Deadline Draws Near For Lifetime Health Cover
Illawarra Mercury
Saturday June 24, 2000
WITH just six days until the June 30 deadline for Lifetime Health Cover, people without health insurance should be seriously - and swiftly - considering the wisdom of opting out.
The older you are, the more financially important this decision is. That's because from July 1, anyone over 30 who joins a health fund will pay a two per cent loading for each year he or she has delayed joining. So a 40-year-old will pay 20 per cent more and a 60-year-old will pay 60 per cent more.
The maximum loading will be 70 per cent for those who join after the age of 65, but people aged 66 and over on July 1 this year are exempt. They can join a fund at any time at the base rate.
The Federal Government has introduced two other carrot-and-stick measures to encourage people aged 30-65 to take out insurance.
The carrot is that the Government will pay a rebate of 30 per cent on insurance premiums, including hospital and ancillary cover.
The stick affects people who earn more than $50,000 (single) or $100,000 (couple/family). If these people do not have health insurance they will pay a one per cent Medicare levy surcharge. This will cost them from $500 or $1000 respectively, and is additional to the Medicare levy of 1.5 per cent that everyone pays.
People in this wage bracket, however, won't escape the surcharge by taking out just any insurance. Last month the Government announced that low-cost policies with excesses of more than $500 (single) or $1000 (couple/family) would not qualify for exemption where policies were taken out after May 24 this year.
THE Government line is that it introduced Lifetime Health Cover to ``restore the balance in our health care system by helping to ease the burden on Medicare and the public health system while giving more Australians greater choice and access to private hospitals".
Whether people truly support this aim or feel financially pressured to support it, private insurance companies have secured many new members. More than 700,000 people have joined health funds since January 1999, when the Government introduced the 30 per cent rebate on insurance costs; 200,000 of them joined last April and May.
Roy Harvey, principal research fellow at the University of Wollongong's Centre for Health Service Development, believes the Government's ``significant financial incentives" have swayed many - but mainly those in higher income groups.
While the Government says it is supporting choice, it really isn't, he said.
``Even with incentives, most people in lower income groups still can't afford health insurance." And people in higher income brackets are being bullied. ``Even if they want to demonstrate for the public health system [by paying the additional one per cent Medicare surcharge], the public health system doesn't benefit from the money. The money goes to consolidated revenue."
It is expected that up to 35 per cent of the population will be covered by health insurance by July 1, but that will be mainly the middle and upper classes, said Mr Harvey. That means the estimated $2.1billion of taxpayers' money spent on the 30 per cent rebate will simply cushion costs for the wealthy.
In addition, Mr Harvey said private hospitalisation was 10 to 15 per cent more expensive than public hospitalisation, ``so the insurance program in fact encourages people to use a more inefficient health system".
The Opposition has said that, despite reservations, it is committed to retaining the 30 per cent rebate and to keeping Lifetime Health Cover. Mr Harvey believes it could maintain the system for those with insurance, but tinker with the rules for those without. However, for the time being, the Lifetime Health Cover system stays.
For individuals, there are clear benefits to joining a health fund, said Mr Harvey. There's the 30 per cent rebate, access to private hospitalisation, and, depending on the cover, subsidies for a range of health care not covered by Medicare.
People who choose not to join still receive public hospital treatment under Medicare but may face long waits for elective surgery and hefty costs for allied health, such as physiotherapy and dental.
FOR those dashing out to buy insurance, Norman Branson, the Private Health Insurance Ombudsman, advised: ``Don't get caught up with the peripheral issues, like Nike running shoes and a chance to win a free trip around Australia. You should choose the level of cover that you want to be treated at."
Basically, you must do the sums. ``You need to be really careful at matching the policy to your health needs," said the Australian Consumer Association's Nicola Ballenden. ``Check excess amounts, exclusions and co-payments (these might be something like $50 for every night in hospital), because all of them can limit your benefits - that's the trade-off for a cheaper product."
A recent ACA Choice survey found the best buys in NSW were $1700 to $2300 a year for families and $850 to $1150 a year for singles.
``People can buy the minimum product, so they don't get hit by the `sticks'," said Ms Ballenden, ``But we didn't look at the very cheap products because they tend not to provide very good cover. We looked at the ones that offered the most amount of cover for the least amount of money."
Policies with exclusions often target younger people and might exclude cardiothoracic procedures, eye surgery, hip and knee replacements, plastic and reconstructive surgery or pregnancy and birth-related services.
Policies with excesses have a lower premium, because consumers pay a specified amount of claims up front. For example, MBF's Select Hospital cover for singles normally costs $918 but drops to $642 if the consumer pays the first $500 of claims.
Ms Ballenden said consumers should check how often the excess is applied; is it just once a year or three times a year? Does it apply to any treatment or just treatments in private hospitals?
Everyone with Lifetime Health Cover will be able to drop it for up to 24 months over their lifetime without incurring premium loadings when they rejoin.
For further information on Lifetime Health Cover and insurance, phone the private health insurance information line on 1800 676 296 or see www.health.gov.au or the ACA's site, www.choice.com.au. Ozecover at www.ozecover.com.au is another site that advises consumers on health products.
© 2000 Illawarra Mercury
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