Pauline Davies never took medicine lightly. She has also never had private health insurance.
“I’ve never questioned paying for medical services just because I don’t have health insurance,” she says.
“I have had a few minor procedures done and see the value in paying the service directly to the provider rather than to the health insurance company.
“When we didn’t have Medicare funding, we were happy to pay full price.”
Davis is believed to be one of a small number of people who have made the conscious decision to pay for their medical expenses out of pocket.
They then choose to wait and receive treatment through the public system, or if they don’t want to wait, they choose to pay upfront and be seen as a private patient.
This isn’t a strategy for everyone, as it involves taking risks to stay healthy and avoid chronic disease. You also need to have a steady income and the ability to save long-term.
People who use their own funds usually set aside money on a regular basis. That money is used to pay for medical expenses such as doctors, specialists, procedures, hospitalizations, treatments, and medical equipment.
Although Davis’ children are now adults, she was a single mother for most of her life. She also estimates that she earned an average or slightly above average income for most of her working life, but she has always lived a frugal life and was good at saving money.
“This is a gamble I made,” she said.
“I was able to retire early at the young age of 59, thanks to hard work and living well, but not paying for health insurance for 40 years has solidified my financial position. I think he gave it to me.”
She said she has never regretted that decision, especially as she has seen the cost of living and health insurance premiums rise.
The next premium increase is scheduled for April.
Switching from insured to uninsured
David is in a similar situation and is self-funding his medical expenses.
For decades, he and his wife have made regular payments into a high-interest savings account and only put money into it when they or their children need to pay medical bills.
The family started buying insurance, but decided to drop it when they were in their 30s after the birth of their second child in the late 1990s.
“My wife was admitted as a private patient at a public hospital here in Canberra, and the obstetrician who was scheduled to be present for the birth was not available,” he said.
They had already paid for the obstetrician’s care, so the absence of an obstetrician and the additional out-of-pocket costs left them questioning whether private health insurance would cover them.
“In the end, yes, I had a wonderful, healthy baby, but there was a little bit of a bitter taste in my mouth about that episode.”
David is currently retired but previously worked in health policy. He believes his background has given him a good understanding of the health care system, which helped him and his wife consider their options.
They also discussed the fact that people should only put up their own funds if there is a safety net to cover the worst-case scenario if a serious health problem occurs. In that situation, they agreed to use a mortgage offset account to cover large unexpected medical expenses.
To become a more active partner in your health care
David believes that his decision to invest his own money has made him more proactive about his health and more likely to seek a second opinion to ensure he is getting the best advice and value.
“When you’re paying for something, people are generally more interested in what they’re getting for their money,” he says.
“There have been times when I have consulted experts and been less than satisfied with the advice I received.
“So I actually paid to go and see another specialist. I don’t think I would have done that otherwise.” [saved for my own] Because I wanted to get value for money. ”
The idea of self-funding medical expenses is not new. However, this is a concept that is not regularly considered.
Latest data from the Australian Institute of Health and Welfare shows the number of general patients using public hospitals (which means their costs are borne entirely by the government) has increased steadily from 2017 to 2022. I am.
In the fiscal year ending in 2022, 6.8 million people were admitted to public hospitals and 4.7 million to private hospitals.
Of these, 37,921 were self-funded through the public system and, like patients in private hospitals, were able to pay to see specialists and doctors of their own choice and to have their own room. Masu. In addition, 376,481 people self-financed in private hospitals.
Pay attention to the fine print
Self-financing health care is not a strategy supported by health economist Stephen Duckett.
He believes the potential risks far outweigh the benefits.
“It’s very difficult to predict what your health needs will be in one, two, or five years,” Dr. Duckett cautions.
“Anyone can go to a public hospital if they have any problems.
“But if you’re a little older and you have a chronic condition and you have hip pain or knee pain and you need a hip replacement, you’re going to have to be in pain for quite a while before you get surgery. We may have to wait. We’re just relying on the public sector.”
In his view, self-financing medicine should only be attempted by people with certain earning capacity, temperament, and strong organizational skills.
“Not everyone has that kind of personality,” he said.
Another consideration concerns taxes and various levies.
The first is the Medicare levy. This is billed at her 2% rate of the individual’s income and supports the public healthcare system.
Additionally, there is an additional Medicare levy charged to some people who earn above a certain amount each year and do not have private health insurance. This levy is usually between her 1% and 1.5% of an individual’s income.
“The way Australia’s tax system works, for many people it’s cheaper to buy health insurance than to pay a tax penalty, the so-called Medicare levy,” he said.
Lifetime health insurance is also available. If you have not taken out private hospital insurance since the year you turned 31, but decide to take out insurance later, you will be responsible for paying hospital insurance premiums.
Davis said when the tax was first introduced in 1984, she considered her options and concluded it didn’t make financial sense to buy health insurance.
She also decided that if she had to pay a levy, she would rather donate her money to public health than to insurance companies.
“I did the math for myself and chose to bet on my health. I worked hard, always lived carefully, and I knew I had a surplus,” Davis said.
Both of her children are now adults. Because her son is in the Defense Forces, he automatically receives private health insurance.
But her daughter, a registered nurse, decided not to purchase private health insurance.
At the end of the day, Ms. Davis said, it all boiled down to one thing. “We understand that you are taking a gamble by not purchasing health insurance, but this is a personal decision that each person makes for themselves.”
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