Private health care crisis

Pricing sensitivity research suggests that, within six years, private health insurance will become unaffordable for more than one-fifth of people currently paying for private health insurance. Public hospital waiting times have doubled on average since 2000 and, when this tipping point is reached, public hospitals will be in trouble.

Australia’s private health cover costs are among the highest in the world, with a family of four paying $588 per month with Bupa Australia. In comparison, the same premium for a family of four in Britain is $176, New Zealand $286 and Ireland $413. While the systems may be setup differently, Britain and Australia both spend around 9 per cent of GDP on health.

The Turnbull Government acknowledged during the election campaign that the feeling among the 13 million private health consumers in Australia is that they are “not getting value for money from their policy”.

The president of Private Healthcare Australia and Managing Director of HBF Health, Rob Bransby, has called on the Federal Government to address the “sick” private health insurance system that is in need of urgent reform.

In a piece in The Australian on Monday, Mr Bransby outlined that, while household income remains stagnant, health inflation increases by 6–7 per cent each year, which contributes to the price increases.

Mr Bransby also pointed out that, due to Government price fixing, Australia’s private patients pay the highest prices in the world for medical devices. Health Minister Sussan Ley and her department are reviewing both the private health insurance sector and the Prostheses List, but until regulated medical device benefits come into line with market prices, health fund members will continue to be overcharged.

The Rudd Labor Government made changes that tied the rebate on health fund premiums received by low and middle incomes to the consumer price index, not health inflation. This change has seen a 30 per cent rebate fall to 28 per cent and this figure is expected to continue dropping over the coming years, adding to the unaffordability of private health insurance.


Opinion: Older Australians hit hardest

It comes as no surprise that Australians aged over 60 are more likely to need a hospital visit than those under 60. As we age, our health deteriorates, and that only enhances the need for private health insurance. But for older Australians living on an Age Pension, private health insurance has become, or is becoming, a luxury they just can’t afford.

The statistics presented by Private Healthcare Australia President Rob Bransby are damning, with 20 per cent of current private health insurance consumers expected to not be able to afford cover within six years. No doubt, a large portion of these consumers are older Australians.

Up until now, Australia’s private health system has eased the burden on the public system. Should Australians be unable to afford private health care, the public health system would eventually be crippled. Neither the Government nor private health insurance companies have clean hands when it comes to our private health system’s woes, but it does appear that both parties are willing to discuss how to fix it. Let’s just hope these discussions go a little faster than those on superannuation reform!

Did you recently give up your private health insurance due to increasing costs? What is a reasonable price to pay for private health insurance? Should pensioners be offered a more affordable rate based on their pension status?

Related articles:
What’s not covered by private health insurance?
Health insurance premiums on the rise
Health checks: when to have them

Drew Patchell
Drew Patchell
Drew Patchell was the Digital Operations Manager of YourLifeChoices. He joined YourLifeChoices in 2005 after completing his Bachelor of Business at Swinburne University. Drew has a passion for all things technology which is only rivalled for his love of all things sport.
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