it looks like another private hospital procedure, we are fortunate that we can afford it, many others will have to suffer.

  4. After being diagnosed with an impacted kidney stone in a public hospital where a surgeon inserted a stent – no out of pocket expenses. Then admission to a private hospital for laser treatment to break up the kidney stone, I was stunned to find that I had out of pocket expenses for the anesthetist of over $550. No other out of pocket expenses except my excess of $500. Not happy!!!

  5. The term Health Insurance is a total misnomer and should be disallowed by the ACCC as it follows no other principles of insurance. The only thing it ensures is that the insured will end up with far higher costs for treatment than if you didn’t have insurance. The “excess” is meaningless, in any other insurance this would be the limit of your liability but with health insurance it’s the entry fee you pay to activate your insurance in the event of a claim.
    Numerous people believe because they have health insurance they are fully covered in the event of a hospitalisation. When I tell them if you are medically insured you need a spare $10,000-$12,000 in the bank to cover the real excesses you may need to pay, they are incredulous, and we have paid both amounts .
    Last year the CEO of Medibank Private was given a bonus of $2,000,000 on top of a very generous salary for no significant increase in customers but while releasing the personal details of nearly ten million present and past customers to the world. If you think your getting value for money, think again.

    • Hi Andrews (great name), we got the data from the government’s medical cost finder database, although they are only averages, so some people – like yourself – will be paying more. Or at lot more.

      That does sound like a pretty shocking experience and expense though! Which insurer were you with at the time?


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