Private Health Check

Private health leaving you in deficit

Proof that many people with private health insurance are paying through the nose on premiums and are getting back very little.

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Many Australians with private health insurance are paying out excessively more in fees than they are actually getting back in benefits and what’s more, the problem is likely to get worse.

Health insurance premiums rose last month, although by not as much as in previous years, as private funds and consumer advocacy groups call on the federal government to help relieve their internal cost pressures, which they claim are outside of their control.

To many people with private health insurance, the cost of the monthly outlay is worth it for peace of mind and is seen as a necessity that’s not worth the risk, especially when having children.

A source from private insurer HCF informed FINANCY that most of its members are 70 per cent in deficit, which means their membership fees out strip the benefits that have been claim thus far.

What’s more, from my own experience and two children later, I was told that of the $20,000 I’ve paid out for ten years in membership fees, I’ve got back $15,000 in benefits – a 25 per cent deficit – and that this was actually a “good” thing compared to most members.

Health Funds will usually provide information on the ratio of membership fees to benefits to members on request.

Like most forms of insurances, the large out-of pocket expense begs consideration as to whether some people might be better off pooling money into their own interest earning savings account to be called upon if needed for a medical procedure.

Indeed, the true benefit of private health is the ability to chose one doctor over another and go to a private hospital.

In emergency situations everyone goes to the emergency ward irrespective of their health insurance.

Private Health insurers and the consumer advocacy group CHOICE used this week’s May Budget to raise awareness about the growing cost of health care after the government’s decided to keep the Medicare Benefits Schedule fees at current levels to June 2020, which it says will effectively freeze benefits in the face of rampant healthcare inflation.

“This measure effectively locks in the 2014 price the government pays for all services provided by general practitioners, medical specialists, allied health and other professionals,” says CHOICE CEO Alan Kirkland.

“It will very likely see consumers paying greater gap payments as the price the government pays for Medicare services won’t even keep up with inflation,” Mr Kirkland says.

This comes on top of changes to the Pharmaceutical Benefits Scheme that still stand to push up the price of medicines for many consumers, especially those with chronic conditions.

Although these measures announced in 2014 have not been passed by Parliament, they have not been removed from the forward estimates.

CHOICE’s nationally representative Consumer Pulse survey also found that in March 2016 over half 55 per cent of Australians are already worried about the cost of visiting their GP.

This number will continue to grow as consumers face greater out-of-pocket expenses for basic healthcare and as the price for private health becomes more expensive.

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