Private health insurance - is it worth it?

A couple of months back my wife was talking with a family friend about private health insurance. Her son, who is now about 25 had been diagnosed with a non-malignant tumour on his spine.

Being a barber and running his own business, he spends most of the day on his feet.

But, having a tumor on his spine meant he was experiencing considerable ongoing pain. In the end, he had to stop working, at least until after surgery could be scheduled.

A visit to the doctor, and then to the surgeon sealed the deal and surgery could be organised to fix the problem once and for all.

Fortunately the son had previously arranged some basic private health insurance with a well-known Australian health insurance company.

However, after a phone call to the health insurer, this family’s hopes came crashing down. The insurer had advised that the cover excluded back surgery.

Now we have all come to expect that basic level health insurance will not cover things like pregnancy, hip replacements or even heart surgery, but to exclude back surgery! This came as a shock.

To make matters worse, once the hospital found they had no health insurance, they advised that the cost of surgery would be $25,000, and it had to be paid up-front!

So here we have a young man, in chronic pain who can’t work, being asked to front up $25,000 just so he can go back to work.

Things looked very bleak.

So, what was the solution?

There appeared to be a couple of options:

1. The family could fork out $25,000 – but not too many people have a lazy $25,000 sitting around;
2. The private health insurance cover could be upgraded, or they could change insurers – but as the condition was now pre-existing, a 12 month waiting period would apply;
3. He could have a chat to the surgeon and see if he could be treated as a public patient – but he would be caught up on a waiting list.

In the end the surgeon agreed to treat him as a public patient. Fortunately he didn’t have to wait long for the surgery to be carried out.

I recently saw this young man. He is now free of pain, and the tumour has gone. He is back at work doing what he does best, although he is still having some physiotherapy.

But what about his private health insurance?

Yes, he still has health insurance but he has moved to another provider who covers a broader range of conditions.

What are the lessons we can learn from this?

1. Private health insurance fills a very real need and may often mean we can be treated as a private patient, when we want to be treated, and not be at the mercy of a waiting list;
2. Understand the level of cover we have and the services we are covered for. Cheapest isn’t always best;
3. Check the fine print. Don’t just rely on a marketing brochure or the good words of a tele-marketer at a cost comparator service.

All in all, this story has a good outcome, but it could have just as easily gone so horribly wrong.

 

The Realise Your Dream blogs are written by Peter Kelly and Mark Teale. More information about the authors can be found here