We’re investigating self insurance for health cover for an upcoming article and are looking to speak to people who do NOT have health insurance (or not the right cover) and have paid for a procedure in private hospital. This could be for pregnancy or surgery, such as cataracts or any other type of procedure.
Please leave a comment below or send and email to healthinsurance@choice.com.au if you’re willing to confidentially share your experience.
Good question.
The only reason I have private health insurance is the reason for which it was sold to me in a Medibank Private work promotion in about 2008, which was the tax benefit. I remind myself of this every time my current insurer (I’m on about my 4th or 5th) tells me that a particular health intervention “is not covered ny my policy” (which is kind of all of them!).
¯_(ツ)_/¯
I have private health cover and wouldn’t be without it now. I looked into paying hospital fees for corrective surgery following a gastric bypass as it wasn’t covered by my current insurance as I had dropped down a table and it was going to cost me $18000 for three nights in a private hospital. The surgery is absolutely necessary but I now have to wait a further nine months until my Gold Cover comes into effect.I believe people never know what is going to happen in the future and health insurance offers peace of mind just as home and car insurance do. I also use my Extras Cover a lot and there are big savings especially when it comes to needing dental work. It may be that some people are financial enough to have $50000 set aside for emergencies but the average person doesn’t.
I’m 77 and highly value my private health insurance BUT what they don’t tell you is that commonwealth health legislation means that inpatient procedures CANNOT be covered by private health insurance so the gap between the surgery costs and Medicare benefit are my Out of Pocket cost.
I recently had spinal surgery and virtually all neurosurgeons quoted my OOP costs at $6,000 with anesthetist $2,500, asst surgeon $1,500. They were all applying the AMA recommended costs. Medicare benefit $1,800. Fortunately after heaps of searching I found a surgeon who charged $500 OOP, same for anesthetist. However I had to travel 3 hours to the hospital which was an impost on family etc… Fortunately the daily hospital cost of nearly $2,000 plus operating theater fees were fully covered by my fund.
At my age the advantage of private insurance is I am in control and do not need to go onto ever lengthening public hospital waiting lists even if I have to try to pay for ridiculously high in-patient procedure gaps.
If I was young and had OUTSTANDING FINANCIAL DISCIPLINE I would open a bank account and deposit the monthly private health insurance premium as my personal private health fund. I think by my age you would have enough savings to have paid for any and all your elective surgeries and have enough remaining for couple of world cruises and more. Remember all emergency events are covered by the public system.
BUT THAT DEPENDS ON WHETHER YOU HAVE THE FINANCIAL DISCIPLINE.
I’m surprised a financial institution hasn’t come out with a well targeted product.
SIDE NOTE: In my opinion the massive OOP gap is a result of the ongoing fight between the government and AMA over in patient procedure fees. For Medicare to pay my surgeon only $1,800 for a 3 hour delicate operation next to my spinal cord and checking on me in hospital twice daily for 3 days is insulting to the surgeon’s care skill and expertise.
It just means more people with private insurance who can’t afford the gap join the ever growing public waiting lists.
So much for so called “universal health care”
(sorry if I sound a little bitter)
If it is not an impost to ask, does this compare with what the government tool suggests are the expected costs for a similar procedure?
Our most recent major costs have been due to knee replacements. Our OOP were greater than the tool suggests. One also needs to take into account the additional costs of the pre and post surgery visits and imaging, physio etc. They are only partially reimbursed with private cover.
Self Insured?
Do thoughts of putting savings aside over a lifetime also need to consider the impacts of taxation and inflation?
Any funds set aside would be post tax, not gain the benefit of the tax rebate for policy holders and incur a taxation penalty due to the surcharge levy. Any earnings of the savings would also be taxed. Estimating the NPV of the strategy would also need to reference the cost inflation attributable to medical procedures and expenses. Anecdote is these are continuing to grow at a faster pace than general inflation and wage growth.
I am convinced it is cheaper to self insure, if you have a good income and savings. However, not everyone has a neat $60k for a new knee and even if you do, sometimes it doesn’t make sense to sell shares or cash in investments.
I have reluctantly taken out private health insurance…I did drop it for a while, but picked it back up in time to retain my “30 year old” status/loading. I only have private health insurance now because the waiting list for publicly provided “elective” treatments such as colonoscopies have blown out to ridiculous timeframes whereas if you go privately the wait is much less.
