Australians pride themselves on being friendly and welcoming. That philosophy extends to our health care system as well. A public, government-funded health care system, called Medicare, provides basic care for every citizen.

Medicare typically pays for:

• 100 % of in-hospital costs at public hospitals
• 75 – 85% of General Practitioner and specialist services

Additionally, the public system covers:

• most immunizations
• 100% of prescription medicine costs
• 30 to 40% of the premiums for private health insurance cover

Treatment under the public health care system does not extend to Australian citizens traveling outside the country, so travel insurance is highly recommended to cover those costs.

Quality of public care

While, certainly, publicly-funded medical care is better than no care at all, the Medicare system does have its drawbacks. There may be long waiting times for non-emergency medical procedures and public hospitals offer more limited choices of doctors than if you were to select from a wide range of private care facilities. This is always a consideration with insurance policies, though. Finding a good doctor is hard enough – is your doctor in your network?

Fortunately, Australians have the option – and, indeed are encouraged – to buy private medical insurance.

Private medical cover, benefits

The benefits of private medical cover include:

• The ability to choose from various private hospitals and a wide range of doctors
• Shorter wait times for care in private facilities
• Affordable premiums not based on age (in general), medical history or health
• Cover for services not paid for by Medicare, including ambulances, dental care and optometry

This article provides more in-depth information on the different levels of cover private health insurance offers.

“Strongly encouraged”

While the public health care system is paid for by a 1.5% tax levy, the Australian government keeps Medicare costs down by making it in citizens’ best interests to pay for a private health care plan.

Medical Levy Surcharge: Anyone with taxable income greater than $70,000 in 2009 ($140,000 for couples) must take out private health care insurance or pay an additional 1 % surcharge in their taxes. This encourages anyone who can afford private health cover to purchase it. Typically only people who truly can’t afford private health care rely on the Medicare system as their primary means of health insurance.

Lifetime Health Cover: It was noted earlier that premiums do not go up based on medical history, general health or age, however, one exception applies. Anyone who has not taken out private hospital cover by July after their 30^th birthday will pay a 2% loading on their premium for every year over 30. For instance, someone taking out hospital insurance for the first time at age 32 will pay a 4% loading on their premium. The loading continues for 10 years. This encourages people to take out insurance when they are young and less likely to need it, rather than putting an excessive burden on private health insurance companies by taking on “high-risk,” older customers, more likely to make claims before they’ve paid into the policy for long.

Waiting Periods: Waiting periods for treatment of specific conditions (pre-existing ailments, or PEAs) encourage people to purchase insurance policies before they need them. Insurance companies may impose waiting periods of up to 12 months on:

• Pre-existing conditions with symptoms present up to six months prior to the purchase of insurance;
• Any obstetric conditions, including pregnancy

Two month waiting periods exist for all other benefits, again, preventing a person from getting insurance, using it for check-ups or treatments, and then cancelling the policy.

Does it work?

It’s often been said that there is no perfect health care system, but our blend of public and private health care seems to work well for most people.

If a person has not taken out private hospital cover by the 1st July after their 30th birthday, then when (and if) they do so after this time, their premiums must include a loading of 2% per annum. Thus, a person taking out private cover for the first time at age 40 will pay a 20 per cent loading. The loading continues for 10 years. The loading applies only to premiums for hospital cover, not to ancillary (extras) cover.

Most aspects of private health insurance in Australia are regulated by the Private Health Insurance Act 2007.

Photo by nellee100

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