The Citizen’s Entitlement: Medicare
In Australia, one of a person’s most essential needs is as widely available as it is easy to get — yet difficult to choose. We are, frankly, blessed with an abundance of health insurance choices so that one person can opt to have only the most basic coverage while another may get herself insured from top to toe and everything in between.
That ‘most basic coverage’ is provided by Medicare, the public entitlement. Medicare provides basic coverage universally, i.e. for every Australian. It has core strengths but, as a tax-dollar-funded service, it cannot be expected to cover all the bases. For example, it includes 100-percent of public hospital-stay costs but does not cover any operating theatre costs nor will it cover a stay in a private hospital. Though Medicare generously includes prescription medicines, not all tests and procedures are covered and for those that are, waiting times typically run to a few weeks.
The differences between Medicare coverage and the private option cross over to a point many persons are very particular and picky about: with Medicare you cannot choose a doctor but with Private Health Insurance you can choose any doctor, including the very best ones. Depending on whether or not your chosen doctor is on its health-care network, a private health fund may cover a small amount to the great majority of such a doctor’s costs.
An Australian’s Option: Private Health Insurance
Medicare provides very good basic insurance coverage and Australians are fortunate to have such a safety net. What, though, about that ‘top to toe’ coverage? That’s where private health insurance comes in. Are you one of the all-too-many who suffer from debilitating migraines? There’s a Private Health Insurance health fund and policy that’s just right for you. Do you have an unusual occupation, like a ballerina or a shop-floor clerk, that puts great stress on your feet? Private Health Insurance will cover podiatry too. If you have an ailment — or even an anxiety about something that ‘runs in the family’ — Australia probably has a health fund with a particular coverage or option to fit you like a glove.
How, though, do you learn all the rules and play a winning game in the sport of Private Health Insurance, Australian Rules? The distinction is well-meant and meaningful: like our football, our health insurance differs in some fundamental respects from that of the United States and most other countries, the most striking one being, well, its sheer variety in breadth and depth.
Is it Private Health Insurance — or a Restaurant?
Private Health Insurance is not a one-size-fits-all offering. In fact, it’s not even only available in different ‘serving sizes’, so to speak. Many health funds offer such customizable insurance packages that you can tailor one to your own individual needs and desires.
Shopping for a particular insurance package from a health fund is not unlike choosing from an a la carte menu; in fact, insurers actually use the term ‘a la carte’ and a few foreign insurance companies incorporate this term in their very name. This being the case, private health insurers can be likened to restaurants that include private clubs and open establishments and whose prices range from budget to upscale, and each with a somewhat different a la carte menu and prices.
The comparison is apt in more ways than one, for most persons probably put more thought each month into where to dine than they do even once a year into whom to buy health insurance from and exactly what to ‘order’!
More than twelve million Australians are customers of one or another of 36 health funds of which twelve are restricted to specific professional groups such as teachers, doctors, and railway/transport workers, leaving two dozen insurers that are open to everyone. Of these two dozen the majority operate country-wide while a few serve only certain states. The group-restricted insurers may be likened to private clubs while the open ones are the equivalent of open dining establishments. Do not conflate the term ‘open establishments’ with public hospitals; almost all health funds get you access into very good private clinics and hospitals.
Using the same analogy, one might visualize every insurance ‘restaurant’s menu as a chart. The two broad types of insurance are shown in two columns, ‘Hospital’ and ‘General’, often termed ‘Extras’ or ‘Ancillary’. The three broad levels of coverage are shown in the three rows, ‘Top’ also called ‘Comprehensive’, ‘Medium’, and ‘Basic’.
Hospital Insurance will cover, depending on the health fund and the policy, from the majority share to the entirety of hospital in-patient costs. This includes treatment, doctors charges, and hospital accommodation; however, whether that accommodation is in a ward or in a fully private room depends on the particular health fund and the extent of coverage you choose. General Insurance covers out-patient costs, doctors visits, and medicines, and may include vision and dental treatment depending on your a la carte choices.
The cost of your ‘order’, i.e. the premium you will pay, broadly depends on which cell(s) you order from. Getting Top Hospital and Top General coverage will cost the most while purchasing only Basic General will minimize your premium. You can choose the latter option if you want to rely on Medicare for your basic hospital-related needs and want to cover only a few ‘extras’.
Regular, Large, or Supersize?
Regardless of the kind of coverage or plan you purchase, you may still need to decide on the extent of coverage which will also determine your premium. This is governed by the insurance policy as each health fund or insurer has (many) more than one policy, each with a different premium. This ‘extent’ is divided into four types: gap, excess, co-payment, and exclusions and restrictions. So, how much do you want? In fast-food terms, Regular, Large, or Supersize? And with the apple pie or the coffee?
(Note that excess and co-payment are often used interchangeably but in fact are slightly different, as explained below.)
