Gap Expenses for Aussie Holders of Health Coverage on the Rise

Even though the Australian economy is one of the most stable and prosperous in the world at the moment, almost in spite of the post-global financial crisis climate of uncertainty, recent data goes to show that financial matters are not the sole determiner of a healthy society. The previous mention of health should be taken literally, in the context of figures released in March by the Private Health Insurance Administration Council. According to the regulating body, Australians who have taken the precaution of paying for family health insurance were still hit with gap payments amounting to a staggering $4.5 billion. They were essentially paying for the basic benefit of having access to a hospital or a dental medicine professional through their private coverage. The same report indicates a similarly disquieting rise in costs covered out of the contributors’ pockets, which have increased by 15 per cent during the 2010-2012 span, amounting to a sizeable $580 million.

According to the survey, private health coverage is better than no coverage at all, yet it doesn’t seem to be doing enough toward alleviating the pressure of the rising costs of healthcare on the general consumer. It might be that people are not picking and choosing enough, before settling on a particular type of coverage, or that they are simply letting an old policy roll onward, even though their lifestyle and needs have evolved since the time they first took it out. The fact of the matter is that consumers still end up covering half the expenses of out-of-hospital treatment (including optical and dental procedures) out of their own pockets. During the 2011-2012 financial year, the total bill footed out of the pockets of the general public amounted to no less than $3.5 billion.

A major media outlet has managed to score a journalistic premiere in the realm of medical and health insurance investigations and gained access to financial data from Australia’s top two private health insurers. What they found was jarring evidence toward the widening of gap costs. For instance, the nation’s second largest private health insurer, which boasts no fewer than 3.5 million policy holders, holds records according to which the average gap for a dental surgical procedure as simple as removing a wisdom tooth widened by 24 per cent from the 2008-2009 fiscal year to the previous one. 

The jump in cost was from $161 to $199 – yet the gap expense is still mild and pales in comparison to the one attested to records with Australia’s top health coverage provider. In their books, the same procedure claimed an average gap expense of $394 during the 2011-2012 fiscal year. A representative from the comparison site HelpMeChoose said that ‘this is even more evidence for why people should be comparing their options and not being afraid to change to a different provider if they feel the costs are getting too high with their current insurance provider’.

The actual amounts claimed by out-of-pocket costs covered by patients are still a relative mystery, even when analyzing cold hard figures in the records. While intensive care therapy will require patients to pay for 99 per cent of the costs (a 2 per cent increase from 2008-2009), foot surgery will only have them shell out 25 per cent of the operation expenses. However, the all-around rise in gap costs is on the rise – the second biggest insurer in Australia states that they have increased by 19 per cent on ocular interventions since 2008-2009 (from $293, up to $350) and by 17 per cent for hip replacement surgery (now amounting to an average of $1,134). The top insurer displays gap costs for hip prosthetic interventions that amount to a sensibly larger $2,020 – yet company representatives have also declined commentary on this issue.


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