Medical Insurance Overview

Deciding between private or public health insurance can be a tough decision especially if you don't know what each offers and the difference in the level of care.  Below is an overview summary of the difference between each and what you can expect in the level of care.    

Private Hospital Insurance

The fund will cover all or some of a patients accommodation costs while in hospital. If a patient is undergoing elective surgery, this has some distinct advantages. The accommodation tends to be more comfortable in a private hospital; the patient will usually get a private room, for example, which is rare in a public hospital.

It also covers part – sometimes all – of the medical fees charged by a doctor(s). This means the patient can afford to get the doctor of their choice to treat them in hospital. In elective surgery this can be quite reassuring, because it means the patient is able to choose the doctor they think is most experienced, qualified and competent for the job. In practice, the patients GP usually makes this decision.

It's possible to undergo elective treatment in a public hospital. However the patient usually won't have the doctor of their choice, and the procedure might be undertaken by a senior trainee specialist rather than an accredited specialist.

There is no evidence to suggest a patient will get any better treatment in a private hospital than in a public hospital. However, a patient may have to wait longer for treatment in a public hospital – months, in the case of some procedures.

 
Public Hospital Insurance

Under Medicare, all Australian residents who decide to be admitted as public patients are entitled to free treatment in a public hospital. Even if a patient has private hospital insurance they can still be treated as a public patient (for free) if they want to.

When a patient books in or is admitted to a public hospital and has private health insurance, the patient will be asked if they want to be treated as a public or private patient. The patient will be asked to sign a 'patient election form' to indicate this. It's the patient’s choice and the hospital is required to explain the implications of that choice.

As a public patient they will be treated by a doctor (or doctors) appointed by the hospital. The patients don't get a choice of doctor. When a patient needs urgent care – e.g. involved in a motor vehicle accident, suffers a heart attack or severe injury, for example – the patient is not going to be too worried about the choice of doctor (assuming the patient is in a position to make that choice).

The patient will be taken by ambulance to a public hospital and treated there. Regardless of whether the patient has private insurance, they will be given the best treatment the public hospital system has to offer. As soon as practical, the patient will also be asked whether they wish to be treated as a private or public patient. If they elect to be treated as a public patient there will be no cost for treatment. If a patient decides to be treated as a private patient, the respective health fund will pay the hospital cost but the patient might still be left with some bills to pay. Why?

If a patient admitted as a private patient they will be charged medical fees. Medicare will cover 75 per cent of the schedule fee and the respective health fund will cover the other 25 per cent, but neither will cover what the doctor(s) charge over and above this. Any hospital admission can involve several different types of medico's services – surgeons, anaesthetists etc – all of whom charge separately. Patients might also have extra paramedical costs like physiotherapy and speech therapy. When all costs are added up it can run into thousands of dollars.

Not all specialists charge separately, or a ‘gap’. In fact, according to the Private Health Insurance Administration Council, the Government regulator of private health insurance, most medical services in hospital are gap-free. But even if the patient has gap insurance, many of the doctors who treat the patient may not have a gap arrangement with the respective insurer.

The likelihood is that if a patient is admitted as a private patient, they will end up with some costs to meet. But if a patient decides to be treated as a public patient, the entire tab will be picked up by the hospital. In some cases even if a patient has private health cover, it may be better to be admitted as a public patient to save on costs.