Private health insurance is a dud. That’s why most Australians don’t have it Grogonomics

RNow the final proposals are made by health insurers to the government for an increase in insurance rates next year. Due to reports that they want to increase above 5%, it is important to remember that health insurance is a bad way to provide good health results.

You can’t say that public policy is always bad in America, but regardless of how they run the election, the one policy that the US does worse than anywhere else is health care.

Among OECD nations, the US spends the most on health and in return has the worst life expectancy:

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There are several reasons why they have this outcome – from racism to a significant lack of economic security such as low minimum wages – but the main reason is that care their health depends heavily on private insurance unlike other countries.

Although the introduction of The Affordable Care Act moved private health insurance from voluntary to mandatory, society is still heavily dependent on a system designed to make a profit from people’s illnesses:

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This brings us to the latest reports of private health insurance companies that are appealing to the Albanian government to raise premiums between 5% and 6% next year.

This increase would be around the long-term average, and as a result wages would again rise well ahead of wage growth:

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Australian Financial Review reports that the Director of NIB said that insurance needs to be increased around that mark because “in the end, we have to pay the fees like any insurance because if you don’t end up going out of business.”

While this may seem obvious, it ignores the fact that the number one reason health insurers may go out of business is because people hate the product they are offering, even and with all the carrots and sticks designed to force people to take out health insurance. most Australians don’t want it.

Over six years ago I wondered if health insurance was a mistake. Since then, when we had the biggest health crisis in a century, nothing has changed the answer.

Not only is it consistently untrue that health insurance takes the stress out of the public system, it’s also a matter of calling it private – it’s a public system that’s run in an ineffective way. provide a product that people don’t want and a place to live. I do not want.

In the late 1990s, after 15 or more years of Medicare, less than a third of Australians had private health insurance. Then John Howard decided that the private sector needed help from the public sector.

He proposed a surcharge to punish high-income earners who do not have health insurance.

The stick was not enough. Howard tried the carrot: offering a discount on your health insurance. These discounts are very expensive – the government this year will spend about $ 7.5bn upon them.

It ruined everyone – you couldn’t pay people to buy it.

Howard returned to the fold and in 2000 forced people to join at age 31 with “lifetime health cover” – a program that was accompanied by TV commercials showing everyone standing under umbrellas because apparently Most people who take out health insurance have made us all. better than.

It was actually only health insurance that was better when people decided that they should get it because they might want it one day when they are older:

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Since then, we’ve had a lot of sticks and carrots – changes to rates and discounts, and in 2019 even a discount for 18-29 year olds.

The result is still less than half of the population with private health.

What’s even more disappointing about the value of health insurance as a product is that the percentage of Australians in their 30s who have it is now as low as it has been since the introduction of whole life cover :

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Perhaps more importantly, those who are “covered” are covered in the sense that a Band-Aid covers a wound and a gap.

Many people quickly realized that getting into a whole life insurance policy is better than taking out the minimum possible. This resulted in an increase in premium insurance and co-payments from 30% to now 88%:

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Similarly, while private health once covered everything, now the insurance standards are highly respected without coverage:

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This is a big change since I last wrote about the evils of health insurance. In 2018 the Morrison government introduced changes that increased the “higher voluntary threshold for products that give people an exemption from the Medicare tax”.

While in 1999, 95% of people had private health insurance with no exclusions, now 65% of policies have exclusions where various things cannot be covered.

So we’ve had 25 years of carrots and sticks, all designed to make health insurance more attractive, and we’ve ended up with fewer people with health insurance and more people with free for everything and maybe they have to pay when they get it. .

And all the while, fees have risen by almost 60% more than wages.

Sometimes the health minister might think that if people like the public health system, maybe the government should fund it better and stop pretending that private health care provides with financial help it offers things other than a product that most people don’t want and hate. have it.