An informed choice

Navigating the private healthcare system.

Written by Editor Medibank

Professor Karen Willis has conducted extensive research into Australia’s complex and increasingly privatised healthcare system. Analysing government policy and interviewing doctors, policy makers and consumers, Professor Willis seeks to better understand how Australians navigate their way through the public/private healthcare ‘maze’.

Aware of the challenges Australians face when it comes to fully understanding the private healthcare sector, we spoke to Karen to get her insights from the field.

Why do Australians take out private health insurance?

Private healthcare plays a key role in Australia’s health system, relieving pressure on the public health system. 13 million Australians hold some level of private health insurance.

According to Karen, there are a range of reasons Australians choose to take out private health insurance.

“People take out private health insurance because they are concerned that they may not get the services they need if there is continued strain on the public health system,” she says.

“They also want to be able to choose their doctor and the hospital. In other words, they want the added peace of mind that they think they will get by having private health insurance. They do not want to wait for care, and private health insurance ensures that they have timely access to procedures for which there may be a waiting period, such as elective surgery.”

Karen says that people also make choices based on their different ages and stages of life.

“People in their 30s may be considering private health insurance because they want private care when having a baby. There is also a perception of reassurance about care for the unknown risks or health issues that may affect children.”

Another key reason of course is the influence of government policies.

“Particularly the lifetime rating where people pay more if they delay taking out insurance after age 30, and the tax penalties for high income earners who do not have private health insurance,” Karen says. “People who take out private health insurance to avoid tax penalties are usually advised by their accountant to do so.”

What is holding us back?

A recent Australian Competition and Consumer Commission (ACCC) report highlights concerns around the complexity of private health insurance policies. “People struggle to understand their policy,” Karen says.

Following the report’s release, the ACCC Deputy Chair Delia Rickard said there is concern that the complexity of the information could affect consumers’ ability to make informed decisions about the policy that best suits their needs.

“Whether a consumer is purchasing health insurance for the first time, or reviewing and renewing a policy after many years, they have to navigate through a range of issues to make an informed decision,” Delia Rickard says.

The ACCC also reported that consumers may encounter significant difficulty in determining what a procedure will cost and how the relationship between their insurer and the relevant practitioner or hospital will affect this cost.

This was something that Karen also came across when talking to consumers. “Some people discussed how they were faced with a much higher bill for their care than they thought, because they did not realise that some components of their care were not covered.”

The study also revealed Australian’s biggest concerns around private health insurance are around cost, lack of perception of value and out of pocket costs.

"Increasingly people are worried about the cost of PHI, particularly as there is now a lot of coverage of the price rises each year,” Karen says.

“They are also worried about the expense of using their PHI if they need to – the out of pocket expenses that they are faced with.”

What do we need to know?

Karen says when making a choice about private health cover, Australians should do their research, and carefully consider the type of cover they need.

“Consider your healthcare needs now and into the future. Look at what is provided locally in both the public and private healthcare systems, and think about your reasons for taking out private health insurance.”

Her tip for ensuring you’re getting value out of your cover?

“Review your policy on a regular basis. If you’re anticipating on using your private health insurance, check what is covered and any additional expenses you may incur when you do use it.”

Want to learn more about private health insurance? Find out what you need to know before you buy.

Written by Editor Medibank

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