Australia's Dirty Truth - Non-Universal Healthcare

In recent weeks, tensions between Private Health Insurers (PHIs) and the private hospital sector have escalated significantly. Private Healthcare Australia has responded strongly to Brookfield's and Healthscope’s campaign against insurers, criticising the sale of hospitals to property trusts for short-term profit. Now burdened with unsustainable rent obligations, these groups are seeking taxpayer support to cover their financial shortfalls and "bail" them out.

Stepping back from this corporate conflict, it becomes clear that Australian consumers are increasingly disillusioned with all stakeholders in the healthcare system.

Private health insurance, in its current form, presents Australians with rising costs every year and is fast becoming unaffordable. Last week, Reserve Bank Governor Michelle Bullock warned that Australians might need to sell their homes due to soaring inflation and rising interest rates. For many, the choice will soon come down to either maintaining private health insurance or meeting mortgage repayments, with the outcome all but certain.

When healthy members inevitably exit the system to prioritise other financial needs, insurers could quickly find themselves in a precarious position reminiscent of the pre-COVID era, when the industry teetered on a “death spiral.” The loss of healthy policyholders—who effectively subsidise the 20% of members who account for 80% of claims—could lead to unsustainable pressures on the system.

For those who manage to retain their coverage, the situation is not much better. Australians are now facing the highest out-of-pocket costs in history to access both primary and specialist care. As highlighted in a 2023 article published by the Medical Journal of Australia, Out‐of‐pocket fees for health care in Australia: implications for equity, it was noted that:

“15% of all expenditure on health care comes directly from individuals in the form of out-of-pocket fees — this is almost double the amount contributed by private health insurers.”

To put this into perspective, in 2019-2020, total health expenditure in Australia exceeded $202 billion. Of this, private health insurers contributed just under $18 billion, while consumers paid close to $30 billion out of pocket. Australia, a nation that prides itself on universal healthcare, has shifted to a system where access to care is increasingly privatised, forcing consumers to shoulder substantial financial burdens.

AIHW data - Spending Trends by Source

While Australia is not unique in adopting this model, what sets it apart is the proportion of healthcare costs borne by its citizens. Australians contribute significantly more of the total health expenditure compared to similar nations, such as New Zealand, Germany, France, the Netherlands, and Ireland.

Many Australians mistakenly equate private health insurance with private health services, but the reality is more complex. Apart from public hospitals, which are now also seeing changes, most health interactions take place within the private sector. General practitioners, specialists, physiotherapists, private hospitals, dentists, and pharmacies—whether for-profit or not-for-profit—constitute the majority of healthcare providers. Today, it is difficult to access any healthcare service without reaching deeply into one’s own pocket.

This raises an important question: how has a nation that boasts of its universal healthcare system become so deeply entrenched in profit-driven models of care?

One possible answer is that Australians have redefined universal healthcare as free access to public hospitals. However, even this definition is evolving, with patients using their private health insurance in public hospitals now facing out-of-pocket expenses. This stands in contrast to the World Health Organisation’s (WHO) definition of Universal Health Coverage , which states:

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“all people have access to the full range of quality health services they need, when and where they need them, without financial hardship. It covers the full continuum of essential health services, from health promotion to prevention, treatment, rehabilitation and palliative care.”

Unfortunately, this comprehensive definition of universal health coverage is becoming increasingly difficult to realise in Australia. The harsh reality is that, right now, there are Australians who are forgoing necessary medical care because they cannot afford it. Others are delaying or even cancelling vital procedures due to the high costs of specialists and anaesthetists gap payments.

Given these challenges, it may be time to reconsider how we describe our healthcare system. While there may not be simple solutions, we should at least be honest with consumers about Australia's Dirty Truth - Non-Universal Healthcare.

Instead of perpetuating the myth of universal healthcare, a more accurate label might be to rebrand Medicare as "Medipay"—a reflection of the growing financial burden on individuals in supporting a failing system.