Public vs Private Health Insurance in Australia

  • November 06, 2020 01:55 AM AEDT
  • Edita Ivancevic
    Journalist Edita Ivancevic
    212 Posts

    Edita is a young journalist who graduated in 2019 from the Faculty of Political Science in Zagreb, Croatia, specialising in Television and Public Relations. Since the teenage years, Edita gained knowledge of news reporting and analysing complex curre...

Public vs Private Health Insurance in Australia

Summary

  • Australian hybrid healthcare system is quite complex, and it can be overwhelming to inspect all key elements that come with it.
  • Both Medicare and private insurance have their perks, but also disadvantages that every Australians need to consider.
  • After reading the complete guide that includes the most significant pros and cons, one should be able to decide what option is the best for him/her.
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Sticking to your public insurance or getting a new private health policy with a range of benefits is one of the most critical doubts Australians have before they turn 31.

When the government introduced the Lifetime Health Cover (LHC), more youngsters decided to join the private insurance world to avoid paying higher tax rates. Due to LHC, all residents aged 31 and younger would need to pay two per cent additional tax if they did not have a private insurance policy.

For that reason, some people have opted for private insurance as it seems more affordable with fewer losses. Basic policies are the first choice for those in a similar situation, but some genuinely want to be more secured and opt for better coverage.

However, both public and private insurance have their advantages and disadvantages. In this article, we would focus on the Australian public and private insurance and their respective pros and cons.

RELATED: What are the different types of health insurance available in Australia?

        Image Source: © Kalkine Group 2020

Public healthcare in Australia

Public healthcare in Australia is mostly referred to as Medicare.  During the initial years, Medicare had another name, Medibank, when it was started back in 1975 by the Whitlam government. The system has experienced numerous changes since its start date, mostly due to political reasons and governments increasing/decreasing the levy over the years.

Today, Medicare is in place and allows most Australian residents to enjoy the perks of an affordable or free-of-charge healthcare system. The system offers additional benefits to people who served in a war as veterans and those who are not in a good financial situation.

When going to a hospital as a private patient, Medicare covers most hospital services apart from accommodation and ambulance service. If individuals want to get those benefits covered, they will need to sign up for a private insurance company for low or no out-of-pocket costs.

DO READ: What is an ambulance cover, and is it for you?

Advantages of public healthcare

            Free or low-cost treatments

All treatments and services listed on the Medicare Benefits Scheme (MBS) are entirely covered by public healthcare. That means consultations with the GP, specialists’ treatments (blood tests, scans, and others), necessary surgical operations, vision tests performed by optometrists, some dental surgeries, and medications listed on the Pharmaceutical Benefits Scheme (PBS) are free or almost free of charge.

The younger generation does not necessarily need private insurance as Medicare covers most of the procedures. Bulk billed GP ambulances do not require any payment from the patient but directly bill the government. Australia is lucky enough to have such a system, as healthcare costs can reach thousands of dollars without any healthcare cover.

ALSO READ: How does health insurance work?

            Many opportunities to save money

Let us say that the average person does not require constant medical attention and has no pre-existing diseases. If that person is eligible for Medicare, there will be no monthly costs for healthcare, saving thousands of dollars annually.

Elective surgeries are still available, but patients will need to wait a few months to get them. In conclusion, if there is scope to wait in queues, Medicare is a good enough option for spending less money.

            Most conditions are already covered

Medicare already covers around 75 per cent of the most common illnesses. Everything that an average Australian need is included in MBS so there should be no worry when visiting a doctor for common cold, getting pathology tests, or just having a standard consultation with the family doctor.

            Equally qualified staff at public hospitals

No matter what hospital one goes to, one will be surrounded by fully qualified doctors. Every doctor working in a public hospital needs to go to the same school that private hospital doctors attended. Same goes with nurses and other hospital staff.

However, some people would still prefer going to private hospitals because they have a feeling that money brings better service. This is not entirely true and should not be a factor while opting for private healthcare.

Moreover, public hospitals may be better equipped than private ones, especially when it comes to emergency cases. Private patients would, most likely, still be admitted to a public hospital when holding private insurance in case they call 000.

INTERESTING READ: Do seniors need private health insurance, or is Medicare enough?

Disadvantages of public healthcare

            Long waiting queues

Apart from emergency surgeries that need to be done straight away (e.g. car accidents), all elective operations are subject to waiting, sometimes for months. When patients have life-threatening diseases such as cancer, time is the most significant factor.

Unfortunately, Medicare does not work like that and requires people to wait till their turn comes. As this disadvantage is a big one, a better solution would be to hold private insurance at the same time in case of similar risk.

