Do I really need private health insurance? How public and private hospitals compare.
“Should I get private health insurance or rely on the public health system?” It’s a question many people have asked themselves and there is no one right answer.
The cover you need will depend on a range of circumstances including your health, martial status, age and healthcare needs.
This guide looks at both the private and public health sectors, access to hospitals, how to decide between public and private health care and more.
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Increase in private patients
A 2016 report by the Australian Institute of Health and Welfare (AIHW) found that private hospital admissions are rising faster than public admissions.
The report found that while the majority of Australian hospital admissions in the last two years were to public hospitals, the number of admissions to private hospitals increased at a faster rate. The Admitted patient care 2014-15 report found that of the 10.2 million admissions to hospitals in 2014-15, close to six million were treated in public and just over four million were treated in private hospitals.
Looking at the increase year-on-year, those being treated as a private patient went up by 5.9%. While those being admitted as a public patient only increased by 2.7%. Various factors could have lead to this change including the influence of government penalties and incentives such as the Medicare Levy Surcharge (MLS) or the Lifetime Health Cover (LHC).
Public vs private healthcare
|Hospital stay||5.7 days||5.1 days|
|Chance of infection||6.70%||4.10%|
Source: Australia's hospitals at a glance 2013–14
Can I choose to be a private patient in a public hospital?
The main advantage of going private in a public hospital is that you get to choose your own doctor if they are available. However, you will still have to share a room, as private rooms are reserved for those who need them most. It may be cheaper for you to be treated as a private patient in a public hospital.
Being treated as a private patient in a public hospital is sometimes necessitated by location. For example, if you live in an area that does not have a private hospital with which your fund has an agreement.
At the time of admission you will be asked if you wish to go private in a public hospital. Some public hospitals will encourage you to choose to be treated as a private patient, as they can make more money. Going private should not put you ahead of other patients awaiting services, as once admitted, all patients are required to be treated on a needs-must basis.
Private patient in a private hospital
If you have a higher level of health insurance that entitles you to be admitted as a private patient in a private hospital, you would have the advantage of being admitted faster for elective treatments than in the public system. You would also be able to choose your own doctor and have a private room rather than sharing. The proviso to this is that the private hospital you’re being admitted to has an arrangement with your doctor allowing them to treat private patients and has the accommodation and services available at the time you wish to be admitted.
What If I want to be treated as a public patient in a public hospital?
Because public health is available to every eligible Australian, those with private health insurance can still choose to be treated as a public patient in a public hospital. As a public patient, your treatment is covered by Medicare including all eligible accommodation, doctor services, diagnostic tests and medications. Drawbacks of being treated as a public patient include:
- Your doctor is allocated to you by the hospital.
- You don’t have the option of a private room.
- You’re subject to waiting lists for elective surgery.
Source: Australia's hospitals at a glance 2013–14, Separate private hospital data not available for NT, TAS and ACT
Being treated as a public patient in a public hospital
As a public patient in a public hospital, you will not usually pay anything for your hospital treatment, as everything will be covered by Medicare. Services covered include:
- Intensive care
- Doctors’ services
- Operating theatre fees
- Allied health services (e.g. physiotherapy)
- Prostheses (e.g. artificial hips)
If you are a private patient in a public or private hospital, Medicare will cover 75% of the Medicare Benefits Schedule (MBS) fee for these services, leaving you with 25% to pay. Whether you have out-of-pocket expenses or not will depend on the level of hospital cover you have and whether your health fund has a gap agreement with the hospital in question, in which case the remaining 25% may be covered by your health insurance. It will also depend on whether your chosen doctor charges more than the MBS fee and if so, whether your insurance will cover this.
Public or private for childbirth?
Whether you choose public or private to have your baby will depend on the following considerations:
- Whether you want your own doctor, midwife and/or obstetrician or those appointed by the hospital.
- Whether you want a private room or are willing to share.
- Whether your birth is likely to be normal or subject to complications, in which case you may want your own doctor in attendance.
- Whether you live in a metropolitan or rural area, as there are less private hospitals outside the major population areas.
What are the benefits?
- Giving birth in public hospital. The main advantage of going public for childbirth is that all costs are paid for by Medicare (apart from any treatments required for your newborn baby, in which case Medicare only pays 85% of the fee).
- Giving birth in private hospital. The main advantage of going private for childbirth is that you will receive a more individual level of care, possibly having your own doctor or midwife, your own room and possibly an extra day or two to recover from the birth before being discharged.
Medical services and general treatment
Medical treatment outside of hospital is only partially covered by Medicare, which covers 100% of the MBS fee for a visit to a GP and 85% of the cost of seeing a specialist. Medicare also provides a benefit for tests and X-rays and some surgical and therapeutic procedures performed by approved doctors and dentists. Medicare does not cover any of the following:
- Most dental examinations and treatments
- Most physio, chiro, podiatry and psychology services
- Most occupational, speech and eye therapy
- Acupuncture (unless performed by a GP)
- Optical (apart from the consultation fee)
- Hearing aids and other appliances
- Home nursing
To be covered for these out of hospital expenses, you need to have extras cover as part of your private health insurance, which will reimburse you for some or all of these services up to a benefit amount determined by your level of cover.
