There is a lot of information around at the moment about Private Health Insurance. It is interesting to note that some people are not well informed about their health insurance cover and worse still only discover that they may not be covered for somethings they thought they were covered for. This sort of confusion has risen from the fact that there is as much as 50,353 combinations of health cover. Crickey! that would send the best heads in a spin, spare a thought for those who are time poor and have poor knowledge in this area.

Knowing about private health insurance extras cover and alternatives such as XHP will enable you to make more informed decision about which one is appropriate for you. After all it's your money and you should get the best value for your money.

Don't be fooled into thinking you will get tax benefits (medicare levy surcharge) if you get extras cover like you would with hospital cover. Extras cover offered by private health insurance companies are at best similar to coupons or a co payment system.

There is nothing insurance about it. If there was any aspect of insurance then they would be limiting their liability by having limits per service, maximum payable for each service, waiting periods before certain services are available. Have you seen anything like it when you have taken out insurance cover for your car, home or contents. One takes out an insurance for protection against the unknown risk that may arise giving them a chance to survive the risk and get back on their feet so to say. The only thing certain about the current products is your liability is not limited or if you want to have things you pay for it yourself.

Until recently there was no alternative. People have been dropping out and trying to self insure for years. Whilst it works from some who are disciplined, not tempted by onslaught of marketing that follows you around like your shadow these days in the online world. Reports from ME bank, suggests that Aussies are running down their savings to make ends meet. This view is also supported by Reserve Bank of Australia. That is not to say that you cannot do it.

The new kid on the block is Dedicated Health Account such as the one offered by XHP. Think of it as a “Super for your extras Health Needs”. Such a structure offers you to accumulate funds for a purpose in this case it being your extras health needs.

Realistically we Australians have free hospital care through Medicare where your needs are weighed up and triaged against their work loads, leading to waiting periods and you don't get to choose your doctor and the rest. If you can not wait then the only option is private hospital cover.

General Treatment, ancillary cover or extras cover all refer to the same fact that Medicare does not cover non hospital treatment, like  dental, optical, physio. GP visits, Specialist visits, diagnostics have limited cover which sometime results in GAP payments as Medicare does not cover them in full. This resulted in people putting off much needed visits  and as a result Bulk Billing was introduced to enable health where the Government paid participating GP’s and some diagnostics covered by Medicare. Dental and Optical are available to those with health care cards and the services are limited.

Australia has one of the best healthcare systems in the world. The most important and simple fact being universality of care for all Australians through Medicare. Introduced in 1975, Medicare as we know it now was called Medibank, ongoing iterations saw the creation of Medibank Private on the 1st of October 1976. Currently according to information from privatehealth.gov.au there are 38 companies who provide private health insurance. Some of which are restricted to certain categories such as teachers, police, navy, defence meaning you would have to had worked or your family was in the category that the restricted funds operated.

Private Health Insurance has had a chequered history, and has needed to be propped up by Governments of the day to keep it going. This saw the introduction of “Carrot and Stick” approach through the introduction of taxes such as medicare levy surcharge, other measures such  as lifetime loading introduced in the year 2000 was a significant life line for health insurance companies to stay and operate as membership had dropped off significantly.

The trend of declining membership is nothing new, has been see right from the start. Australian Bureau of Statistics conducted a study to assess the decline in the year 1988 shows the following reasons. Reasons for the decline in membership were

That was back then, whats it now. No surprises here. Here is what was revealed in a Roy Morgan survey

Reasons for Not Renewing Private Health Insurance

Source: Roy Morgan Single Source Australia. 12 months ended February 2017, n = 50,003 and 12 months ended February 2018, n = 50,006. Base: Australians aged 14+ who didn't renew private health insurance. 12 months ended February 2017, n = 117 and 12 months ended February 2018, n = 160

Okay admit it, that this survey is not specific about extras health.

Infact research conducted by finder.com.au shows that over two-thirds of Australian health insurance policyholders are unsure what portion of their health insurance extras are not being used.It was a national survey of more than 2,000 people showed that a potential $4.5 billion worth of health insurance extras are going unused at an average of about $550 per person.

Well where does the taxpayer funded rebate fit into this picture. My guess is pure profits being handed down in a platter. Most likely if it were not for the the rebates and the “carrot and stick approach used by the Government” we may not have private health insurance cover as we have it today.

One thing is obvious money is being wasted and is most likely not sustainable into the future.