Can retirees ditch their health cover?
A report by major investment bank Morgan Stanley says that Australia’s public hospital system is now so good that many people consider it as “adequate catastrophe cover”.
The report also labels private health insurers as lazy and says the belief that private insurance has eased pressure on the public system is a myth. It notes that recent multi-billion dollar state government investment in public hospitals has seen a big drop in waiting lists, with quicker elective surgeries and more single rooms on offer.
“The private health industry has become lazy,” said Morgan Stanley Executive Director Daniel Toohey.
“The Government should refuse any premium rises for three years to force the industry to sort itself out,” he told News Ltd.
The cost of private cover has risen 54 per cent since 2009, making it one of the most expensive annual bills and forcing 10,000 people a month to cut their private cover or quit completely. Membership has declined from 47.4 per cent in 2015 to 45.8 per cent in September.
Morgan Stanley predicts that health fund members will continue to quit or downgrade their policies, and says public hospitals will be able to cope with increased demand.
“Our analysis suggests that under a status quo scenario, the public sector could feasibly absorb the excess demand caused by an ageing population and falling participation in the private hospital sector,” the analysis says, according to News Ltd.
People who are grudge purchasers of health insurance “will be better off paying the Medicare Levy Surcharge than buying insurance,” Morgan Stanley says.
The investment bank researched private health insurance in order to advise its clients on stockmarket investments in health funds and public hospitals. It subsequently cautioned clients about investing in the sector.
Health funds made $1.4 billion in profits last financial year. At the same time, gap payments for some services, including surgeons’ fees in private hospitals, have risen by up to 20 per cent. Funds place the blame for the rise on the Government’s three-year Medicare freeze.
Global market research firm Ipsos supports the Morgan Stanley report, saying that the confidence of Australians in the public hospital system has risen by 10 to 15 points in the past decade to more than 80 per cent.
Private Hospitals Association chief Michael Roff argues that speedy quality care and choice will continue to be highly valued by its clients.
“In the public system, you don’t get to choose when you are treated, you don’t choose which doctor treats you and you don’t choose which hospital you are treated in,” he said.
“In the private system you do. And apart from the case of major trauma, you will always wait to be treated in a public hospital.”
Would you abandon private cover?