Cost and value - private health insurance in rural and remote Australia

Friday, 31 March 2017
Boy getting his ear inspected by female health practitioner

With the cost of private health insurance rising again from 1 April 2017, many people are again questioning whether to retain their current level of insurance or whether it is actually worth having private health insurance at all.  If you live outside the major cities of Australia, buying or retaining private health insurance is a more complex issue – after all, access to health facilities where you are able to use private health insurance is significantly limited.  In effect, many people living in rural and remote Australia who do hold private health insurance are cross subsiding the cost of private health insurance for people living in major cities. 

Of people who live in Inner regional communities, 49.9% do not have private health insurance, increasing to 52.3% in outer regional and remote communities.

In rural and remote Australia, consumers mainly consider two key issues when determining whether private health insurance is right for them - cost and value. 

With regard to cost – people living in rural and remote Australia have lower incomes than those in the city and also have higher costs of living – this makes buying additional extras much more difficult. It also makes the decision on how to direct any additional disposable income more difficult. 

When it comes to value, many people in rural and remote Australia may have difficulty in seeing the value in private health insurance.  The main value is to be able to access a ‘private service’ with a choice of doctor.  If that means going to the major city to do so, some will hold onto their insurance. 

But in rural and remote areas, private hospitals are often not available or there may be only one or a limited number of doctors and choice is meaningless.  And the same applies with extras cover. Private health insurance is simply not usable in many rural and remote communities. One area where private health insurance may be valuable in rural and remote Australia is in being able to be treated as a private patient in a public hospital.  In some instances this provides more comfortable accommodation and potentially a greater choice of doctor (noting that this may be limited in rural and remote Australia).  Recent suggestions about removing this entitlement from private health insurance would further reduce the value of the product for rural and remote Australia.

A Ministerial Advisory Committee has been looking at how to improve the value of private health insurance in rural and remote Australia.  The Alliance has been passing on feedback that for rural and remote consumers, communities and the workforce that serves them, the focus should be on improving the value of the product rather than reducing the cost.

The Alliance has suggested that private health insurance needs to focus its attention on how best to deliver improved access outside the major cities to a greater range of services.  This may mean looking at how to support greater access to:

  • rehabilitation services;
  • mental health facilities and support services;
  • oral health;
  • mixed sub-acute and non-acute facilities;
  • prevention and early intervention; and
  • travel and accommodation when a patient needs to relocate for treatment.

Watch this space for further updates….