Australia, we’re being ripped off

We are Medicare levy-paying taxpayers who are often unable to access, without unreasonable and distressing waiting periods, public treatment. It’s time to call foul on a health system that is failing us.

Generic image of bankrupt man, hands with two empty pockets of jeans pants.

Here’s something for reform-spruiking Health Minister Sussan Ley to mull over: Australians are lumbered with an expensive, inefficient, bastard, hybrid health system that’s anything but a fair deal.

We are Medicare levy-paying taxpayers who are often unable to access, without unreasonable and distressing waiting periods, public treatment.

Most of us are also paying, under threat of punishing Medicare levy surcharges and savage “lifetime health cover” penalties, bloated health insurance premiums yet, when we require treatment, we are frequently expected to stump up supersized gap payments.

We are also forced to wait for 12 months even for private treatment if a condition develops requiring an insurance upgrade.

Think I’m overstating this diabolical shambles of a system? Well, last week I spoke with Julie. A former high school teacher, 20 years ago Julie set up her own business as a Qi gong instructor. She was super fit when she began having significant hip pain and was told a full hip replacement loomed.

Always having been “as healthy as they come”, Julie, while she’s paid a Medicare levy all her working life, never had private health insurance. Looking into it, she found she would be required to pay a 70 per cent premium penalty, the maximum level of the innocuously titled “lifetime health cover”, for 10 years. And make no mistake about the impact of this. It converts a $2000 premium to $3400.

She was also faced with the private health insurance industry’s mandatory 12-month wait. Queensland Health, meanwhile, informed her of a three-year wait.

Six months on the pain from the osteoarthritis in her hip had spiralled out of control and she was almost crippled: “I couldn’t teach. I couldn’t work. I couldn’t even walk.”

Why are Australians being let down by the healthcare system? (Pic: Thinkstock)

She firstly asked a private specialist, to whom her GP had referred her but who did not work in the public system, how much it would cost for the necessary hip replacement. She was given a “ballpark” figure of $34,000. Her GP then referred her to another specialist who did some work in a public hospital that could offer an intermediate (private) bed. The operation, including $8000 for the prosthesis, was estimated at about and eventually cost her less than $15,000, which she paid for by cashing in some of her superannuation on compassionate grounds.

So, when Julie needed urgent surgical treatment, after a long life of good health, what did she get from the public system in return for almost a lifetime of paying income tax, myriad other direct and indirect taxes, excises and duties, as well as a Medicare levy? Nothing.

When she turned to the private sector, she was firstly met with the punitive, Howard government “lifetime health cover” penalty that would have pushed her health insurance premium into the stratosphere and a 12-month wait.

Let’s take a minute to unpack this loading, which goes straight into the pockets of the private health insurers. As at December 31, 2015, there were 1,164,700 Australians paying this “cover” — including 39,615 being slugged 70 per cent extra for their insurance. What this windfall means in dollar terms for the 34 insurers is not publicly reported.

When I asked the five biggest how many of their members were subject to the penalty in 2014-15 and what it was worth to them in dollar terms, all bar one refused to supply the information. Using the figures supplied by that one provider to calculate an average, I estimate they collect somewhere well north of $591,876,000 a year.

What do the more than 10 per cent of privately insured people get for paying this penalty every year for 10 years? Nothing.

Then compare the ballpark figure of $34,000 Julie was given by the non-public specialist for surgery in a private hospital, with the estimate of $15,000 for surgery by another specialist in a public hospital intermediate bed.

Beware of how much a hospital bed will cost you. (Pic: Thinkstock)

This is a vast discrepancy. Both specialists’ fees for the procedure well exceeded the Medicare schedule fee ($1317.80 with a refund of just $988.35) with declared gaps of $3316 and $2611, gaps that would not have been covered by top private health insurance either, unless the specialist had some sort of no or reduced gap arrangement with the insurer — some do, some don’t.

But, perhaps worse (in the context of the Medicare schedule fee for the procedure being hopelessly inadequate), is the private hospital bed charge of $4000 for five nights ($800 a night!), plus $16,278 for theatre fees and the prosthesis. A total of $20,278.

In contrast, for her intermediate bed in the public hospital for seven nights and including the theatre fees and prosthesis, Julie was quoted $9254.

Remembering more than $6 billion of taxpayers’ money is being used to prop up the private health insurance industry by way of means tested premium rebates, I think it’s time to call out the lie that the private sector provides anything remotely like an efficient, good value for money auxiliary to the public system.

And it’s time to also call foul on a public system that, whether it’s because of underfunding, systemic inefficiencies or too few specialists doing public work, shoves sick people on interminable waiting lists.

As a taxpayer, Medicare levy payer, a payer of a private health insurance premium (sporting a 20 per cent penalty), a gap payer and staring down the gun barrel of hip surgery myself, I’m fed up.

Stay tuned for more on this. And if you’ve got a costs gap, lifetime health cover or waiting list horror story to share, post a comment and email me.

Margaret Wenham is the Opinion Editor for The Courier-Mail.

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Originally published as Australia, we’re being ripped off