I loathe private health insurance. Do I have it? Of course

It is easy to begrudge private health insurance. It is even easier to begrudge private health insurers. They are the smaller cousins to the big banks and big supermarkets, and just as we moan about bank fees or the eye-watering cost of staples on supermarket shelves, high health premiums have a slot on our complaints register. If you have private health cover – and there are about 4 million of us in NSW who do – you probably have a gripe or two.

HCF has “reluctantly agreed” to start paying NSW’s gazetted public hospital bed rate, a win for the Minns government.Credit: Michael O'Sullivan

Like many parents, I am paying for my teen to have straight teeth. With a $10,000 price tag for braces, I expected some reasonable return from my health fund, which has been charging high premiums for many years. Turns out I will get about $500 over the two years he has train tracks on his teeth. Time to cancel my extras, I think.

There is little love lost for private health insurers, so it was not surprising that NSW Labor was emboldened to take them on. It became an almighty stoush, in which the industry unleashed an aggressive advertising campaign. The government followed suit with legislation designed to punish the insurers by increasing the state levy on each health insurance premium in NSW to a maximum of $3.27 per person covered per week (up from $1.77). It is a move that no other state has attempted. In weighing up where voters’ sympathies would lie, NSW Treasurer Daniel Mookhey took a punt on them being with his government.

Mookhey’s instinct was probably right.

At the heart of the fight was his accusation that the big four insurers – Bupa, Medibank, NIB and HCF – were rorting the public system to the tune of $140 million a year because they were not paying enough for their members to use public hospital beds. Mookhey was adamant that the insurers should have been paying the gazetted rate of $892 per bed per day. He has letters from the big insurers dating back to 2013 (when the Coalition was in power) agreeing to pay that rate.

But since then, NIB has been paying NSW $491 per night for its members to stay in a single room, Bupa $501 and Medibank $515. Had the insurers been paying the full rate, NSW Treasury estimated the government would have netted an additional $86.8 million a year.

The insurers were just as adamant that they were not short-changing NSW, which they argued was charging double the federal government-regulated rate for private patients in public hospitals. They warned that changes to the bed rate in NSW would push up premiums. The insurers did their best to put the fear of God into policyholders.

“The NSW government is trying to cover its budget mess by making you pay more for health insurance,” one advertisement said, warning that public patients would be pushed to the back of already lengthy queues for elective surgery. It was aggressive and politically charged. But it wasn’t the state government that was about to suffer.

Private insurers are allowed to increase their premiums each year after receiving approval from the federal health minister. Increases to premiums are politically fraught, not so much for the NSW government but the federal government. No doubt Mookhey considered this when he took on the insurers.

For a sense of its political sensitivity, federal Health Minister Mark Butler’s most recent decision to allow insurers a 3 per cent rise to premiums was delayed until after the byelection in the federal Melbourne seat of Dunkley in March. Butler will need to make another determination before the looming federal election, and the insurers are demanding a big bump.

Mookhey’s hardline approach may have paid off. Over the weekend, HCF “reluctantly agreed” to start paying the gazetted bed rate rather than that increased levy of $3.27. Its chief executive, Sheena Jack, called it the lesser of two evils.

I, meanwhile, will reluctantly continue to pay my health premium for my family of five. Not because it does much to offset my orthodontics bill, but because I’ve been prodded by the federal government’s tax system – with its Medicare levy surcharge on Australians who elect not to take out private health insurance. I also want the assurance that I can access healthcare quickly if someone in my family needs it. But, for now, I am turning a blind eye to my second child’s wonky front tooth. It will move on its own, right?

Alexandra Smith is state political editor.