Healthy, Wealthy Or Wise
The Age
Monday January 27, 2003
Coping with the rising cost of health insurance is a tricky operation. By Denise Cullen
News that private health funds are pushing for another hike in premiums this month is sending members' blood pressure readings through the roof.
Although Federal Health Minister Kay Patterson reasons there are "increased pressures on health costs", radio talkback switchboards rang hot with callers incensed by the health funds' application to the government for an average 6 per cent rise in premiums.
Chief executive of the Australian Health Insurance Association (AHIA) Russell Schneider argues that health fund benefits are driven by the incomes of health workers.
"If there were to be no rises in health insurance premiums there would be a freezing of the incomes of nurses, of doctors, of technicians, of all the people who work in private hospitals and all the people who provide allied health services," he says.
That may be so but many fund members are once more questioning how much value they're receiving for increasingly steep premiums. Last year health funds hiked prices by an average 7 per cent, although some people paid much more than that - in some cases, rises of up to 18 per cent.
Such fee increases, reports the Private Health Insurance Ombudsman, were the single biggest area of complaint last year.
Senior health policy officer with the Australian Consumers' Association Martyn Goddard says consumers are feeling angry because the deal sold to them three years ago has changed. "We were told that when we got all these premiums (being paid) into private health, then premiums would go down but they've gone up. We were sold a pup, frankly," he says.
Fund members are frustrated because they feel they wield little control.
But is there anything you can do on an individual level to protect your delicate hip pocket nerve from further premium hikes?
Here are a few strategies that can save you money and help you get better value for your health fund dollar.
Pull the plug
The start of a new year is a good time to review your budget, your state of health and whether or not private cover is still appropriate to your needs - if, indeed, it ever was.
If you decide you're not getting much bang for your health insurance buck,
opting out of the system altogether is the most dramatic and obvious money-saving strategy.
You won't be alone. Consumer advocates predict many fund members will take that step, with some choosing to self-insure.
But remember that without private insurance, you might wait longer for some elective procedures and you'll be bidding adieu to other benefits such as choice of doctor and, perhaps, a plusher room if you do end up in hospital.
Sign up fast
It was the Government's Lifetime Health Cover incentive which saw many people
"run for cover".
The system penalises people who don't take out health cover until later in life: wait until after your 31st birthday and you'll pay a 2 per cent surcharge each year up to a maximum of 70 per cent.
That's bad news for fortysomethings who have twiddled their thumbs on the issue but the flipside is that those in their 20s can secure themselves cheaper health insurance premiums for life.
If that's the way you want to go, top cover isn't the only ticket to a cheap ride. There are many other affordable options.
Crunch the numbers
Got a promotion recently? Been doing some overtime? Even if you think you don't need insurance, your pay slips might tell a different story.
Once your income and fringe benefits reach $50,000 as a single ($100,000 as a couple), you need to take out private health insurance to escape a 1 per cent Medicare levy surcharge.
That's at least $500 ($1000 for couples) and counting, which probably comes close to covering the cost of your premiums anyway.
Consolidate your policies
It's not usually possible to save money by rolling two individual policies into a family policy, as the family premium is usually double the individual premium.
But the Australian Consumers' Association points out that a single parent might do well to combine his or her policy with that of a partner.
"That's because single-parent premiums are, with many funds, the same as family premiums," a spokeswoman says.
Dump the extras
Do you really need a new pair of glasses every year? Or a set of false teeth? Or a weekly tune-up at the chiropractor's office?
If you really must cut the cost of your private health insurance, maybe you can opt for hospital cover without all the extras that bump up premiums.
But first, check whether you get value for money from your ancillaries cover, advises the Australian Consumers' Association.
You can do this by calculating how much cash you received from your insurer last year for your claims, compared to the premium you paid.
Or flog them to the hilt
If you're going to stick with ancillaries, you might as well take advantage of what's
on offer.
"From the individual member's point of view, it obviously makes sense to get as much in return for your premium as possible,"Mr Goddard says.
"So if massages, gym shoes and golf club memberships are offered as part of a private health insurance package it makes sense to use those things, even if you didn't consider buying these things before you saw you had insurance for them."
However, he points out such conflict between the self-interest of the individual and the overall sustainability of the system has contributed to the cost blowouts of the system as a whole.
"The main reason premiums are going to go up again this year, well above the rate of inflation, is that people are making more claims than the funds thought they would."
Read the fine print
While you're reviewing your ancillary policy, check the annual benefit limits.
The Australian Consumers' Association points out that some funds restrict the overall benefits paid by combining the maximum limits.
"For example, you get $400 worth of physiotherapy and chiropractic in a year rather than $400 for each. This can lead to large differences in how much you're covered for."
Be excessive
Choose a product with an excess (an amount you must pay for a hospital stay before benefits are payable), or a co-payment (usually a set daily amount for a hospital stay).
"You have the choice of paying lower premiums for a higher excess and if you don't feel you're likely to need hospitalisation, that might be appropriate," explains a Medibank Private spokesman.
Other ways to cut costs? Look for policies that exclude treatment for some conditions (cosmetic surgery and hip, knee and other joint replacements are common exclusions) or that only cover you as a private patient in a public hospital.
But make your choices carefully, the Medibank Private spokesman warns.
"Some people find out down the track that the policy doesn't cover them for what they want."
Seek a discount
Medibank Private recently ditched its direct-debit discount, as did MBF, and discounts for payment methods such as electronic funds transfer and payroll deductions are generally less common now.
But your fund might be different. It doesn't hurt to ask.
Shop around
When it comes to health insurance, comparing apples with apples is the devil's own job but it's worth taking time to compare the offerings of your incumbent insurer with its competitors.
For more tips about choosing a policy, visit the Australian Consumers Association's website at www.choice.com.au - click on "Money" under "Browse by Category" to reach the right links.
There's also an online calculator with more than 1400 different premium options - click on "Health Insurance" on the home page - but if you're not a member, you'll need to pay $8.25 to access it.
© 2003 The Age
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