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Once upon a time most Australian’s were content with universal healthcare provided by the Government in the form of Medicare. Private cover was like a trinket or a foible of the super rich.
However, as the population increases, the Baby Boomers age and our ties with American corporates get ever more murky Government policy has shifted. As part of the Lifetime Health Insurance policy, today private health insurance is compulsory for everyone aged 31 or more. But what’s the best way to go and how much (or how little) can you get away with without being penalised?
Health insurance in Australia
In Australia, Medicare, the Government health insurance system, provides universal health care. This is available to all Australians who live in Australia, and gives access to free or low-cost health services. Non-Australian citizens who are permanent residents can also qualify for the scheme. The Medicare system also means Australians overseas can access healthcare in countries where Australia has a reciprocal health agreement – for example, the United Kingdom.
Private health insurance, on the other hand, provides some health care trimmings such as the option to choose differing levels of cover, over and above the basics covered by Medicare, and greater choice of doctor, location and timing for treatments.
What does private health insurance cover?
Private health insurance covers some or all of the expense of being treated as a private patient in hospital. Unlike Medicare patients, private patients in a public hospital are charged a portion of their accommodation, theatre fees, drug costs and doctors’ fees, as well as many other costs. In a private hospital they are charged even higher fees for treatment. Having private health cover helps to reduce these expenses significantly.
Outside of hospital care, private health insurance can cover some or all of the cost of many medical procedures that Medicare does not. Private health insurance can cover expenses such as podiatry, chiropractic treatment, dental treatment and many other procedures, for example. These types of treatments are considered by the Government to be non-life preserving (luxuries) although they can impact significantly on the quality of life of some individuals. For those individuals, private health cover can add value.
Private healthcare vs Medicare
Medicare covers a range of medical, hospital and pharmaceutical costs, including doctors and specialists. Medicare covers the full cost of seeing a doctor and most of the cost of seeing a specialist, and provides benefits for tests and examinations used to treat illnesses. It also covers eye examinations. Medicare covers all the costs for a hospital visit for public patients and most of the costs for private patients.
Patients with private insurance, however, get a number of benefits added to their Medicare entitlements. People with private insurance can be admitted to hospital as a private patient, allowing them to choose their own doctor and have more discretion over when they enter hospital.
Lifetime health cover
In an effort to encourage more people to take up (and maintain) hospital insurance while they are younger the Government has introduced a policy called Lifetime Health Cover. Under these new rules, all Australians must take out private hospital insurance before they turn 31 or be charged a levy of two percent per year of delay on top of your private health insurance costs FOR LIFE (up to a maximum of 70 percent). What that means is people under 31 who have private cover get a discount – people who delay get penalised when they do eventually take it out.
The Medicare website has more detail about what Medicare covers and the Australian Government’s information site about private health cover explains more about the advantages of private cover.
The idea of Lifetime Health Cover is to take some of the pressure off the public hospitals and encourage non-life preserving operations and interventions to be managed in a user-pays private setting. In that way, public hospitals can continue to offer essential treatments – and emergency care – as it is needed and for free.
