Private health insurance in Australia refers to a type of insurance that covers the cost of medical treatments and services in a private hospital. It is optional and separate from the public healthcare system, which is funded by the government through taxes. It is designed to provide additional health benefits and coverage beyond what is provided by the public healthcare system.
Private health insurance provides a range of benefits, which includes shorter waiting times for elective surgery, choice of doctor or specialist, and access to a private room in hospital. Some private health policies also cover ancillary services such as dental, optical, and physiotherapy. Private health insurance policies can be tailored to meet the specific needs of individuals and families, and can include coverage for a wide range of services.
In Australia, private health insurance is regulated by the Australian government through the Private Health Insurance Act 2007. The government makes available a range of incentives to encourage individuals to take out private health insurance, such as the Medicare Levy Surcharge, which is a tax on individuals who do not have private health insurance and earn above a certain income threshold.
Types of private health insurance in Australia
- Hospital cover: this is the most basic type of private health insurance available in Australia. It provides coverage for hospital treatment, including accommodation, doctor and specialist fees, intensive care, theatre fees, and rehabilitation costs. Hospital cover can be either basic or comprehensive. Basic hospital cover typically covers only the essential hospital services, while comprehensive hospital cover provides a broader range of services. Some policies may also offer exclusions or restrictions for certain treatments, such as cosmetic surgery.
- Extras cover: Extras cover is also known as ancillary or general treatment cover. It is a type of private health insurance that covers services that are not covered by Medicare, such as dental, optical, chiropractic and physiotherapy services. Extras cover is optional and can be purchased separately from hospital cover. Extra covers can also be basic or comprehensive. Basic extras cover usually covers only the most essential services, while comprehensive extras cover provides a broader range of services. Some extra cover policies will also provide a benefit for wellness services such as gym memberships and yoga classes.
- Combined cover: Combined cover is a package that includes both hospital and extras cover. This type of cover is designed to provide comprehensive coverage for both hospital and non-hospital or ancillary services. The level of coverage provided by a combined policy depends on the specific policy selected. There are a range of combined policies available, with different levels of coverage for hospital treatment and extras services.
- Ambulance cover: Ambulance cover is a completely separate type of private health insurance that covers the cost of ambulance services in the event of an emergency. It can be purchased as a standalone policy or as an add-on to hospital or extras cover. Ambulance cover is not included in Medicare and is required in some states of Australia, such as Victoria.
- Overseas Visitors Health Cover (OVHC): Overseas Visitors Health Cover (OVHC) is a type of private health insurance designed to provide protection for unexpected medical expenses for visitors to Australia who are not eligible for Medicare. The visitors could include international students, working holiday makers, and other temporary visa holders. OVHC provides coverage for hospital and medical expenses, as well as some extras services, such as dental and optical. There are different levels of OVHC available, depending on the level of coverage required.
- Corporate Health Insurance: Corporate health insurance is designed for employees of a specific company or organization. It is often cheaper than individual health insurance policies, and can offer additional benefits such as reduced waiting periods and coverage for pre-existing conditions.
Private health insurance in Australia is provided by a range of insurers, including large for-profit companies, smaller not-for-profit organizations, and mutual health funds.
Disadvantages of private health insurance in Australia
- Cost: Private health insurance can be expensive, with premiums increasing regularly. Some people may struggle to afford the cost of private health insurance, particularly if they have a low income.
- Limited coverage: Private health insurance policies may not cover all medical treatments or procedures. Some policies have exclusions or restrictions such as pregnancies, mental health, the length of hospital stays, and the choice of doctor and this can limit coverage, leaving patients with out-of-pocket expenses.
- Waiting periods: Many private health insurance policies have waiting periods before coverage begins. This can be particularly problematic for people with pre-existing conditions who may need immediate or urgent medical attention.
- Complexity: Private health insurance policies can be complex, with varying levels of coverage and different terms and conditions. It can be difficult for people to understand the details of their policy and to compare policies from different insurance providers.
- Gap payments: Private health insurance policies may not cover the full cost of medical treatments, leaving patients with gap payments. This can be a significant financial burden for some people, particularly for those with chronic or complex health conditions.
- Inequity: Private health insurance can create an inequitable health system, where those who can afford it receive better care than those who cannot. This can exacerbate existing health disparities and undermine the principle of universal access to healthcare.
- Public system is available: In Australia, there is a public health system called Medicare, which provides free or subsidized medical treatment for Australian citizens and permanent residents. This means that private health insurance may not be necessary for some people, particularly those who are young and healthy.
Cost of private health insurance in Australia
The cost of private health insurance can vary depending on several factors which includes the following:
- The level of coverage
- The insurance provider/company
- Age
- Health status
- Location
According to the latest data from the Australian Prudential Regulation Authority (APRA), as of June 2021, the average cost of private health insurance premiums in Australia was $172.40 per month for singles and $407.20 per month for families. These are only averages and individual costs can vary widely based on the factors mentioned above, as well as the specific health insurance provider and policy chosen. Additionally, these figures only cover hospital cover, and many people choose to take out extras cover as well, which can add to the overall cost.
