Australia’s private health insurance system is broken and urgently needs repair

Proper health insurance, the type that actually covers you for everything, is now so expensive it rivals mortgage payments and is proof the system is broken.

Opinion: When you crash your car, the insurance covers the full cost of repairs minus your excess but when it comes to health insurance you can’t find a single product that does the same.

Australians are paying for their health four times over — once through the Medicare levy, then through their health fund premiums, they must then pay an excess when they use it.

And the fourth bill is the most galling of all — the gap fees four in ten people have to pay their surgeons and anaesthetists that their insurance does not cover at all.

Proper health insurance, the type that actually covers you for everything, is now so expensive it rivals mortgage payments and is proof the system is broken.

The most comprehensive product, that pays fees at the rate recommended by the Australian Medical Association, is only available to doctors, and you have to be a wealthy doctor to afford it.

We live in a country where the government uses financial penalties that force you to buy health cover once you turn 30 or earn an income over $90,000 a year.

It also spends over $6 billion of taxpayers money subsidising the product.

The idea behind these carrots and sticks is to relieve pressure on our overburdened free public

hospital system.

Even with these subsidies the product has now become so expensive two in three Australians can only afford cover that excludes many key procedures which means they will still have to rely on the public hospital system if they get sick.

The failure to properly index Medicare rebates, which are used as the basis of health fund rebates, means health insurance covers so little of your costs the smartest financial decision if you are having a baby or get cancer or have an accident is not to use your health fund and risk gap fees of $2000 to $20,000.

You are better off relying on the free public system where you will be treated as a priority patient and get speedy treatment at no cost.

It is quite simply outrageous that Australians who use their health cover are being forced to raid their superannuation to cover medical gap fees their health fund will not pay.

Medical device companies are partly to blame for bleeding the system by overcharging insured Australians for hip and knee replacements and other devices that cost up to five times less in Europe.

And doctors who charge massive gap fees are risking killing off the very system that underpins their private business model.

Younger people are voting with their feet, dumping the product and this is threatening to send it into a death spiral as the membership ages, further pushing up premiums.

Our investigation has exposed just what a shambles the private insurance system has become.

There are a mind boggling 104,000 products to navigate if you are trying to find the best deal.

And common sense doesn’t help, our analysis found some Bronze and many Silver products cost more than Gold.

Even the state you live in affects how much you pay.

The Consumers Health Forum is right that it’s time we had a major inquiry into the system and a key question should be whether it might be more efficient to spend the $6 billion that subsidises the industry on the public system instead.

Originally published as Australia’s private health insurance system is broken and urgently needs repair