The Lucky Country and out of pocket costs

Australian’s are used to being told they are the ‘lucky country’ and that healthcare is ‘free’. Before you accept this concept as fact, consider the following information.

17% of all total health care expenditure in Australia is now being funded by individual co-payments. It is now the largest non- government source of funding for health, goods and services and is significantly higher in Australia than most OECD countries. Consumer’s Health Forum Australia 2014. In terms of annual individual expenditure… Australians pay an average of $1075 per year out-of-pocket on health services. This is $94 higher than the average paid in other developed countries. 

Flag Post 2013….more than 16 per cent of Australians say they delay access to treatment because of cost. More than a third of Australians with a chronic condition say they have experienced a cost barrier to care. Consumer’s Health Forum Australia 2014.…the heavier costs consumers now face are fuelling the emergence of a two-tiered health system — one for those who can afford to pay and one for those who cannot. 2013.

Some privately insured patients are being bankrupt by out of pocket medical costs

A study of more than 900 men by Griffith University’s Health Institute found they were left shocked and angry when they received huge bills even after paying insurance for 20 years 2013.  

Breast cancer patient Helen Williamson was left bankrupt after private cancer treatment. “Financially, it has just ruined us” she says. “We lost our house because we couldn’t keep up the repayments.” The Sydney Morning Herald 2013. Sydney mum Leonie Haven had to raid her superannuation in 2012 to pay $30,000 when her cancer care was not fully covered by her health fund or Medicare. “I had to pull out of the procedure in the private system because I couldn’t afford it and I’m going through the public system” she said. 2014. 

According to a report, Medibank Private conducted a national survey on twenty one thousand private patients, asking for feedback on costs and quality of their care in private hospitals. Across Australia, more than a quarter of patients said they were not advised, or incorrectly informed, of gap fees to be charged by their treating specialist. Sixty five per cent of private patients complained they were not told about gap fees for pathology services. The survey found that the average out of pocket cost for private patients was $1086.

The Australian Senate Enquiry into Out of Pocket Costs 2014

The Senate Enquiry into of of pocket costs has received 95 submissions, from every major Medical, Nursing, Dentistry, Pharmaceutical and allied health body in Australia, every major patient lobby group and numerous individuals. The failure of private health funds to reveal their constantly changing tables of payments has been raised. This impacts on health providers, who say they have no idea what the out of pocket fee is going to be, until the claim has been processed.

The result is angry patients blaming their health professional rather than realising that the problem lies with the private health insurance companies. The refusal of many private medical specialists to publicly reveal their fees to patients has also been raised. There is no legal cap on what private specialists can charge, with some bill patients for over $500 for one consultation. This secrecy stops patients shopping around to get the best quote, in the same way they do for any other consumer products.

Patient lobby groups have numerous stories of patients ending up more concerned about money than their health, due to multiple bills being issued for one procedure alone, all due at different times, with different item numbers. There are no ‘bundled quotes’ for overall treatments in Australia’s private health system, leaving patients no idea of how to estimate their overall costs. Bupa health fund has called for doctors to advertise their fees to prevent ‘bill shock’.

The American experience of out of pocket costs medical costs

The USA health system is completely privatised, and is also the most expensive in the world. For a country of 300,000 million people it costs an estimated 3.8 trillion a year, the yearly GPD of France. Healthcare costs the USA 17% of it’s GDP, when other public health systems cost their economies only 9% or 10% of their GDP, while delivering more doctors and nurses and better outcomes for patients. At the same time, it delivers rates of disease survival and overall life expectancy that fall well below comparable western countries.

Price fixing among USA hospital suppliers for items such as joint replacements, price gouging by hospitals for the most basic hospital supplies such as toothbrushes and aspirin, over servicing by doctors and hospitals due to legal fears and kickbacks deals, high administrative costs due to a fragmented health insurance industry and secrecy of pricing under ‘commercial in confidence’ laws are blamed by many commentators. Warren Buffett a conservative US commentator and the worlds second richest person, has publicly called the  health system ‘the tapeworm’ in the US economy.

The future?

A substantial amount of the health dollar is allegedly being wasted. Over servicing, excessive prices, lack of competition and over use of hospitals is being blamed. Until Australians stand up to the wealthiest industry in the western world, and demand better outcomes and more lower prices, nothing will change. And sick people will go on paying the price.

©Wikihospitals 2015


Australians pay more for health care. ABC 4th March 2014.
Wasted – 4 Corners, 29th September 2015.
Prostate cancer patient anger at huge bills despite paying insurance – 5th September 2015.