CHOICE membership

Comparing health insurance systems - universal, public and private

Inspired from a discussion on our Health Insurance SpotAShonky thread, we’ve decided to start a discussion about the best ways nations and governments can structure health insurance systems.

In Australia, we have a dual system that encompasses both public and private parts. Within the private system, there are also non-profit health insurance providers. You can find lots of useful information on the CHOICE website about health insurance, including a health insurance guide and a an interactive quiz to help you decide if you need private health insurance.

There are many different ideas on the ‘best’ way to organisae health care, and it’s worth noting that not even experts always agree on the answer. It’s a topic that people can feel strongly about, as it often encompasses people’s personal beliefs, but please note that this topic is specifically for discussing health insurance. A broader discussion about government owned vs privatisation can be found here.

Please note, this is a place for civilised discussion, personal or political attacks, name calling and bad behaviour is not tolerated. Please be sure to abide by our guidelines, and to be respectful even when you disagree.

Brenton H.

While it is important that health insurance companies are run ethically & efficiently & look after their members it is also worth noting that “profit” is not a dirty word & organisations that make profits are often the most efficiently run & produce the best service. It is necessary to remember that the wonderful treatments that are continually being developed for previously untreatable illnesses involving very expensive research into drugs & hardware will always mean that premiums will increase at a rate higher than inflation. People often criticise the funds for not giving value for money, but forget that like all insurance schemes they can only work if the fortunate members that don’t need to claim support those that do. After all we don’t periodically burn our house down or crash our car just to get some so called value back for the premiums we pay. I would like to see Choice clearly make this point rather than continually promote discontent with the world leading Australian health system in which private health plays a vitally important role. To do otherwise will slowly ensure its gradual decline & eventual demise.
I have no interest in any private health fund apart from being a longstanding satisfied BUPA member.

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Welcome @brentonhay

I don’t believe that Private Health Insurance is vitally important, so it’s demise would be great in my eyes. There are enough examples in the real world Businesses (not just health) to also show that efficiency might be purely how much profit they can derive at the expense of those paying for those profits. They may be efficiently run to squeeze the last drop of profit they can, but it doesn’t mean it meets the real needs of those paying.

With all the funds that are both for profit and non-profit this dilutes the value of any premium paid. The expense of duplicated multiple CEOs, Boards, Buildings, employees, and other infrastructure means every dollar someone pays into Private Health Insurance means that dilution of effectiveness is occurring. It could even be described as wastage. Then if they have shareholders (many are Corporate) this means dividends and or increased Capital are required.

Let’s put all the money paid by Private Insurance holders and the rebates the Govt pay to these businesses into Medicare, take all the duplication including profits, CEOs, infrastructure etc out of the equation and then we can talk about efficiency of the dollar paid.

I see a lot of people complaining about the Medicare levy, too much tax is often the label applied. They however are very happy to pay way more for Private Health coverage than a modest increase to the levy instead, which Levy helps share the cost across those who do and don’t claim and those who can’t afford to pay the what I think are excessive Fund premiums.

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While I am inclined to be of the mindset of @grahroll it is necessary to point out that 100% of for-profit public companies have job #1 as providing returns to their shareholders and operating within the law.

Those dividends (eg dollars on top of care) would be reinvested in healthcare by a non-profit or government scheme, be it by providing more services, better services, or funding research. OK, many governments would put it in their general revenue or cap their ‘expenses’ (as they see it).

I’ll note that ours is not the world’s leading health system according to most league tables. We appear to be #8 by one report. The top ranked have dual public private systems with their own unique characteristics. The USA with its absence of a universal public system accompanied by the most expensive private system is only at #15 as seen by American eyes where ‘socialist anything’ is somewhat worse than death to the ideologues.

This comparison of 4 models may be interesting to readers. The Advisory Board looks like an objective advocate.

https://www.advisory.com/en/daily-briefing/2020/02/21/universal-health-care

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A 2021 report shows Australia’s healthcare at 32nd in the World and USA at 37th (How they are determined would vary by the criteria used by the organisations ranking them so different sites different outcomes)

https://worldpopulationreview.com/country-rankings/best-healthcare-in-the-world#dataTable

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Got to love it. That report also references this one, having a smaller sample of only 11 advanced selected countries rather than all, and being 3 years out of date.

It is all in the criteria!

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You might as well apply this socialistic approach to every aspect of life, not just the health system, but while it may be ideal, it will never work in a fair & equitable way because of one insurmountable limiting factor & that of course is HUMAN NATURE which will always mean the creation of bureaucracies & layers of unnecessary management who will protect their positions at all costs. Unfortunately it is only competition & incentive for profit that almost always sees the real advances in human achievement.