Source: Australia's hospitals at a glance 2013–14
Benefit payments by provider
Health funds will usually have different cover amounts for each medical condition or service that is claimable under their policy. To give you an idea of how each provider handles their benefits for specific treatments you can refer to the chart below:
|Basal Cell Carcinoma or Squamous Cell Carcinoma removal from nose, eyelid, lip, ear, digit or genitalia||$221.35||$335.85||$311.85||$366.10||$315.80||$303.15||$296.90||$265.65||$265.65|
|Breast, benign lesion surgical biopsy of excision||$260.05||$355.20||$367.25||$356.40||$380.55||$355.30||$348.80||$312.10||$312.10|
|Carpal Tunnel Release||$276.80||$459.05||$426.80||$440.20||$453.75||$404.90||$417.55||$332.20||$332.20|
|Complicated Delivery (of baby)||$1,629.35||$2,649.15||$2,307.90||$1,855.90||$2,406.65||$2,198.50||$2,280.10||$1,955.20||$1,955.25|
|Coronary Artery Bypass||$2,200.00||$3,665.20||$3,404.40||$3,783.30||$3,294.85||$3,265.15||$3,064.80||$2,640.00||$2,640.00|
|Femoral on Inguinal Hernia||$464.50||$640.60||$657.50||$909.70||$662.70||$636.05||$623.05||$557.40||$557.40|
|Overnight investigation for sleep apnoea||$588.00||$747.65||$707.85||$682.20||$703.45||$694.25||$709.40||$705.60||$705.60|
|Tonsils or Tonsils and Adenoid||$295.70||$522.05||$493.85||$513.90||$481.30||$472.35||$442.65||$354.85||354.85|
|Uncomplicated Delivery (of baby)||$693.95||$2,150.35||$1,979.05||$1,484.50||$2,057.05||$1,886.95||$1,550.60||$832.74||$832.74|
I recognise most of these funds except for the AHSA, what is that?
The funds represented by the ASHA are:
- ACA Health Benefits Fund
- Australian Unity Health Limited
- CBHS Health Fund Limited
- CUA Health Limited
- Defence Health
- GMF Health
- Budget Direct Health Insurance
- Frank Health Insurance
- GU Health
- HBF Health Ltd
- Health Care Insurance Limited
- Health Insurance Fund of Australia Limited
- Health Partners
- Navy Health
- Peoplecare Health Insurance
- Phoenix Health Fund
- Police Health Limited
- Queensland Country Health Fund Limited
- Reserve Bank Health Society Ltd
- rt health fund
- Teachers Health Fund > UniHealth Insurance
- Teachers Union Health
- The Doctors' Health Fund Pty Ltd
- Transport Health
What is covered by the Pharmaceutical Benefits Scheme?
The Pharmaceutical Benefits Scheme (PBS) subsidises many prescription pharmaceuticals, so whether you have private health insurance or not, you will be able to purchase those medicines listed on the PBS at a reduced rate.
However, not all pharmaceuticals are covered by the PBS, so if you need such medications on a regular basis, this is where private health insurance can help. Depending on your level of cover, you can arrange health insurance that covers the cost, although you will normally be required to make a co-payment as well and there will be benefit limits on how much you can claim.
Are ambulance costs covered?
Medicare does not cover the cost of emergency or other ambulance services, except in some states (Queensland and Tasmania) and in some circumstances (pensioners and low income earners in NSW and ACT).
So this is another area where private health insurance can help. Most policies include cover for emergency ambulance transport, which can be many hundreds of dollars if you are required to pay the bill yourself.
Questions you should ask before being admitted
Before you go into hospital as a private patient, you need to find out the estimated cost of your treatment and whether your health insurance policy will cover most or all of the costs. There are several questions you should ask:
- Your health fund. Speak with your health fund about your level of cover and whether your procedure is included, any waiting periods or exclusions that may apply and whether they have a gap agreement with the hospital you will be treated at.
- Your treating doctor. Make sure you ask your doctor for a written estimate of the services for that you will be billed for, whether there are any additional charges, whether they are participants in your health fund’s gap agreement and if there are any other costs not covered by Medicare (e.g. pharmaceuticals or diagnostic tests).
Speak with an advisor about your healthcare options
Whether you opt for private or public health cover will depend on your personal situation and finances. The main advantages of private cover are your choice of doctor, admittance when you need it and possibly a private room. If you don’t mind waiting, sharing and being treated by an unknown doctor, then perhaps public health cover would be all you require.