Narrow The Gap

Greater transparency is the key to reducing out-of-pocket expenses in a complex and costly health system.

- Beth Quinlivan

For anyone who has a hospital stay looming on the horizon and who is also watching their healthcare costs, a recent series of reports by health insurer Medibank Private and the Royal Australasian College of Surgeons (RACS) makes for interesting reading.

Australia has standards of healthcare that are among the best in the world but what the Medibank/RACS reports show is that individuals are paying dearly for that care and that health is now a major budget item.

Using data from the past two years, the reports detail costs and out-of-pocket expenses – as well as other information on complication rates – for common surgical procedures.

Medibank, like other insurers, reimburses medical expenses according to the details of the policy – you can’t claim on obstetrics, for example, unless it is specifically covered by your policy. Also like other insurers, Medibank covers doctors’ fees if the doctors participate in their “no gap” or “known gap” contracts. If the doctor’s fees are more than the amount the fund has agreed to reimburse, then the “fee gap” is paid by patients.

On some procedures detailed, most patients escaped out-of-pocket expenses. With colonoscopies, for example, patients paid an out-of-pocket fee to the medical specialist in 9% of cases (averaging $272).

But that was low compared with other common surgery. People having a hip replacement paid out-of-pocket expenses to the surgeon in 42% of cases, and in 77% of instances for the anaesthetist, for diagnostics and for an assistant surgeon. Out-of-pocket expenses varied across states – they were charged in 95% of procedures in the ACT, 79% in NSW, with lower rates in Tasmania and South Australia. The actual level of out-of-pocket fees was certainly not trivial: up to $5000 for the surgeon and up to $2500 for other medical services.