Aussies react to whether Medicare if to blame for poor value in private health insurance

Australians are divided over whether raising the Medicare rebate is the best way to get better value from our health insurance. See comments, have your say.

The role of Medicare in reducing gap fees when you are treated as a private patient in the hospital system has split opinions.

You probably don’t know it but when you elect to be treated as a private patient in a public or private hospital, Medicare pays 75 per cent of the Medicare fee for your surgeon.

Yes, the public insurer actually pays more of your doctor’s bill than your health fund does.

And the reason your gap fees have been creeping up is the Medicare rebate has not kept pace with inflation since the scheme was introduced in 1984.

In fact, Medicare rebates were frozen for five years after 2013.

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The Australian Medical Association has indexed its fees to inflation since 1984 and this highlights the massive inadequacy of Medicare.

For example, the AMA fee for a knee replacement is currently $4675 compared to Medicare’s $1450.

The Medicare fee for a hip replacement is just $1761 compared to the AMA fee of $5675.

Under health insurance rules, health funds must top up the Medicare payment for a doctor’s service by at least 25 per cent of the Medicare fee.

Funds can pay the doctor even more on top of this but, in an increasing number of cases, this top up is not enough to cover the doctors’ charges and patients are left with huge gap fees.

For example, the government’s Medical Costs Finder website reveals 68 per cent of people who have a knee replacement pay gap fees of up to $3900 to surgeons, anaesthetists and other doctors for this procedure that are not covered by either Medicare or their health fund.

Typically, the combined doctors’ fees for this service are around $4800. Medicare funds $1900 of this fee and the insurer pays $1800.

So, if we want better value from our health insurance, one way to achieve this is to raise the Medicare rebate.

But Australians are not convinced that this is the way to go.

“Health insurance is poor value as it is about the profit to the shareholders and increasing the payments to doctors, hospitals and others who want some from the trough. Don’t blame Medicare for pushing the prices up, blame yourselves,” said Kym.

Philip had a similar view: “Try Doctors greed. Put up your hand if you are earning less than $500,000 a year. No one? Thought so.”

Another reader calling themselves ‘Oh no not again” backed the status quo. “Just spent 4 weeks in private hospital cost to me $15 for medication to go home with. Like all insurance people complain about the cost until they need to make a big claim and then it’s worth every cent.”

Michael agreed: “Same here after $43,000 heart operation the cost was the Aspirin they sent me home with.”

But Natalie had a different story: “Full gold private health $2500 out of pocket for knee surgery and $2000 out of pocket for cataract surgery”.

Meanwhile David said it comes down to choice: “Doctors don’t work for insurance companies. The patient is their client. Patients choose their own insurers. Some insurance companies are good and some bad. Some have high excess and some don’t. In addition Medicare hasn’t been indexed to keep up with the costs of business for doctors, and the insurers want to pay out the least amount possible to maximize (sic) their profits. So the patients pay a gap.”