Why Private Health Insurance in Australia Delivers Better Value Compared to the United States

A thousand reasons. The US subsidizes the cost of drugs and medical equipment for the rest of the world. The US is more litigious and people sue for millions of dollars, which are passed onto everyone else. Poor health outcomes contribute to fewer doctors and more underinsured patients, driving up costs. Moreover, the high cost of US healthcare education?—?including undergraduate degrees and pre-requisites?—?means that the overall healthcare system works more like a profit motive rather than a prioritized service at a fair price. Insurance companies, pharmaceutical companies, and hospitals are all involved in this cycle, each trying to maximize profits at the expense of everyone else.

Complexity in the US Insurance Market

The insurance market in the USA is complex, opaque, and littered with profit motives that distort the type of services provided. In this article, we explore why private health insurance in Australia is generally a better bargain than the healthcare system in the US. We’ll also touch on some Podcast insights from Planet Money that shed light on American economic, business, and consumer systems.

Understanding the Differences

Australian health services are quite highly regulated, and insurance providers need government approval to increase premiums. There is also nationwide coverage and competition. This competitive environment and government support make it financially beneficial for many Australians to have cover, leading to a wide base of insured individuals.

Due to the highly accessible nature of Australian health services, including primary care options like doctors, dentists, and clinics, combined with widespread drug subsidies, many people avoid hospitals for routine care. This is in stark contrast to the US, where emergency departments are the only viable option for non-emergency situations, driving up overall costs.

EPISODES AND INSIGHTS

Listen to these episodes from Planet Money for a fascinating look at American economic, business, and consumer systems:

Episode 655: Pay Patients, Save Money Episode 87: Health Insurance Is Like an All-You-Can-Eat Buffet Episode 101: Health Care Economist on Call Episode 77: Health Care Goes to the Economist

These episodes offer deep insights into the complexity and opaque nature of the US insurance market and the broader economic implications.

Efficiency in the Australian Health System

While the Australian health system isn’t perfect, it is structurally much more efficient compared to the US system. One major barrier to fixing the US healthcare system is its current structure. To fundamentally improve it, a complete reboot and starting from scratch would be necessary. The way the US healthcare system is currently set up, one major issue is higher insurance premiums and out-of-pocket costs for patients, which in turn, are a result of multiple litigious claims and a profit-driven healthcare model.

Conclusion

The Australian approach to private health insurance is not just better; it’s often a more affordable and efficient choice compared to the US healthcare model. By understanding the differences in regulatory frameworks, accessibility of services, and overall cost structures, consumers can make more informed decisions about their health insurance choices.