Paying a premium for health

For Kilian de Lacy, 1999 was a bad year. She needed two arthritic knees replaced, and a hysterectomy. More recently, her husband, Bruce Twidle, faced a six-month wait when a painful gallbladder had to be removed.

The couple's Southern Cross health insurance proved a godsend.

Says Mrs de Lacy: "By using insurance, Bruce got the same surgeon he would have had through the public system and he only had to wait six weeks. He had been in a lot of pain and we were told it could have been six months through the public system, if we were lucky."

But the good news stops there.

Next year, Mrs de Lacy turns 65 and the couple's $260 monthly premium bill will rise significantly. She is not sure by how much, but knows from talking with fellow Porirua Grey Power members that she's in for a shock.

Health insurance has been under attack following the revelation that Southern Cross is paying nowhere near the full cost of private chemotherapy treatment, which ranges from $5000 to $15,000.

The country's biggest health insurer, covering 800,000 New Zealanders, will only contribute $1300 a year towards chemotherapy treatment, sparking doctors and the Cancer Society to warn people to check their policies first.

Mrs de Lacy and her husband originally signed up for a plan that included GP visits and prescription costs but, like a growing number of New Zealanders, they switched to a hospital and specialist plan because it was cheaper.

Industry figures show premiums are generally rising, although Southern Cross is managing to hold or reduce its charges this year. For many people, it is now seen as a luxury they can no longer afford. According to the latest issue of Consumer magazine, numbers dropped from about half the population to about a third over the past 12 years.

In 2000, 20 per cent of New Zealanders had comprehensive plans and 14 per cent had major medical; last year, this shifted to 14 per cent and 18 per cent respectively.

The Consumers Institute supports this trend, saying New Zealanders should be insured for big-ticket items rather than day-to-day medical costs.

Southern Cross chief executive Ian McPherson admits the rising cost of comprehensive plans has probably deterred some. He also blames moves by the Government to heavily subsidise the cost of GP visits.

"We exist to complement for Kiwis the public system," he says. "We don't want to be in competition with it, and we are supportive of it. There are certain things we think the public system should do."

While hip operations and cataracts are core business, obstetrics, acute emergencies and accidents are off the list because they're adequately covered by the public system, says McPherson.

Chemotherapy cover is "a contribution to ensure that should you have a prolonged wait, it will get you started. But we don't pretend to fund the whole course of chemotherapy."

Most recently, members have been able to claim for brachytherapy - a high-tech treatment for prostate cancer, which can cost up to $27,000.

They can also get some cover for the "pill cam" diagnostic process used to check for ulcers or cancers in the gut. But broken and varicose veins will no longer be paid for if they're for cosmetic reasons.

Consumer magazine asked subscribers who had made a claim to rate their insurer's performance. It found that Southern Cross was at the bottom, with 83 per cent ranking it good or very good, compared with 97 per cent who belonged to the police insurance scheme, and 90 per cent and 88 per cent of Sovereign and Tower members respectively.

"We heard many good comments about Southern Cross. But we also heard criticisms, particularly from people with the lower-premium policies with ceilings on payments," the magazine says.

It also found that hospital treatment not related to an operation - such as chemotherapy, or treatment for a stroke or diabetes - was covered by some company policies and not others. Recommending policies that do offer this - which does not include Southern Cross - it says: "Private insurance is not just a way of avoiding a long waiting list. It can also give you access to a more 'preferable' environment when you are receiving treatment".

Consumers Institute chief executive David Russell believes the shift to age-related premiums, which all companies now have, is the main reason fewer people currently have health insurance.

"When the shift to age-related policies happened, that caused a big increase for the elderly, and a number of people cancelled or didn't renew their policies, or they went from comprehensive policies to surgical and hospital."

While health costs are generally rising by about 8 per cent a year, they are rising faster for those over the age of 65.

Over the past year, for example, the cost of claims from those aged 55 to 59 were up by 6.8 per cent, says Southern Cross. For those aged 60 to 64, it was up by 10.2 per cent. But for those aged over 65, costs were up by 14.4 per cent.

Mrs de Lacy and her husband are a good example of this trend.

Each of knees cost between $12,300 and $14,800 to replace, and her hysterectomy would have cost between $4800 and $10,000. Her husband's gallbladder surgery would have cost $4100 to $6400, according to Southern Cross.

Mrs de Lacy says there is "no way" they could have afforded to pay private bills themselves.

"We're lucky to have health insurance in the first place because Bruce has a bit of extra income on top of his super. If you don't use your health insurance, you wonder if it's worth paying that money. But when an emergency happens, you can go straight into a private hospital and that's reassuring."

- HERALD ON SUNDAY