Private health insurance gaps: leaving people uncovered and in debt
Australian Broadcasting Corporation
Broadcast: 11/11/2015
Reporter: Tracy Bowden
A breast cancer patient has warned others to check their private health insurance fine print after forking out more than $20,000 for treatment, despite having private cover.
Transcript
LEIGH SALES, PRESENTER: Last year, Australia's private health insurance industry made a profit after tax of more than $1 billion. But many of their clients who've experienced big premium increases don't think they're getting value for money. The Government's announced a review of private health insurance and is asking voters what they think via an online survey. Shortly we'll hear from the federal Health Minister, Sussan Ley, but first this report from Tracy Bowden.
MICHELLE HENESSEY: 2012, I was diagnosed with an aggressive form of breast cancer. With that one, they tend to treat with chemotherapy first fairly aggressively.
TRACY BOWDEN, REPORTER: When Michelle Hennessey was battling cancer, the one thing she thought she didn't have to worry about was medical bills. She'd had private health insurance since she left school.
MICHELLE HENESSEY: I had always assumed that everything that Medicare didn't cover would be covered by my private health cover and the reality was that it didn't cover a lot of things. So, scans and ultrasounds and echocardiograms and all of those diagnostic things, none of those were covered by private health and Medicare only covered a small portion of it.
TRACY BOWDEN: Despite having top cover, after four rounds of surgery as well as medication costs and more tests, the environmental scientist was up to $20,000 out of pocket.
MICHELLE HENESSEY: Someone needs to look at what the differences are between what the surgeons are charging and what the providers are actually paying. The gap just seems to be massive.
TRACY BOWDEN: About 50 per cent of Australians have some form of private health insurance. They pay a total of $13 billion in premiums and taxpayers contribute $6 billion to the private health insurance rebate.
STEPHEN DUCKETT, HEALTH POLICY ANALYST, GRATTAN INSTITUTE: It really is a tragedy that people spend money for years and years and years and then when they go to use the insurance that they thought they had, they don't have it at all.
LEANNE WELLS, CONSUMER HEALTH FORUM OF AUST.: It's just so hard to shop around as you would do for any other product. It's really hard. It's a maze for people to compare and contrast policies.
TRACY BOWDEN: Premiums went up an average of six per cent last year and half a million Australians dumped or downgraded their policies.
STEPHEN DUCKETT: Over the last decade or so, the proportion of policies which have got exemptions associated with them where you don't get coverage for this or that and the proportion of policies which have a deduction, that is, you have to pay the first $500 or something, have gone up significantly.
GEORGE SAVVIDES, CEO, MEDIBANK PRIVATE: Look, I feel for customers of private health insurance. What they've seen in the last few years is the - as we age as a population, the consumption of health care growing.
TRACY BOWDEN: The private health insurance industry blames skyrocketing premiums on an ageing population making more claims and changes to the government rebate.
GEORGE SAVVIDES: Premium increases have been accelerated or elevated due to the reducing private health insurance rebate through a policy change of the previous government which continues to impact pricing today.
TRACY BOWDEN: In the last financial year the Private Health Insurance Ombudsman received 4,265 complaints. That's a 24 per cent increase on the previous year. Most complaints around 30 per cent are about benefits.
STEPHEN DUCKETT: Back in the '60s there was a major inquiry into health insurance and their conclusion was that health insurance was unnecessarily complex and beyond the comprehensions of many, and that's a quote from that review and it looks like we're back in the same boat.
MALE VOICEOVER (TV advertisement): The Federal Government's rebate means you can now enjoy all the benefits of Medibank Private hospital cover for 30 per cent less.
TRACY BOWDEN: It's 16 years since John Howard's Government took steps to encourage people to take out private health cover.
JOHN HOWARD, THEN PRIME MINISTER (1998): And what we are offering the Australian people from 1st January next year is a 30 per cent tax rebate on private health insurance.
JENNY MACKLIN, THEN SHADOW HEALTH MINISTER (1998): It won't help public hospitals, it won't reduce the cost of health insurance in the long term, and most importantly, for those who do have insurance, it won't get rid of the gap payments.
TRACY BOWDEN: Over the years, very little in the debate has changed.
LEANNE WELLS: It doesn't seem to us that those incentives and those penalties have achieved what they set out to do, which was to take pressure off the public hospitals, make health care more affordable and open up choice for people with private health insurance.
TRACY BOWDEN: The Federal Government has heard the complaints from voters. It's launched an online survey where the public can have their say about what needs to change.
BRIAN OWLER, AMA PRESIDENT: At the moment we have uncertainty, we have multiple reviews going all at once with no clarity, no end point, no vision about what our health care system should look like in the future and I think that is the question that the Government needs to answer so that we all know what aim that we're actually working towards.
MICHELLE HENESSEY: It hit really hard. I now have a credit card debt, a substantial credit card debt. I had to take some money against the mortgage to pay off the differences for everything.
TRACY BOWDEN: Michelle Hennessy has ongoing health issues and knowing that her private health insurance won't cover all of her bills, she's downsizing.
MICHELLE HENESSEY: I'm hoping that by getting a smaller house I might be able to at least pay out some of those debts and have a bit put aside to pay some of the future health expenses that I have.
(20min delay)