            Rare diseases and some treatments are not covered

Patients that do not hold private healthcare insurance and want to see a dentist will need to pay significant out-of-pocket expenses. Medicare does not cover for most dental treatments or palliative care (e.g. physiotherapy, acupuncture, and others).

In the case of rare diseases, the patients would be luckier if they have a private insurance policy.

            No choice for particular doctors

When patients are being treated in public hospitals, they cannot choose their specialist. On the contrary, they will get a specialist who is available at that moment.

As this element is rarely considered an issue, it might be difficult for some people that have already put trust in a particular doctor. A known face can sometimes do wonders in the recovery process and treatment.            

            Possible additional expenses

As mentioned earlier, Medicare Levy Surcharge (MLS) affects people that do not get private insurance by the age of 31. If the levy comes in effect, one will need to pay higher taxes for quite some time. In case they decide to sign up for a private insurance policy, they will need to pay up to 70 per cent higher insurance premiums, depending at what age they joined.

RELATED: What factors can impact your health insurance premiums?

Private healthcare in Australia

When the Australian government decided to privatise part of the healthcare system, a hybrid system got created. Since then, Australians have opted for private insurance in cases where Medicare was not applicable.

Today, 38 private healthcare insurance companies offer a range of services for their clients. With MLS in place, more people were forced to get private insurance as it proved to be cost-effective. However, private insurance is not a bad option to consider, as it offers many attractive benefits.

Advantages of private healthcare

            Limited or no queues

Okay, maybe some. But nothing compared to those in public healthcare when waiting for elective surgery.

Depending on the procedure type, it might take a few days or a few weeks maximum to get under the surgeon’s table. In rare cases (mostly for procedures that are not as common), patients can choose when they want to be admitted to the hospital.

            More privacy

Private healthcare insurance holders can stay in a private room while being treated in a hospital. Medicare does not cover for private rooms, only shared or semi-shared hospital spaces.

Patients in private hospitals can usually choose which room they want if it is available. Having a private room after a tough procedure does sound like a more pleasant scenario compared to the shared room with five other strangers.

            Selecting doctors and specialists

Compared to public healthcare, private healthcare holders can enjoy the option of choosing their own doctor. However, the desired doctor might not be available at the time of surgery so patients would still need to be happy with whatever doctor they get.

Apart from this choice, people can get more claimed treatments, such as dental procedures, eyeglasses and prescription sunglasses, heart surgeries, joint replacements, and others.

            38 companies to choose from

Australia has 38 private insurers, each being different in the services they offer and the cost of these services. Individuals can pay for the desired number of extras and services they need, so it is unlikely that the money will go to waste.

The insurers also offer different levels of insurance. Starting with Basic and moving to Gold, everyone can find whatever suits their needs and reasons for joining.

DO READ: What are the top healthcare insurance providers in Australia?

Disadvantages of private healthcare

            It can get more expensive every year

Private healthcare insurance companies are infamous for raising premiums every year. That happens because hospital costs are prone to change, and these companies just try to make some profit themselves.

However, the industry is immensely competitive, so insurers need to be cautious about expenses they ask for. It is human nature to opt for something more affordable. Therefore, most insurance policies do not differ that much in price.

In conclusion, patients can have a policy which is affordable one year but can be considerably expensive in the next.

            It is already quite pricey

For a good health insurance policy, people need to pay a lot of money annually. Some gold policies can cost up to A$200 weekly, which includes most benefits one private healthcare insurance company can offer.

That said, Australians were seen to get Bronze Plus insurance the most. ‘Plus’ editions usually provide at least one more medical department that the insurer will cover for.

            High complexity

Private health insurance is not easy to understand. Multiple companies offering different products can be both advantageous and disadvantageous, as people may find all those rules and conditions confusing.

The insurers are also often getting sued for misleading content and marketing. For example, they would tempt people to join them for a few weeks for free but would have tons of conditions that applied to the promotion.

            Waiting periods are still a thing

No matter how high or comprehensive the policy is, Australians still need to respect a company’s waiting periods. Those with pre-existing diseases need to wait up to 12 months, which could be a problem if they require urgent treatment for the illness.

Some waiting periods are short, like physiotherapy or vision services (mostly for two months), but people still need to wait. It could be frustrating to wait for, especially after paying hundreds of dollars towards the company, which does not even cover for any claims in the beginning.

ALSO READ: Latest Development in the Health Insurance Space; Flick Through Bupa, HBF Health and HCF

 


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