The gap is the amount you must pay out of pocket for a specific medical cost. Say you have had a hospital stay with different procedures. You may have required, among other things, small elective surgery and chosen to have a personal nurse attend to you but your policy does not cover these two costs so they are the ‘gap’ you must pay for yourself. Some insurers offer insurance to cover the gap itself so that, in effect, there is no gap.
The excess (or deductible) is the amount of a full procedure or a single hospital stay or a fixed amount per annum that you must pay up-front and which is invisible to the health fund. To put it another way, the health fund will only ‘see’ your medical cost minus the excess. Suppose you have a hospital bill of $5,000 and you have a coverage deductible of $500, the insurer will ‘see’ your bill as being $4,500.
The co-pay is the amount you must contribute towards something that is a single charge, such as a hospital’s per-day bed charge or a single doctor’s visit. For example, if you have a co-pay of $40 and your daily hospital bed charge is $250, your insurer will pony up $210 per day. Or if you visit a doctor whose fee is $120 your insurer will pay $80 while you’ll ‘co-pay’ $40.
Sides and Salads
Third, exclusions and restrictions determine what’s not covered at all or covered in a limited fashion. For example, cosmetic surgery or joint replacement may not be covered at all; in such a case each of these would be an exclusion.
A restriction could be of two kinds. For example, one policy may restrict orthodontic care only to public clinics, i.e. it would not insure for orthodontic care with the doctor of your choice. Another policy may allow you to use the orthodontic doctor of your choice but restrict coverage to only 40 percent of the costs, leaving you to pick up the majority share. Each of these scenarios is an example of a restriction.
Finally, there are more a la carte choices to be made. These are the specific extras or ancillaries — compare them with sides and salads at a fine restaurant — that you may choose to get. If you have a history of diabetes in your family you may want your coverage to include dialysis but if you fear rheumatism then you would probably want to include out-patient services and joint replacements. Those with high-risk occupations, such as factory-floor machinists, may well consider ambulance and emergency room coverage.
The ‘Standard Information Sheets’ and other checklists provided by health funds aids greatly in including (and excluding) extras and ancillaries, each of which will add a little to your premium. Eyeglasses/contacts, dental fillings, naturopathy, and psychotherapy are some examples of Extras or Ancillaries.
“Fifteen to Twenty Minutes”
Talking about sides and salads, when you order a baked potato with sour cream it doesn’t get served immediately, does it? The same applies to a new insurance policy or an upgrade (but not to a timely renewal). You must sit out a ‘waiting period’ before your new insurance, or upgraded or added coverage, becomes active. Because of this waiting period it’s wise to apply for Private Health Insurance before you even think you will need treatment for any condition.
Interestingly, with Medicare (for all covered treatments) you must wait for operations and tests while with Private Health Insurance you must wait for benefits to become active after which wait time for operations and treatments is negligible, even nil.
Waiting periods depend on the particular ancillary. For example, podiatry and chiropracty benefits usually kick in after only two months whereas most major dental benefits, such as root canal treatment, activate after twelve months from enrolment. If you insure a pre-existing condition for the first time, the waiting period can also be significant; one year is a common period for most pre-existing conditions.
Decisions, Decisions . . .
These broad facts explained, keep in mind that you have two dozen or more health funds to choose from ranging from the small and exclusive Reserve Bank Health Society to Medibank Private, a veritable behemoth. So how to choose one? We’ll get you started.
First, you need to decide more or less what you are most interested in insuring for. You won’t patronize an Italian restaurant if you’re in the mood for Chateaubriand and you won’t go to a steakhouse if it’s Pizza Margherita you’re hankering for. Are you more interested in consulting with the finest doctors? Or making sure you get the best emergency treatment? Or is alternative medicine your ‘thing’? Second, one health fund will ‘do’ certain types and kinds of insurance better than others — this is a fact you will glean as you read different health funds’ offerings. Different funds have their different strengths and weakness, including life stage or age group, and gender-related issues. Third, get a good fix on your individual circumstances that imply or indicate your specific insurance needs. For this purpose see the checklist in the companion article Private Health Insurance Versus Medicare.
If there’s one thing that varies far more than Australia’s types and kinds of insurance, it’s types and kinds of medical costs one may sustain so the more homework you do in choosing the right health fund and policy, the more it will pay off in the long run.
So the last decision to make is which health fund to choose? If you’re a member of a particular professional group — teacher, doctor, armed forces, and so on — you’re eligible for a closed or restricted fund that may offer excellent coverage for an equally excellent price. That is one option. For the rest of us and also for professionals, 20-plus health funds, most of which serve all states, offer an array of choices.
You could begin narrowing down your options by talking with family and friends as to their experiences with their health insurers. Besides word of mouth, you could use the Insurance Industry’s versions of the Michelin Guide: try looking through CHOICE and Product Review’s ratings. Finally, see what others are saying about health funds and policies on online chat-groups and discussion boards.
Happy Hunting — and Bon Appetit!