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Why Bother With Private Health Insurance?
What isn’t covered by private health insurance?
In Australia, private health insurance is designed to cover you for hospital services and ancillary treatments like dental, ambulance and physiotherapy. This can potentially leave a big gap, namely visits to your GP, consultations with specialist doctors, and diagnostic imaging and tests.
These types of health care services are called out-of-hospital services, and because they are covered by Medicare then private health insurance doesn’t cover them.
Sometimes, out-of-hospital services are bulk billed, which means you don’t have to pay anything. Yet many doctors, specialists and imaging clinics choose not to bulk bill, leaving you with accounts to pay. Unfortunately, you can’t claim these types of accounts on private health insurance.
So, why should you bother with Private Health Insurance?
Given that you still have to foot the bill for many health care services, you might wonder why people bother with health insurance. Sure, you may still be paying for some health care services. But think about the ways you can save.
Recent research* found that the main reasons why Australians get health insurance include:
- Peace of mind (57%)
- Cover for extras (51%)
- Reduce costs if they get ill and need to go to hospital (45%)
- Choice of hospital and doctor (36%)
- Reduce hospital waiting times (30%)
- Save on tax (28%)
With these benefits in mind, many people are actually better off with private health insurance.
An example showing the potential costs of out-of-hospital services and saving money with health insurance:
Jane has been feeling slightly odd of late, and has noticed strange flutters in her heartbeat. She makes an appointment with her GP to get some advice. After a thorough clinical examination, the GP refers her to a Cardiologist, who requests an echocardiogram at a nearby imaging clinic. After the imaging, she goes back to the Cardiologist for a follow-up appointment.
All of these appointments are out-of-hospital services, so Jane’s health fund does not cover them. Her costs so far are $513.702, comprised of:
- GP consultation = $13.70 ($50 minus Medicare rebate of $36.30)
- Cardiologist initial consultation = $182 ($310 minus Medicare rebate of $128)
- Cardiologist follow-up consultation = $64 ($120 minus Medicare rebate of $56)
- Echocardiogram = $254 ($450 minus Medicare rebate of $196)
At the follow-up appointment, the Cardiologist breaks the news that Jane will need surgery to implant a pacemaker. Thankfully, with private health insurance behind her, Jane can choose where and when she wants to have this surgery safe in the knowledge that her hospital costs will be subsidised by her private health insurance. Given that the average cost of a pacemaker insertion is $12,3003 – she has the peace of mind in knowing that the majority of this cost will be covered by her private health insurance and not out of her savings account.
Without private health insurance, Jane may not be able to afford these expensive medical services when she needs them and may be significantly out of pocket when she is sick.
The bottom line
Having health insurance gives you greater peace of mind knowing that you are covered for those big ticket items – because if you found out that you needed a pacemaker or had to go in for surgery, then the last thing you’d want to worry about is how much it’s going to cost.
*PHI premium increases, Galaxy Research prepared for iSelect, February 2017
The figures quoted in the example paragraph are examples only. You should ask your health care professionals what they charge, and what the Medicare rebate is, for the particular health treatment you are receiving.