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What are the advantages of taking out private health insurance in Australia ?

For regular doctor’s (general practitioner’s) visits: nil. You see the same doctors in the same order for the same price.

For the vast majority of prescription items: nil. Nearly all medications are price-negotiated in bulk under our Pharmaceutical Benefits Scheme, and our government typically pays about a third of the retail price that insurers in the US pays for equivalent drugs, with consumers in Australia paying different pricing according to income. Basically, in 2017, ordinary income-earners pay a maximum - many antibiotics etc are less - of around A$35 per prescription (around US$27), and retirees and those on welfare pay A$6 per prescription (around US$4.50).

For specialist’s visits, such as dermatologists, allergists, neurologists, etc, nearly all specialists work in both the public and private systems, and their waiting list is much longer for public patients than for private patients. So if you elect to be seen as a private patient, you will be seen more quickly. Depending on the specialty and how in demand they are, this might cut your wait from 3 months to 2 weeks, or it might cut you from 2 years to 3 months (if it’s a really over-burdened specialty in your area).

But note a couple of things: firstly, your private health insurance usually doesn’t chip in for the consult fee, anyway - you bear that out of pocket. And public patients could make the same choice. So whereas a public patient may be seen free, or for $30 or $50 out-of-pocket, a private patient (whether with or without private health insurance) might pay $200 or $300 out-of-pocket for their consult.

Where the real difference comes in is if you need hospitalisation as a result of the consult. A public patient is referred to the public hospital system, and won’t necessarily be treated (operated on) by “their” doctor. They usually won’t get a private room. They may have to wait a few months. (They are triaged, so the more urgent their surgery is, the faster they’ll be seen.) A private patient can go to any of the private hospitals the doctor has consulting privileges at, is guaranteed to get their doctor, and will usually get a private room, and will usually get their surgery faster. Neither the private or public patient will pay anything significant out-of-pocket, or possibly $500 (depending on the private insurance plan - it’s quite complex, but generally not as complex as the US system).

So if you have to go to hospital, with private health insurance, you’ll generally:

get your surgery faster,

you’ll guaranteed to be seen by your choice of doctor,

you’re guaranteed a private room (if that’s what you paid for in your plan),

the meals are usually better (none are great though),

you usually get a TV above your bed, and

usually (but not always) the decor’s a bit nicer.

The public system:

has better amenities - all the best technology is in the public system, which is why all the top specialists still work in both the public and private systems

does all the cutting edge research and operations

is by no means second-rate, it’s just over-burdened

has just as well-trained doctors and nurses - the doctors are largely the very same ones working a different shift

The other advantage of private health insurance, that some families find advantageous but I’ve never found financially worthwhile (ie I think the premiums I spend on it are far in excess of what I claim back every year), are partial payments of optical, physiotherapy, psychological, dental, and other allied health services.

For me, the vast majority of the time, the public system is perfectly good enough. Our private health insurance is mostly there for peace of mind just in case one of the following two scenarios happens to somebody in our family:

Somebody needs long-term inpatient care - if you’re going to be in hospital a long time - maybe due to rehabilitation from a car accident or something - then you at least want to be doing it in a private room. (At least, my family of introverts would. Being in a ward for weeks or months would be our idea of hell.)

Somebody requires surgery that’s urgent for them, but not deemed urgent by the public health system. For example, if my husband had a cycling accident and did an injury that made him very uncomfortable and necessitated a hip or knee replacement. Joint replacements are presently about an 18-month waiting list, I believe. For a relatively young man in his 40s who’d be wanting to get active and back to work, who’d find himself on a waiting list with elderly people for what would be deemed elective surgery, he’d find that extremely frustrating. Being able to use our private health insurance to get it done within weeks would be extremely useful.

The main reason most people take out private health insurance in Australia is not that it’s hugely advantageous product, or that there’s anything wrong with our public health system; it’s that we’re provided carrots and sticks in the taxation system to do so, such that for most well-off Australians, it makes it financially advantageous.

For families earning under $180,000 per year, the government pays 27% of the cost of a complying private health insurance policy premium as a rebate.

For families earning over $180,000 per year, the government also imposes additional income tax, the “Medicare Levy Surcharge”, if they don’t have complying private health insurance.

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