The private health insurance industry likes to warn Australians of a doomsday scenario. It claims that a decline in private health insurance will lead to a massive blow-out in public hospital waiting times.
Don’t believe it. The relationship between public and private activity in health care is complex. In fact, a greater proportion of private activity is actually associated with longer rather than shorter waiting times in public hospitals, as I have shown here and more recently here.
Yet, in its most recent pre-budget submission, Private Healthcare Australia asserted that if private health insurance coverage dropped below 40 per cent of the population, then waiting times for knee replacements would increase by one month.
Let’s think about that. About 44 per cent of the population currently has some level of private hospital insurance. For that figure to fall below 40 per cent, about one-in-10 of the currently insured population would need to drop out.
But under the new Gold-Silver-Bronze-Basic system of private health insurance, only people with Gold-level insurance are covered for joint replacements. So that means that most people with Silver, Bronze, or Basic insurance will not currently have insurance for knee replacements anyway. Only about 25 per cent of the population has Gold cover, so the 40 per cent doomsday threshold has already been well and truly passed.
And guess what? The sky has not fallen in.
We should be wary of self-interested assertions such as ‘an X per cent drop in private health insurance will lead to a Y month increase in public hospital waiting times’.