Those without health insurance sometimes realise they need to go private, and may end up using crowdfunding, KiwiSaver, or loans to pay for private healthcare because of public waiting lists, Professor Paula Lorgelly, chairwoman in Health Economics at the University of Auckland, said.
Private health insurance typically covers you for specialist consultations and diagnostics such as scans, and non-urgent (elective) surgery.
According to the Financial Services Council, the No 1 reason that New Zealanders take out health insurance is access to private services that may not be readily available in the public system, followed by avoiding paying for expensive healthcare out of pocket.
Within the current public system, there are reasons people might want health insurance, even for conditions they could get treated publicly.
Lorgelly said the New Zealand public health system doesn’t have sufficient staff and has equity issues. “The solution is a better public system,” she said. “Insurance should be for extras, like a private room or choosing when surgery happens.”
“It might be for certainty, being able to book in advance rather than wait for a text from the hospital. It might be because you want a private room,” said Lorgelly.
People with a family history of health issues and those likely to want to have elective surgery in the future could benefit. Beware, however, that most insurers either exclude or have a stand-down period for pre-existing conditions that you’ve had symptoms of in the past.
For many people, the choice of whether they buy health insurance comes down to affordability. If they can’t afford their rent, mortgage, and groceries, private health insurance is unlikely to be a priority.
The best case is if your employer offers free or subsidised group policies. Otherwise, you’ll be paying premiums of over $1000 a year when you’re young and single, which will rise sharply as you age. Eventually, many older people simply cancel their policies.
Lorgelly said: “If you don’t have pre-existing conditions, then you’re the best model for insurers. I’d probably say go for it. But if you’re healthy and don’t need healthcare, why would you want insurance instead of the public system?”
There is a wide variety of health policies from providers such as AIA, NIB, Partners Life, and Southern Cross. They all have different offerings and terms and conditions. For some people, it’s important to have overseas treatment cover, non-Pharmac drugs, cancer cover, and a wide range of other services.
Do you want simply surgical cover, or specialist appointments as well? Do you want to be able to choose your own provider, or be limited to your insurer’s choice? Premiums can be reduced by choosing a bigger excess and leaving out GP visits and dental care.
Comparing policies isn’t easy. Lifedirect.co.nz offers an online comparison. An insurance broker can do the heavy lifting for you and help you understand the differences. Either way, read the policy, and understand what you’re paying for.
An alternative to health insurance policies, as Lorgelly points out, is to save the premiums and use that money to pay privately should the need arise. I did a back-of-the-envelope calculation taking average premiums invested at 6%, less 28% PIE tax. By age 65 you’d have $172,000, enough for several major surgeries and other treatments.
In conclusion, said Lorgelly, whether health insurance is “worth it” depends on your age, health, risk tolerance, and financial situation.
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