- Private health insurance provides for patient choice
- The Government incentivises joining as it takes pressure off the public system
Private health insurance offers Australians the opportunity to supplement health coverage from the public system (Medicare) through the payment of monthly premiums to a health fund.
Private health insurance can be for hospital or general (ancillary or extras) cover, or both (combined).
Hospital cover applies to hospital treatment where a Medical Benefit is payable (MBS) or for any hospital treatment for psychiatric care, rehabilitation or palliative care. Treatments with an MBS number can also be provided out of hospitals if they are considered to be ‘hospital substitute’ treatment.
It does not matter whether the hospital treatment is delivered in a private or public hospital. Private hospitals are usually used by privately insured patients, but treatment in public hospitals using private insurance is growing. This can be due to deliberate strategies by public hospitals to attract these patients for financial reasons.
Hospital cover allows privately insured patients to choose their doctor, hospital and often the timing of their treatment.
The private health insurance policy will cover some or all of the costs of the hospital accommodation theatre fees, and the out-of-pocket costs for the treating doctors (the rest is covered by the MBS)
If a medical device used by a medical practitioner in hospital treatment is listed on the Prostheses List, the health fund must pay the minimum benefit, without out of pocket costs to the consumer. This means the Prostheses List ensures the consumer gets the device their doctor chooses, without having to pay.
Following significant falls in private health insurance coverage in the late 1990s and more recent declines, the Australian Government introduced additional measures to encourage people to sign up for private insurance:
- Lifetime Health Cover means that anyone taking our private insurance hospital cover will pay more for every year after the age of 30 that they hadn’t been a member.
- The Private Health Insurance Rebate is a means tested rebate for insurance premiums. The average rebate has fallen in recent years below its original 30% for all members.
- People above a certain income must pay a Medicare Levy Surcharge if they don’t have private health insurance
- Under the recent reforms, 18-29 year olds receive discounted insurance
These measures are in recognition that private health insurance takes pressure off the public system and that the decision of individuals and families to invest in their health is important.
At 31 December 2018 44.6% of the Australian population had private hospital cover while 53.9% had general cover. For further information see Private Health Insurance Issues and Opportunities.
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