I’ll disagree with only, but I will agree that greed makes the world go round…

edit:

In healthcare they exist in the private system where accountants literally control your care. Not a good implementation. Some of my family in the USA were quite ill. One had $100,000 bills multiple times a year and his doctors had to regularly fight the insurance company. Another currently is $250,000 in debt because of lower quality insurance and arguments with doctors for one illness, whereby if a top insurance was involved it would be settled for about $40,000 or less. I had many lab tests myself and remember seeing the settlements where an uninsured was expected to pay the full amount ($26 back then) and the full insurance paid about $3, no copay, no more to be paid, all done.

As a new member you may not be aware, but I am of American heritage and know ‘how good’ a fully private system (US style) can be, and know how and why the American medical community is generally quite wealthy (excepting for the nurses and even more so the assistants who are treated quite poorly most of the time).

You can praise a system that treats people like that, but from me, no thanks.

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Like the fair and equitable health system in the USA pre-Obama that provided health services at an internationally high cost and only for those who could pay. A health service that only supports the wealthy and those with high paying jobs where insurance is in the package is not what I want in this country.

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Isn’t that a definition of a socialist system where all share in the bounty. Yep Private Health is a Social approach where the less fortunate insured are subsidised by the more fortunate insured because they all pay policy amounts. So what’s wrong with a more inclusive and less profit taking system? Currently some of my taxes go to help subsidise those with Private Health, I would rather they go to Medicare. Private Health Insurance is neither fair or equitable in that regard.

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Part of the bigger picture on the cost of health care in Australia is evident in this report for 2017-18. I’m not sure if there is a similar more recent version.

https://www.aihw.gov.au/getmedia/91e1dc31-b09a-41a2-bf9f-8deb2a3d7485/aihw-hwe-77-25092019.pdf.aspx

Simple take aways:

  • Approx 11 million out of 25 million Aussies have some form of private health cover.
  • The total annual expenditure on all health care $185 billion. (IE $7,485 per person)
  • The Commonwealth provided $ 77B of the funding.
  • The States & Territories provided $ 49B of the funding.
  • Private Health insurers provided $ 16.6B (9%) of funding.

The size of the contribution of private health insurance towards meeting medical needs is self evident.

There analysis in this report of how the private sector supports or does not support the cost of medical services in Australia does not look at inputs to the sector.

If there are potential weaknesses in the public system in Australia they might include limited support for optical and hearing, no support for dental, waiting times for non urgent procedures (until they have become critical).

Access to specialists and the ability to receive the attention of the same specialist over time is generally reserved for private patients. Specialist services tend also to be concentrated, making universal access for private and public patients in many areas of Australia very difficult.

For anyone seeking some protection from large one off expenses for health not covered by Medicare and public hospitals - private insurance is the current option that provides the most certainty.

The system is not perfect.
The systems of patient record keeping within both the public and private systems are fragmented.
For older Australians the transition overtime from paper to digital records has seen many complaints of lost history.
For younger Australians the digital systems vary from practice to practice, State to State, and don’t readily follow. Important given the changing economic outcomes that favour flexibility/uncertainty over stability of employment.

In looking to other nations.
How many in their public funded systems deliver an equal level of service and health outcomes?
How many provide access to all on the same basis?
How many exempt all those earning below similar thresh-holds of income from paying towards their universal health care system?
For Australia’s major issues with Indigenous health outcomes do others do it better?

There are commendable thoughts in brentonhay and grahroll. In some consumable areas governments believe deregulation is the way to go; that competition will bring lower prices/fees. Here in SA we got deregulated electricity which resulted in the reverse. We had the dearest electricity for many years. By contrast some might see a deregulated telecommunications has worked in our favour. Left solely to Telecom (now Telstra), would we be where we are today with our phone systems? We might have the technology but what about the packages and their fees?

Another area, and closer to health funds, is superannuation. For many years I belonged to a fund that charged fees while my wife had a fund that did not charge fees. The TV adverts for this scenario suggest by not paying fees the client is financially better off. This was not our experience. Indeed, it strongly suggested ‘you get what you pay for’. Well, maybe—my financial advisory services started well, then my advisor left. A succession of less-than-desirable advisors came and went, so I decided to change practice. At the last minute a new guy contacted me, told me I’d been poorly managed, and could we meet. I did. His service is fantastic. That was 10 years ago. I still pay the same/adjusted fee, but I’ve got a better advisor.

While I greatly appreciate what CHOICE is trying to achieve with health insurance, what I don’t want to see is a ‘flavour of the month’ reporting. CHOICE regularly reviews things like internet service providers, coffee machines and other goods and services that are subject to rapid change. I can’t keep up with that, but I get it. Health funds too are regularly reviewed but my capacity to change is limited. So, what am I looking for? A significant part of the answer lies in the long term; security, quality of service, level of communication (that’s a tough one these days) and a good web page. It’s clear from member reviews that finding the “best” is not always a winner. If post purchase service is poor, it doesn’t matter who you can report this to, it will cost you.