What Australia’s Health Panel said about private health- October/November 2021


On 9 September 2021 the President of the Australian Medical Association, Dr Omar Khorshid, announced that he will call for a national summit aimed at reforming the private healthcare sector.

It is widely asserted that there are fundamental problems with the private health system in Australia. Having paid thousands of dollars in premiums, insured consumers often face significant gap fees for private services. Medical devices cost 30-40% more than they do in other countries and the industry has been analysed by respected commentators as being in a “death spiral” as young people increasingly opt-out. Additionally the COVID-19 pandemic has led to major spikes in profits for private health insurers as Australian’s continue to pay their monthly premiums but are unable to claim on benefits.

CHF has previously called for a Productivity Commission inquiry to examine government funding of the health system and the role subsidised private health insurance plays.

We previously ran a survey of consumers on their costs and experiences with private health insurance in 2015 and believe that the time is ripe for us to see how things have changed in the consumer view. So the October/November 2021 Australia’s Health Panel survey asked what Australia’s Health Panel thought about the private health system in Australia.

And we found that Australians have a diverse but negative-leaning view of the private health system.

Australians have a good general idea of what is and is not covered by the private health system, although find that the specifics can be very difficult to compare and understand. They also believe that private health insurance is generally unaffordable and not “value for money”, with the poor cost-benefit ratio being by far the leading factor for people to stop having PHI or not get PHI in the first place. This indicates that some fundamental and systematic restructuring of the funding and costs of the private health system is required, in particular for those with reduced access e.g. rural Australians or increased need e.g. elderly Australians.

Unexpectedly the Lifetime Health Cover (LHC) loading was found to be a disincentive to joining rather than an incentive. Given the broader socioeconomic trends that are impacting on young people in particular, such as the housing crisis and wage stagnation, it would appear that the age limit of 31 is set too low and should be raised. People are unable to afford to get PHI when they turn 31 and the LHC then keeps them out of the system.

Those who do have PHI find the process of making a claim easy and do so relatively often, but many find themselves surprised by the size of the gap payment required. Many Australians “shop around” different private health providers to try get a better deal, but very few use or are even aware of the official Government comparison tool privatehealth.gov.au. This shows that more needs to be done to ensure that Australians are accessing and using independent tools to help them choose what is best for them, rather than using other tools that have different priorities.

Australians are quite clearly unsatisfied with the actions of the private health sector, particularly PHI providers, regarding the COVID-19 pandemic. Many are unaware of the promises that have been made in regard to “giving back”, but when told about them they have overwhelmingly found what they have received to be generally inadequate.

Finally, the Australian community is generally split in regard to the concept of the ‘two pillar’ system. However, while they are split as to how the public-private systems should interact, there was a strong view that public funding and subsidies should not be provided to the private system in general and for-profit providers in particular. And while many had in-principle opposition to the idea of healthcare being provided on the basis of wealth rather than the basis of need, they felt the current state and funding for the public system made the private health system an unfortunate necessity.

For the full report, download the file below. The Consumers Health Forum of Australia would like to thank all panellists for giving up their time to participate in this survey. Any questions about this survey and its findings can be directed to info@chf.org.au.