A recent report by investment bank Credit Suisse found that private patients were increasingly opting to join public waiting lists.
The report says one of the main reasons patients are fleeing private health is the cost of surgeon’s fees.
Credit Suisse says that on average private elective surgical patients pay around 50 per cent of the surgeon’s fee in addition to the private health insurance excess. They also pay for any anaesthesia fees, radiology and pathology tests or hospital stay costs.
“As affordability remains a key issue for consumers we believe the primary reason for the under-utilisation of private health insurance is the rise in out-of-pocket costs associated with a surgical procedure,” the report said.
“While longer-term drivers of demand for private hospital services remain in place – ageing population – we think it is unlikely that we will see a recovery in utilisation in the short term as long as affordability pressures continue to shift patients into the public system.”
Ramsay Health Care took a $1 billion dollar hit on its share value last month after the company admitted that rising costs and affordability were causing their patient numbers to drop.
Ramsay CEO Craig McNally said there had been a significant drop in their maternity patients during May alone.
“I don’t have the absolute answer for that at the moment but I’m sure affordability is a part of that,” he told The Australian.
He said there was a “ramped up trend” of privately insured patients electing to have their babies in public hospitals because out-of-pocket costs could be as high as $10,000 in a private setting.
“In May there was a surprising 12 per cent decrease in maternity and I believe that is an out-of-pocket issue,” he said.
Complaints against insurers on the rise
The public’s decreasing enthusiasm for private health insurance because of affordability can also be seen in polls and the number of complaints.
A Galaxy poll of more than 2000 respondents in March found that over half of Australians with private health insurance say it is no longer worth the expense.
The same month the Private Health Insurance Ombudsman reported that there had been a record 30 per cent increase in the total number of complaints in 2016-17.
“The increase of over 1300 complaints within one year is the largest rise we have experienced over the last 10 years,” it said.
Economic commentator Ross Gittens says it is clear why people have a declining interest in private health insurance.
“Most people under 60 only get a fraction back of what they pay. Often when you do claim you don’t get what you expected because you don’t get choice of doctor or a private room, you’re caught by ever changing exclusions from your policy, or because no one warned you about a huge gap payment,” he said.
“Private insurance is so counter productive the best thing would be to end the ($6.5 billion of government) subsidies and use the saving to improve the performance of the public system.”