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Millions of Aussies ditch private healthcare as out-of-pocket expenses soar

Anastasia Santoreneos
Aussies are ditching private healthcare. Source: Getty
Aussies are ditching private healthcare. Source: Getty

Australians are ditching private healthcare in droves as out-of-pocket costs for medicines, hospital stays and specialist fees climb, new reports show.

The latest health spending data from the Australian Institute of Health and Welfare showed Aussies were paying 4 times more on out-of-pocket hospital expenses now than they were a decade ago, with the total number of people holding private health insurance decreasing by almost 2 million in that time.

Over the 2017-18 financial year, Aussies spent $1,568 on average on out-of-pocket expenses – which equates to around 2.5 per cent of their average annual income.

The report follows news that private health insurers HCF and Medibank were slashing member benefits, meaning customers using private rooms for overnight stays in NSW and ACT public hospitals would face hundreds of dollars in out-of-pocket fees.

And earlier this year, Grattan Institute health economist Stephen Duckett said with premiums rising and consumers dropping their cover, the medical industry was fearing a “death spiral”.

“If current trends continue, more younger people will drop their cover,” Duckett said.

“This will put insurers under still more pressure to contain costs, and governments under still more pressure to tackle rising premiums and out-of-pocket costs. Inevitably, government will be faced with the question of whether more subsidies are the answer.”

The Medicare versus private health insurance debate

Duckett wrote our healthcare system was “riddled with inconsistencies and perverse incentives”, and that policy reform was “urgent”.

He suggested the government question the role of private health insurance, and whether it’s to complement the public system or simply substitute it.

“If the purpose of private health care is to complement the public system – providing services, facilities and amenity beyond those considered necessary for public funding – then the argument for public subsidy is weak,” he said.

“If the purpose of private health care is to substitute for the public funding and provision of service then the argument for public subsidy is stronger.”

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