So we now accept the fact we will pay a penalty (gap payments and premiums) for the luxury of being able to have any medical procedures we might need in the future when we need them, rather than when our “number comes up” in the lottery of the public waiting lists.
My husband and I have been married for 41years and he has been to hospital most years. Last year was 41 days and I topped it off with ankle surgery staying 14 days. There is no way that I would cease my health insurance. The OOP expenses seem to be getting greater, though my attending physician and rehab doctor were fully covered. I was rather shocked with the cost of my husband’s daily blood tests. 31 days cost us over $2000.
My complaint is that the extras cover has stayed the same for years. The cost has gone up but the amount reimbursed hasn’t. Occupational therapy costs $95 per half hour as does physiotherapy. The fund pays just $27.
Just as well we have some well paying shares. The dividends pay for all the extra medical expenses. Thank goodness our GP bulk bills.
Hi
I dump my hospital cover many years ago. Extras and ambulance only. Bought shares with those funds instead. Built up a significant nest egg that I could use for private hospital procedures if required (haven’t needed to yet).
Best financial decision I’ve ever made! Health insurance is a waste of money, especially when I hear when people make claims aren’t covered or have significant out of pocket expenses.
From my experience, get rid of your hospital cover!
Not for everyone?
It is sometimes human nature that we are happy to share the successes of personal choices, but less likely to share when it turns out for the worse.
As you say, you haven’t had to have any major medical procedures that could cost many thousands of your savings if a private health insurance fund is not there to cover much of the cost in the private system.
I am sure that if faced with a two year wait for a procedure in the public system, or getting it done now in the private system but paying many thousands of dollars if uninsured, one may rethink things.
Those who have been rejected for claims, or had substantial out of pocket expenses, have usually had ‘junk’ insurance. Designed for the purpose of avoiding the tax penalty surcharge imposed on those without PHI.
But as I said, Ive saved the cost of the insurance over 10-years, plus the capital gain from investing it creating a significant nest egg.
So if I have to get a hip replacement, I can now just pay for it from my own ‘health fund’. Ive done the sums and even taking into account the extra tax, Ive still better off.
Its a no-brainer, and I suspect for most reasonably healthy people that would be the case. Though I get that for some families, say those about to start a family, they are better off having insurance.
Not everyone has the discipline to save for a specific purpose such as future health care costs over many years for when the events will come. Nor the income surplus over many years to do that.
Private health insurance is not really insurance at all compared to other insurance, where for a premium, an insurer will cover one for financial loss. They take on all or part of the risk of an event.
With PHI, there is no consideration of risk. Everyone, due to community rating, pays the same premiums for the same cover, regardless of risk.
Also, not insured, no worries. There is a public health system as a fallback. One may not get that hip replacement for a while, but can get it free. Eventually.
And lastly, when I did my sums, it was far cheaper to have PHI and not use it in my younger years, than not have it and pay the unescapeable tax surcharge. A difference for me of many thousands over the years. And that surplus has built up over the years into a very nice savings. And the PHI is there, just in case.
I take great care, however, to make sure that the fund I am in has agreements with private health providers to avoid out of pocket expenses, and that everything I may need is covered. So no junky bronze level, and as I have built up savings over the years, can cop an excess to reduce premiums.
Hi Mark, apologies I missed your reply and question.
In my search for reduced OOP costs I searched extensively for procedure costs for my spinal surgery.
Nowhere could I find anything on an L4/5 laminectomy (spinal decompression) for spinal stenosis including all govt sites & tools. The only fee information was direct from neurosurgeons.who all but one stuck to the AMA recommended fee of $6,000.
Please let me know if you can find anything.
My spinal cord was severely pinched creating nerve pain and lack of feeling in right leg…The neurosurgeon spent 3 hours “grinding” the bone down to relieve the pressure on my spinal cord. One slip and I would have been a paraplegic or worse.
For that plus his twice daily for 3 days attendance on me in hospital, his fee from Medicare was $1,800.
In my opinion that is an insult and gross underpayment for his skill developed after years of study and perfecting his skills. On the other hand the AMA fee of $6,000 is excessive and smacks of a money grabbing protest against inadequate medicare fee.
